Cast your mind back to 2021, and you may remember when the FCA laid out their three-year strategy, aiming to transform the financial services sector, and becoming more innovative, assertive, and adaptive.
Now into the second year of their strategy, we think it’s time to reflect on the measures the FCA has implemented so far, and what impact they’ve had within the industry.
In this blog we taken pause to review the industries progress towards delivering on the FCA’s expected outcomes, touching on indications of how we might expect the regulator to continue to enforce regulatory compliance and to help remind firms of actions to ensure all the necessary tasks are in play and we’re all on track.
1. The introduction of Consumer Duty
First coming into force on 31 July 2023, Consumer Duty has called for firms to put their customers first, and to hold themselves accountable for doing so. Since implementing the initial plans, the FCA has continued to update firms on what they need to be doing in order to remain compliant with the new Duty, and taking action against insurers who aren’t providing value to their customers.
The authoritative body has even banned certain providers or debt advice from receiving referral fees from debt solution providers. This move was made in the hopes of saving customers with debt from paying unnecessary fees, and ensuring they are receiving better quality advice—all of which is in line with the Duty.
Lenders were also analysed by the FCA, in terms of how they treat mortgage and consumer credit borrowers who are struggling financially, and improvements were sought to rectify this and align them with the Duty’s goals.
With the final deadlines for the Duty pending in July of this year, it’s crucial you’re complying with the requirements, or you risk financial and reputational loss. Need a hand? Our RegTech Consumer Duty Solutions can take the stress out of compliance and ensure you’re always on the right side of the regulators.
2. Tackling online misconduct
Fraudsters are getting increasingly clever online, which has sadly led to a rise in scams over the web. The FCA recognised how additional screening checks for firms approving marketing for unregulated firms could help, and implemented financial promotions rules for cryptoassets with the aim of ensuring customers know exactly where they’re putting their money.
The action the authoritative body has taken so far, includes:
- Launching new guidance for firms to ensure promotional content isn’t misleading
- Removing over 10,000 potentially misleading adverts
- Sending out 2,243 warnings about unauthorised firms and individuals
- Making policy and legislative changes, including to the online safety bill to remove harmful content from online platforms
- Cancelling 1,266 firms that failed to meet its minimum authorisation standards
- Imposing fines totally over £52 million and sanctions totally £5.4 million
- Convicting 7 people in criminal courts for fraud—6 received prison sentences
- Disrupting 26 machines across 34 locations accused of operating as unlawful crypto ATMs
3. Setting higher standards
Just last year, the FCA revisited the rules it had introduced in order to boost the overdraft market, and were pleased to find that people over the UK had collectively saved almost £1 billion from two measures: their 14-point action plan designed to tackle low rates paid on savings accounts, and the new rules it set out to maintain access to cash in a digital world.
In addition to these measures, in September of last year, the FCA announced a consultation they’d worked on with the Prudential Regulation Authority. This looked at proposals to introduce a new regulatory framework on Diversity and Inclusion in the financial sector.
4. Promoting competitiveness and positive change
The whole premise of the new Duty is to inspire positive change that keeps customers safe and well-informed when dealing with financial products and services. But as well as the Duty, the FCA has helped to deliver a new framework for the future of regulation, with the aims of promoting healthy competition and long-term, sustainable growth.
As the world becoming increasingly digitised, and with the rapid uptake in automation and AI, the FCA has also assessed the benefits and risks of AI to consumers, and to share their recommendations of how best the regulator can support its safe and responsible adoption.
With the final phase of the FCA’s 3-year strategy on the horizon, it’s important that firms are adapting to the new recommendations and regulations as soon as possible.
For more information on how Worksmart could help you and your firm to stay on top of the requirements, reach out to our team of experts at email@example.com or book a meeting with our friendly experts.