In April 2022 the FCA launched a three-year strategy (Strategy 2022 to 2025) ("the Strategy"), in the hope of delivering better outcomes, and its 2022/23 Business Plan. In this Insight, Sushil Kuner, a Principal Associate in our Financial Services Regulatory team summarises the key themes of the Strategy, highlighting how the FCA's approach appears to be its most aggressive yet.
The FCA's overarching Outcomes
In his foreword to the Strategy, Nikhil Rathi, chief executive of the FCA, makes clear his intention for the FCA to be "more innovative, more assertive, more adaptive" and "focusing on results rather than being driven by processes".
The Strategy sets out four overarching cross-sector outcomes the FCA expects financial services firms to deliver across markets ("the Outcomes"):
- Fair Value - consumers receive fair prices and quality and, in wholesale markets, market participants are able to make well informed assessments of value and risks due to appropriate transparency
- Suitability and treatment - consumers are sold suitable products and services and receive good treatment
- Confidence - for consumers, they have strong confidence and levels of participation in markets, in particular through minimised harm when firms fail and minimised financial crime. Wholesale markets are resilient to firm failures and clean with low levels of market abuse, financial crime and regulatory misconduct
- Access - diverse consumer needs are met through high operational resilience and low exclusion, and markets are orderly in a variety of conditions so that participants are able to access a diverse range of services with minimised operational disruptions
The Strategy makes clear the continuing need for a diverse and inclusive industry, which the FCA considers a key dependency in achieving the Outcomes. The FCA has warned that it will be tracking firms' progress on this through firm data.
Key focus areas
Over the next three years, there are three key themes where the FCA is strengthening its focus on. Each theme is supported by cross-cutting commitments, the key points and Outcomes for which are summarised below. In this we have also added which of the overarching cross-sector Outcomes these relate to:
Theme 1 - Reducing and preventing serious harm
Theme 2 – Setting and testing higher standards
Theme 3 – Promoting competition and positive change
Concluding remarks and next steps
It is clear that the FCA is taking a much more aggressive approach, whether that is at the authorisation gateways stage, during its ongoing oversight of firms or through its approach to enforcement. Firms should take immediate steps to assess the impact of the FCA's new strategy and the introduction of the new Consumer Duty later this year, to ensure they are meeting higher regulatory standards and delivering on the Outcomes.