The FCA’s 2023/24 Business Plan

In April , the FCA released their 2023/24 Business Plan (the “Plan”), providing insight into the regulators’ approach to the second year of their 2022 to 2025 strategy (the “Strategy”). As part of the Strategy, the FCA outlined 13 commitments designed to strengthen their approach which were grouped into three focus areas. The Plan centers on work within the three areas:

Reducing and preventing serious harm
Setting and testing higher standards
Promoting competition and positive change

We have selected some of the key details within the Plan and what we expect to see over the next 12 months.

1. Key Challenges for 2023/2024

Given the heightened geo-political tensions and uncertainties within the UK, the economy is experiencing high levels of volatility. The FCA acknowledges this in their Plan, highlighting interest rates, inflation, unemployment projections, declining household disposable income, and market volatility as key uncertainties that may require the regulator to reconsider their plan of action. It is yet to be seen how the FCA will respond to these uncertainties and address the cost-of-living crisis without delving into the effects on global markets.

2. ‘Our Focus 2023/2024’

Location and People

The FCA opened a Leeds office in September 2022 to improve its connection to firms in the north of England, bringing the total number of UK offices to five (London, Edinburgh, Cardiff, Belfast). The regulator had to increase its headcount due to significant delays in application processing, resulting in a growth from 3,800 to 4,500 employees between January 2022 and March 2023. This allowed for increased resource in the Authorisations and Enforcement and Market Oversight Divisions. As a result, there has been a recent reduction in application processing times and more engaged questioning, which is expected to continue improving.

Data and Technology Led Regulation

As part of a wider ambition of the FCA to become a data-led regulator, the Plan outlined a specific objective:

“Complete a major upgrade to our core regulatory system and improve our intelligence capabilities through the automation of analytics tooling, helping us detect and respond to consumer harms faster.”

This will have noticeable and far-reaching ramifications on the relationship between the regulator and authorised firms. We anticipate automated analytics will result in a closer and more ‘personal’ monitoring regime by the FCA, freeing resources from analysis of data to acting on adverse findings or engaging in preventative work.

Cryptoassets

HM Treasury issued a consultation on the 1^st February 2023 on proposals for a broader future regulatory regime for cryptoassets. This is the roadmap proposed for the regulation of cryptoassets and the FCA have noted it intends to be heavily involved in consulting with the market.

There has been little to no change in terms of the next steps for the regulation of cryptoassets with the only requirement on firms remaining registration under the anti-money laundering rules.

As of the 3^rd April 2023, the FCA have still registered only 41 cryptoassets firms under anti-money laundering rules as they continue to rebut firms who cannot demonstrate robust AML procedures.

3. The Three Focus Areas

Although the developments above are labelled as topics of the FCA’s focus, they are not aligned to the thirteen commitments within their Strategy and so do not fall into one of the three focus areas.

Within the Plan, each focus area is broken down into specific aims and incorporates an all-encompassing list of action points the FCA have planned to achieve them. Below we have highlighted a specific aim and picked out some of the key actions the FCA have committed to over the next 12 months.

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As with every business plan published by the FCA, or any supervisory body for that matter, it remains to be seen how many of the key activities can be achieved over the next 12 months or perhaps instead how much wider geo-political and economic uncertainty necessitates a reprioritisation of resources from the regulator.

How Can Complyport Help?

If you have any questions about the FCA released their 2023/24 Business Plan, or you think your firm may require assistance with any of the proposed upcoming changes, please contact Jan Hagen via jan.hagen@complyport.co.uk to book a free consultation.

About Complyport

Complyport is a market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.

Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.

We specialise in supporting the UK financial services industry with compliance guidance, advice and best practice including support with: