March 27, 2024


by: kiran


Tags: "Regulation"

The FCA Business Plan 24/25 – Are you Covered?

The level of activity coming from the FCA is unprecedented – and their business plan for 2024/25 shows their clear intent to continue that trend.

Their focus for 2024/25 will be:

  • Protecting consumers – the FCA will continue to assess firms against the requirements of the Consumer Duty.
  • Ensuring market integrity – the FCA will continue to lead the debate on how the right form of regulation can support growth for UK markets.
  • Promoting effective competition – the FCA will continue to promote competition and innovation to deliver good outcomes for consumers.
  • International competitiveness and growth (secondary objective) – the FCA will focus on embedding their secondary objective to facilitate medium to long-term growth in a way that can secure better outcomes for all consumers.

The FCA will continue to deliver all their 13 public commitments that are in their strategy but will particularly focus on:

  • Reducing and preventing financial crime.
  • Putting consumers’ needs first.
  • Strengthening the UK’s position in global wholesale markets.

The messages from the plan will come as no surprise considering recent communications (i.e. their proposed changes to enforcement approach). They are focussing on results rather than being driven by processes and this relates to all their activities from authorisation to supervision to enforcement. The FCA continues to work towards being an outcomes-based and data-led regulator, having made progress with this on their approach to the Consumer Duty and enhancing harm prevention capabilities.

As we have seen from recent activities, the FCA are not afraid to act when they see potential harm (GAP, Multi-Occupancy Insurance etc) and the plan re-emphasises this.

The FCA will continue to keep checking if firms are following the Consumer Duty and supporting financial well-being. Following the introduction of Consumer Duty Rules in 2023, the FCA plans to launch multi-firm work and market studies this year

There are some encouraging signs for firms who may be thinking about applying for authorisation as the FCA are aiming to make the authorisation process more streamlined. That said, although (hopefully) the process may be slicker, don’t be fooled into thinking this will make getting authorised easier. The robustness of the FCA’s approach to assessing firms’ readiness, ableness and willingness to comply with FCA requirements during the authorisation process is only going to increase, especially with the expectation that firms will be required to comply with Consumer Duty from Day 1.

The FCA are looking to become a world-class data-led regulator by automating more of its analytics tools to help it detect and respond to consumer harms faster and working with firms on the safe deployment of artificial intelligence.

In relation to the insurance sector, the FCA intends to check claims handling response times, and whether insurers are doing enough to help customers in vulnerable circumstances.

What firms need to consider:

A lot!

Clearly, there will be no slowdown in the FCA’s activity. There has been an overall increase in the FCA’s budget of 9.7% from last year (mostly in response to increased responsibilities relating to the Consumer Duty and Financial Promotions Regime). Their workforce will be more than 5000 by the end of March 2024 with their focus on ensuring they have the right skills to achieve their objectives. They therefore have the resource to focus their attention on where they see potential harm.

Firms should consider all aspects of the business plan that impact them and ensure their house is in order. The general feeling is that regulatory interaction is on the increase and the FCA are not afraid to act quickly.

Those firms handling claims should ensure that they have robust Management Information (MI) and Key Performance Indicators (KPIs) that can evidence the support they are providing to customers and that claims are being dealt with swiftly and fairly. Hopefully, you will have made improvements to these processes as part of your Consumer Duty work.

Firms’ approach to vulnerability will continue to be assessed and this is an area that firms should constantly be looking to develop. As the FCA has said on many occasions in relation to the Consumer Duty, it is not a ‘once and done’ exercise. Don’t think that just because you carried out a lot of work in preparation for the duty that all is ok – firms should be able to evidence that they are constantly looking at ways to improve outcomes for their customers.

If you would like to discuss any areas from the FCA’s business plan or would like a summary of its key messages as they relate to the insurance sector, please do not hesitate to contact us.