The FCA delivers its most aggressive strategy yet

There will be a greater focus on firms that are not meeting threshold conditions, with the FCA committing to using "breaches of threshold conditions to stop or restrict the activities of a broader range of problematic firms, even if they don't pose a risk to consumers or markets."

The FCA has, for many months now, been displaying signs of a much stronger gatekeeper role in authorisation applications and applications for registration of cryptoasset firms, and the Strategy makes clear the FCA will continue to have a stronger authorisation gateway. Newly authorised financial services firms will also be subject to enhanced supervision from the FCA's newly created 'Early Oversight' team.

Confidence

Recognising that too many firms fail owing redress to consumers, leaving a larger bill of unpaid redress liabilities being pushed onto those that remain in the market, the FCA will focus on improving firms' financial resilience, identifying problem areas early and carrying out redress exercises with firms, where appropriate, with the aim of fewer firms failing and less reliance on the FSCS.

Fair Value, Confidence

There will be increased focus on firms' plans to mitigate the risk of failure, which the FCA will be reviewing at the authorisation gateway and through its early oversight strategy. Where firms do not properly plan or start to fail, the FCA has committed to acting faster, for example, by instigating insolvency proceedings. The FCA will closely monitor firms' resilience against its prudential standards, and if firms meet current standards but still cause harm when they fail, it will consider raising those standards further.

Confidence

FCA data suggests that Principals of ARs generate 50 to 400% more complaints and supervisory cases than other directly authorised firms. The FCA has committed to increasing its supervision work and activity at the gateway to reduce the most significant risks. It is also currently consulting on changes to the AR regime to clarify and strengthen the responsibilities and expectations of Principals and increase the amount and timeliness of information the FCA receives from Principals and their ARs. Principal firms whose business models are predicated on a large network of ARs should take particular note - the FCA will likely take action in respect of firms with unmanageable risks.

Suitability and treatment, Confidence

With a stronger gatekeeper role, the FCA will closely scrutinise firms' financial crime systems and controls before they are authorised and will be more proactive in its supervision, using intelligence from its local and international financial crime partners, better data and social media channels. The FCA has also committed to enhancing its focus on investment fraud and authorised push payments.

Confidence

The FCA will continue to focus on firms and issuers of securities, ensuring they have robust controls around inside information, and will work to ensure that issuers of securities make timely and accurate disclosures to support transparency in markets. Over the next two years, the FCA will be improving its ability to detect market abuse through a significant upgrade in its market surveillance systems, which it hopes, will allow it to keep pace with evolving market abuse techniques and take advantage of advancements in big data analytics. Market abuse will continue to be high on the Enforcement agenda with the FCA pursuing offenders with its full range of enforcement tools, including criminal and civil sanctions.

Confidence, Access

The FCA's proposed Consumer Duty, when implemented, would require firms to act in good faith, avoid foreseeable harm to consumers and support and empower them to make good financial decisions. Firms will be held to this higher standard and will be expected to provide products and services that meet the needs of their diverse customers and offer fair value. Firms will need to deliver good consumer outcomes at every stage of the customer journey and be able to evidence that these outcomes are, in fact, being delivered. The FCA will expect to see an overall reduction in upheld complaints as a success measure against this commitment.

Fair Value, Suitability and treatment, Confidence, Access

Recognising that digital services make it faster and easier for consumers to engage with financial services than ever before, often through targeted adverts that are illegal, unfair or misleading, the FCA will focus on stopping unauthorised business and consumer warnings about these firms. The FCA is particularly focused on high-risk investments and will take action through its Consumer Investments Strategy to minimise investment risk to consumers. It is also consulting on changes to limit the categories of consumer to whom cryptoasset promotions can be made.

Suitability and treatment, Confidence

Recognising the crucial role that the financial services sector has in accelerating a smooth transition to net zero and a fairer, more sustainable long term future, the FCA plans to develop measures to assess its impact through monitoring the quality of sustainability disclosures as well as the level of misleading marketing of ESG products. Firms should therefore expect close scrutiny of compliance with new climate related financial disclosure rules and any new disclosure requirements which may be introduced. The FCA will also be encouraging improvements in ESG data, ratings, assurance and verification services and has committed to consulting on a new regulatory framework and data requirements to accelerate the pace of change on diversity and inclusion.

Suitability and treatment, Confidence

The FCA has introduced new rules and guidance to strengthen operational resilience and the FCA will be assessing the impact of these new rules by testing firms' operational resilience, business continuity and incident response plans, cyber security and third-party management.

Access

Following Brexit, the UK has greater freedom to tailor its rules to better suit UK markets, and the FCA will play an important role in implementing any legislative changes resulting from the Treasury's regulatory review.

Fair Value, Suitability and treatment, Confidence, Access

The FCA wants to secure a UK wholesale market which supports the domestic economy and growth and which is open to innovation, underpinned by high standards of market integrity and consumer protection. It wants to safeguard the UK's position as a leading global market of choice for issuers, intermediaries and investors. The FCA has developed proposals for reform in primary, secondary and post-trade markets which it intends to consult on in the coming years. The programme includes:

• reforming rules around when a prospectus is required and its contents;
• transparency in equity markets; and
• the creation of a new sandbox for new market models of infrastructure models.

Making better use of data, it will also act swiftly to tackle misconduct, for example, through market abuse.

Confidence, Access

Recognising that digitalisation of financial services is changing the way consumers makes decisions and markets operate, the FCA has committed to proactively shaping the digitalisation of financial services through developing a regulatory approach to digital markets. As well as working with the Government and other stakeholders to develop joined-up regulatory approaches and provide thought-leadership in the space of digital regulatory policy, the FCA will examine the role of artificial intelligence in financial services. It has warned that it will test whether consumers are being empowered to take decisions in their best interests by undertaking "robust investigations informed by behavioural economics to test digital consumer journeys, understanding how consumers access information and make decisions about digital financial products and services."

Fair Value, Suitability and treatment