The FCAs new Business Plan - what it means for enforcement
14 April 2023
14 April 2023
A key theme of the Business Plan is the FCA's intention to take a proactive approach to both supervision and enforcement, particularly using early intervention measures (which often involve the use of formal powers such as imposing requirements on firms to take/or refrain from taking certain actions).
Unsurprisingly, the FCA has identified the introduction of the Consumer Duty as a critical driver of its regulatory approach and mindset, and additional resources have been allocated to support its implementation. This extends to the FCA's enforcement priorities and processes, with the FCA putting a significant focus on early identification and intervention to prevent and reduce harm to consumers. The most interesting manifestation of this is the creation of a new Interventions team within the Enforcement division. The new team will become operational on 31 July 2023 at the same time that the Consumer Duty comes into force and will enable to FCA to take rapid action where immediate consumer harm is identified.
The FCA is also focussing on taking a more assertive approach to tackling financial crime. It will be increasing the volume of its proactive assessments of firms' anti-money laundering systems and controls. This includes a greater use of data to identify firms more susceptible to receiving the proceeds of fraud, and a plan to develop further data-led analytical tools to support the FCA's anti-money laundering supervisory work.
Elsewhere, the Business Plan contains an intention to give clearer guidance to firms on the procedure for reporting failures to meet the FCA's new standards on operational resilience, ahead of the 31 March 2025 deadline for firms to remain within the tolerances set out in the FCA's operational resilience rules. We expect operational resilience (including preparedness for incidents) to be another area of enforcement focus, particularly in cases where an operational disruption results in serious consumer detriment or a significant market impact.
The release of the latest Business Plan follows the recent announcement of Therese Chambers and Steve Smart as new co-Executive Directors of Enforcement. Given the incoming co-heads' backgrounds in consumer investments and national security (respectively), in line with the themes set out in the Business Plan, we expect that the Consumer Duty and financial crime systems and controls will feature heavily as enforcement priorities in the coming years.
Authors: Adam Jamieson and Mark Donnelly