Nikhil Rathi, the FCA CEO, has announced the publication of the FCA Business Plan 2022/23, continuing to set out the re-shaping and transformation of the FCA in what is his second FCA Business Plan. This has been issued alongside a new three-year Strategy document, “Our Strategy 2022 to 2025”, and in effect forms the first year of the Strategy.
The Business Plan has moved away from the previous sectoral approach (so no commentary about individual market sectors); it is instead focussing on outcomes and or reinforcing the ‘more innovative, more assertive, more adaptive’ message.
The FCA is looking to focus its resources on outcomes to prevent serious harm, and has created 80 new roles to deal with what it refers to as ‘problem firms’. Thirteen commitments have been grouped under three key areas:
- Reducing and preventing serious harm – the focus is on protecting consumers from the harm that authorised firms can cause, including tackling fraud and poor treatment. The FCA has set out the ways in which it believes this commitment will be achieved. These include by dealing with problem firms, improving the redress framework, reducing harm from firm failure, improving oversight of Appointed Representatives, reducing and preventing financial crime and delivering assertive action on market abuse.
- Setting and testing higher standards – focusing on the impact that authorised firms’ actions have on consumers and markets. All regulated firms are expected to adopt the same high standards, and have an open and cooperative approach. This will be achieved by putting consumers’ needs first, enabling consumers to help themselves, A strategy for positive change: our environmental, social and governance (ESG) priorities and minimising the impact of operational disruptions,
- Promoting competition and positive change – to use competition as a force for better consumer and market outcomes. This will be achieved by preparing financial services for the future, strengthening the UK’s position in global wholesale market and shaping digital markets to achieve good outcomes.
The FCA states that it has streamlined its work into six core activities, which have been used to frame the Business Plan. These six core activities are to:
- authorise firms and individuals
- set rules and standards
- support competition and innovation
- empower consumers and firms
- recognise and reduce harm
- take quick and effective action
To read the full details of the FCA Business Plan 2022/23, click here.
The headline figure is that the proposed Annual Funding Requirement (“AFR”) is going up to £640.1m in 2022/23 from £613.7m in 2021/22 an increase of £26.4m or 4.3%. However, there is a £35.7m or 6.2% increase in the baseline Ongoing Regulated Activities (“ORA”) budget. The A19 General Insurance Mediation fee block is seeing a 3.2% increase in AFR from £30.4m to £31.4m.
This consultation is open until the 12th of May, time enough to give the 100-page document appropriate attention. Given the relative lack of mention of insurance in the Strategy and Business Plan, and the move by the FCA to focus on outcomes rather than sectors, there may be an argument for questioning the fee allocation and, again, like the FSCS funding, should the firms that are causing the harm (e.g., in the investment space) pay more.
For more information read here.