FCA Business Plan 2022/23

Background and Summary

• The Financial Conduct Authority (FCA) has published its Business Plan for 2022/23.
• FCA Business Plan for 2022/23 takes a different form to its predecessors. It’s a shorter summary of priorities and planned activity that relies more on links to other sources, particularly the three-year strategy the regulator has also published and the Regulatory Initiatives Grid.
• The plan is no longer a standalone document. The plan is now accompanied by a webpage which contains numerous hyperlinks.

An overview of the strategic themes in the business plan:

The plan is now a more focused on a thematic approach (as opposed to the previous sector focus) which reflects the FCA’s ever increasing wide remit (e.g. Crypto assets).

A significant portion of the plan has already been started in the previous 12 months and therefore the plan has not added to the burden of regulatory changes referred to In the grid.

The Plan centres around three focus areas which demonstrate how the FCA positions its priorities moving forward:

• Focus 1 – Reducing and preventing serious harm – dealing with problem firms and the harm they cause.
• Focus 2 – Setting and testing higher standards – improving consumer outcomes, imposing ESG standards.
• Focus 3 – Promoting competition and positive change – being globally competitive through high international standards.

Within each of these themes the FCA has provided a narrative on the outcomes it intends to measure to assess their success, repeating prior commitments to hold itself accountable against published performance metrics.

The FCA published its Outcomes and Metrics which are basically a repetition of previous statements and commitments of how it will hold itself accountable.

FCA Internal Transformation

1. The FCA wants to become a data-led regulator through various methods (e.g. AI). It intends to publish a data strategy later on this year.
2. Regulatory decisions have been streamlined with more decision-making by the Executive, therefore speeding up the process
3. Making the FCA more diverse, with a target of 50% of its senior leadership identifying as female and 20% as ethnic minorities by 2025
4. National location strategy with a Leeds office of c.100 staff and a doubling of the Edinburgh office to 200 staff

However, given what is a minimal budget, questions may be asked as to whether this ambitious programme can be achieved, especially with regard to data, a notoriously expensive area.

The three main focus areas expanded

Focus 1
Reducing and preventing serious harm – dealing with problem firms and the harm they cause.

• Complete the ‘Cancellation of Firm Authorisation Project’ which accelerates the process for removing authorisation.
• Develop an automated approach for identifying simple Threshold Condition breaches.
• Finalise rules on increased obligations of Principal firms in relation to their Appointed Representatives and Increase Supervision activity on Principal firms.

Focus 2
Setting and testing higher standards

• Finalise rules for the new Consumer Duty (due to published on 31st July 2022).
• Increased Supervision targeting of financial promotions (Summer 2022).
• ESG strategy, particular focus on ESG product marketing and disclosures.
• Increased Supervision of operational resilience by the FCA Technology, Resilience and Cyber Department.
• Issue a discussion paper on managing the risk of critical third parties, with a rule consultation to follow in 2023.

Focus 3
Promoting competition and positive change

• With HM Treasury (HMT), as part of the FRF process, start the transfer of rules from legislation into the handbook.
• Work with government on a new regime for digital markets.
• Study digital consumer journeys to understand if they empower customers to act in their best interests.
• Issue a discussion paper on AI in financial services.

Sector priorities?

As stated above the plan does not include sector specific plans. Sectors not mentioned below have not received specific attention from the FCA in the document.

Next Steps

As there are no longer sector-specific plans, it may be more difficult for an individual firm to quickly identify what is and what is not relevant to them.

Read our other latest items from the Regulatory Calendar at:

FCA Strengthening of Financial Promotion Rules for High-Risk Investments >>

FCA Market Study on how competition is working between Benchmarks >>