As the world struggles to come to terms with the aftermath of the COVID-19 pandemic, the ongoing Russia-Ukraine conflict, energy crisis, inflation, market volatilities, economic and geopolitical uncertainties, collapse of financial institutions (such as Silicon Valley Bank and Credit Suisse) and rapid developments in technology, the global regulatory landscape has adapted to a more stringent and focused new normal.
The Financial Conduct Authority (FCA) published its business plan 23/24, which revolves around its 2022-2025 strategy, which aims to safeguard consumers, promote market integrity and prioritise consumers’ interests. It builds on and around three themes :
Preventing and mitigating serious harm
Establishing rigorous testing standards
Encouraging and driving positive changes
Consumer duty, which comes into force on 31 July 2023, aims to set clear and objective standards for firms to provide retail customers convenient outcomes, ensuring consumer protection across financial services with focus on 4 major areas a) products and services, b) price and value, c) consumer understanding and d) consumer support . This aims to help people who are financially stressed in coping with rising interest rates, inflation and rising cost of living.
The FCA aims to become a data-led regulator, exploiting new digital capabilities and data solutions through automation, analytics and intelligence. The implementation of a transformational data collection regime and future investments in cybersecurity and operational resilience resonate with the FCA’s intent to embrace technology at scale. The authority also strives to use technology for the identification and prevention of financial crimes and recognition of patterns related to scams and frauds for parameterised control.
In 2022, the FCA removed or asked for the amendment over 8,500 potentially misleading advertisements and identified over 1,800 warning signs about potential scams in financial firms. 23% of the firms that applied for operations were not authorized during FY22/23. The regulator has set threshold conditions – minimum requirements financial services firms must meet, failing which they would not be able to operate in regulated markets, ensuring confidence among consumers and other market participants.
The FCA wants all firms to be financially resilient so they can cope with and recover from all forms of disruptions. Firms with adequate resources to conduct business that hold client assets and funds diligently and are subject to low financial stress are less likely to fail or cause significant harm to consumers and market participants. The key is constant monitoring, early identification and requisite steps to prevent a failure.
Stern supervision by firms on market abuse, commitment to providing best debt-related advice to consumers and utilisation of digital technologies for better delivery and supervision of financial services will likely assist consumers to reap benefits of UK's global economic prowess and ensure financial service providers can operate in a regulated, innovative and open economic panorama. The Regulatory Initiatives Grid  highlights other regulatory initiatives by different members of the Financial Services Regulatory Initiatives Forum.
The FCA would also like to see healthy competition in the financial services industry which promotes the economic growth and technology-driven innovation in the UK. To promote such a competitive environment, it has enabled 300 authorised firms to receive oversight and support from FCA through their oversight regime and functions. To customise financial services and its regulations in UK markets, promoting competitiveness and delivering better outcomes for consumers and businesses, the financial services and market bill emphasises on the following agenda:
The UK’s sustaining its position of a global financial hub
Promoting competitiveness in markets and ensuring effective capital use and adequacy
Promoting financial inclusion and consumer protection
The FCA wants the UK wholesale market to support the domestic economy, growth and innovation and become one of the leading markets in the world for global investors. In this context, it plans to bring a proposal shortly in the FY 2023-24. Some changes are expected in regulations involving MiFID, securitisation, asset management and short selling.
How Acuity Knowledge Partners can help
We develop controls that are dynamic, robust and proficient in addressing risks at all levels of a company. Our expertise lies in identifying and reviewing gaps in compliance programmes, helping meet regulatory requirements and providing unique solutions by leveraging our state of the art technologies
Our focused suite of offerings span forensic analysis, compliance testing, monitoring programmes, risk trend analysis and risk mitigation. We customise and design reviews dedicated to mitigating company risks, keeping the latest regulatory expectations in mind. We also offer a well-thought-through approach – from initial analysis to end documentation and recommendation – to provide a holistic view of the risks a business is exposed to and how to safeguard the business.
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About the Authors
Shawaf Ali Baig has overall above 5 years of experience in the financial services industry. Prior to joining Acuity Knowledge Partners, he was an analyst at State Street Global Advisors. His expertise spans marketing compliance, corporate compliance, policy monitoring, code of ethics and personal account dealing. Part of the Central Compliance team at Acuity, Shawaf is responsible for reviewing marketing materials and financial promotions. He holds a Bachelor of Commerce from Jain University, Bengaluru.
Treenoy Das has overall above 5 years of experience in the financial services industry. Prior to joining Acuity Knowledge Partners, he worked at Price Waterhouse Coopers as an ethics and compliance analyst. His expertise spans independence compliance, risk consultancy, project management, personal account dealing and digital solutions. As part of the Compliance Operations team at Acuity, he supports his client through compliance monitoring.
Treenoy holds a Master of Business Administration in Finance and Marketing from University of Calcutta and a Master of Technology in Laser Technology from Jadavpur University, Kolkata.
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