Business Plan 2022/23

• An increase in the number of cancellations or withdrawals over the next three years will reflect an increase in our effort to intervene when firms fail to meet the Threshold Conditions.  

(Our Threshold Conditions are the minimum conditions which a firm is required to satisfy, and continue to satisfy, to be given and retain permissions.) We anticipate this metric to rise over the next three years, followed by a decline as relevant firms adjust their conduct to fit with our expectations. We recognise that a long-term aim to increase cancellations and withdrawals of permissions is not what we want. So we will keep this metric under review as we assess our operational effectiveness in this area and to ensure there are no unintended consequences. 

• Increase in awareness of, and perceived effectiveness of, FCA interventions. 

This is an example of a new perception metric we will develop using a survey of firms. We intend to rework existing survey questions related to FCA action to cover the effectiveness of our use of the Threshold Conditions and other intervention powers. 

• Complete the next phase of our Cancellation of Firm Authorisation Project. This will allow us to automate some of our processes, increasing efficiencies while still providing effective decision-making at the right points.

• Conduct a small number of complex Threshold Conditions test cases to determine whether our aims are supported by current legislation and policy and where necessary seek to make changes to support our ambitions.

• Level the playing field for firms that follow the rules by removing those that consistently show they are unable or unwilling to do so.

• Develop an automated approach for identifying simple Threshold Conditions breaches.

• Identify and cancel firms that do not meet Threshold Conditions at pace and at scale, removing them from the perimeter. 
• Intervene at pace against firms causing harm to consumers and/or markets, preserving consumer assets and stopping harm in its tracks. 
• Increase the number of resources, with new hires providing extra capacity to drive faster and more targeted action.
• Expand the types of Threshold Conditions breaches we take action against. This will include more firms that demonstrate over time that they do not have adequate resources to operate in the interests of consumers and markets without material intervention from the regulator.

• We are developing a metric that measures the proportion of consumers who consider that the service that claims management companies provide to them meets their expectations.  

We consider an increase in this metric a broad indicator of CMC services providing fair value. However, it should be noted that the outcome of consumers’ actual claims can influence their perception of the value CMCs provided and they received. 

• Increase in the overall timeliness of firms’ complaints resolution measured by the proportion of complaints closed within three days, between three days and eight weeks, and after eight weeks.

We are also considering the feasibility of metrics in relation to complaint resolution that would better capture the fairness of complaint resolution, in addition to timeliness. 

• Stabilisation of the redress burden arising from insolvent firms’ unpaid liabilities through Financial Services Compensation Scheme (FSCS) claims over a multi-year period, with a view to a subsequent reduction.

As FSCS claims will always be 'after the event' these are lagging indicators. So it will take some time before the impact of our work begins to show. FSCS claims may also be driven by wider economic conditions. 

• Increase in consumer awareness of the redress system from our Financial Lives survey data[5]. This is our flagship survey of UK consumers.

We recognise the limitations of this metric in capturing consumer understanding of the redress system as well as awareness. This is complex and we may explore how to develop this further. 

• Publish our response to the consultation on CMC phoenixing. This is when individuals from firms that go out of business later reappear in connection with CMCs and charge consumers for seeking compensation against their former firm’s poor conduct by bringing claims to the FSCS. Our proposed rules ban CMCs from handling claims where they have these connections. 
• Consult on revisions to the pensions transfer redress guidance in July 2022. 

• Embed the wider implications framework[6], launched in January 2022. Through this, we will work in more areas with our regulatory partners, to tackle common issues and provide greater certainty to consumers and firms. 

• A low and stable proportion of firms not meeting financial resource requirements. 

A low and stable proportion of firms who do not meet their financial requirements indicates that firms are generally able to conduct business and wind down without causing significant harm. The metric does not perfectly capture progress towards the outcome because not all prudential regimes are harm based. So even where firms meet their financial resource requirements, they can cause harm. 

• The proportion of firms with 'adverse' 'reasonable assurance' CASS audit opinions remains stable, with a target rate of below 10%. 

A low and stable proportion of firms with adverse CASS audits indicates that firms generally hold client assets and funds appropriately. An adverse report is one where the auditor has identified a problem (eg the firm not identifying client money).

• Set rules and standards to ensure we apply greater consistency to firms, firms better understand the obligations on them and harms are properly taken into account, for example by: 
  • embedding the new Investment Firms Prudential Regime (IFPR) 
  • inputting into developing crypto policies 
  • developing standards for consumer investments firms promoting the need for wind down plans 

• Identify harm and act to mitigate it proactively and quickly by using Data Dashboards to identify emerging issues.

• Be more assertive with our powers to start insolvency processes when necessary to mitigate harm caused by firms. 

• Reduction over time in volume of complaints (per £1m of revenue from regulated activities) about principal firms compared to non-principals. 

We know our activities will take some time to impact complaints data. We anticipate a reduction in complaints will lag behind the changes we are making. We may also see increases in the short term, where our work reveals misconduct that drives complaints. 

The AR Regime crosses the breadth of the financial services sector. So we’ll also use metrics related to other strategic outcomes where ARs are operating to measure the success of our work. 

• Strengthen scrutiny at the regulatory gateway. This includes more engagement with principal firms as they appoint ARs and robust assessments of authorisation applications by prospective principal firms. 

• Publish final rules following our consultation (CP21/34[7]). Our proposed rules and guidance are intended to: 
  • clarify and strengthen principals’ responsibilities and our expectations of them 
  • increase the amount and timeliness of information we receive on principals and their ARs 
• Continue work with the Treasury on the outcome of its Call for Evidence on the AR regime as it considers possible legislative change. 

• Assess the need for further policy interventions discussed in our consultation. We’ll consider the potential impact on competition and innovation, for example in relation to regulatory hosting. This will inform whether we need to take further action.  

• Improve the information relating to principals and their ARs included on the FCA Register (subject to consultation). 

• Intensify supervision of principal firms to reduce the most significant risks from ARs. We’ll increase our use of data to better target our interventions.

• Undertake more assertive supervision of high-risk principals, including greater use of our regulatory tools and appropriate enforcement action.

Slow the growth in investment fraud victims and losses.

Slow the growth in Authorised Push Payment (APP) fraud cases and losses.

• Reported investment and APP fraud victims and losses. 

The Government is developing its economic crime plan, and fraud action plan, with its partners, including us. While counter-fraud work is already underway, in the short to medium-term fraud offences are likely to continue to rise. There are wide-ranging drivers of the different types of fraud and an array of parties who can affect its prevalence and impact on victims. The effect on outcomes depends on those partners working together and taking actions, as well as us. The incidence of fraud is also affected by levels of consumer awareness and consumer behaviour. So it is challenging to isolate and measure the impact of our interventions on fraud. 

• Increase in the proportion of applications rejected, withdrawn or refused by the FCA under Money Laundering Regulations (MLRs) or for financial crime reasons. 

This metric is under development and indicates the strength of our gateway to ensure high standards and minimise financial crime within the regulatory perimeter (the legal boundary between what we do and don’t regulate). Over time, as our work on money laundering and financial crime has wider effects, we expect the proportion of applications rejected, withdrawn or refused to stabilise as firms adjust their conduct to fit with our expectations. 

• Reduce the opportunities for fraudsters to seek approval through the gateway.

• Ensure we have effective oversight of firms communicating and approving financial promotions and that firms only do so when they have the relevant competence and expertise. The proposals in CP22/2[8] will help us achieve this. We intend to publish our final rules in summer 2022. 

• Continue to run our ScamSmart consumer campaign, focused on the areas of highest priority fraud. The campaign helps consumers spot the warning signs of scams and access tools such as the Warning List[9] – a database of unauthorised firms. The campaign runs across loan-fee fraud, investment and pension fraud.

• Develop our approach for effectively supervising the anti-fraud systems and controls of the firms we regulate. 
• Undertake a small number of assessments of firms’ anti-fraud systems and controls to understand and evaluate how they are protecting consumers from fraud.
• Put greater resource into our intelligence gathering and expand our analytics to better spot and track potentially fraudulent activity at scale and reduce the average amount of money lost due to scams. Increase engagement with partners at both a strategic and tactical level, including the National Economic Crime Centre (NECC). This will enable us to contribute to the ten-year Fraud Action Plan, being developed by the NECC, Economic Crime Delivery Board and Economic Crime Strategic Board.
• Continue our work to supervise cryptoassets firms’ compliance with the Money Laundering Regulations (MLRs). We will rapidly intervene where firms risk being used as conduits for illegal activity, or where firms pose harm to consumers or market integrity (for example operating without registration, perpetrating fraud or high-risk activities).
• Proactively supervise through the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).

• Enhance capabilities to identify, alert and request that platforms take down unauthorised financial promotions, associated websites and social media accounts. 
• Continue to use our enforcement powers to disrupt, pursue and sanction those committing financial crime, fraudsters and their enablers.  

• Increase in perceived effectiveness of our action to promote market integrity.  

We plan to develop a new perception metric using a survey of market participants. 

• Increase in the number of FCA interventions, broadly defined, for failure of publicly traded issuers to disclose properly.  

We are developing a broad measure of how our discussions and interventions with issuers promote better disclosures. This measure will be affected by our capacity to detect poor disclosures as well as overall market conditions. A decrease in the number of interventions may indicate that standards are improving, so this metric will need to be interpreted alongside indicators of market cleanliness. 

• Decrease in values of our market cleanliness (MC) statistics.

Our broad measure of market cleanliness is one indicator of possible insider dealing but this can be affected by other factors such as sample size or high volatility. 

• Provide guidance through Technical Notes, which we consult on through our Primary Markets Bulletin publications. 
• Continue to supervise issuers to ensure those standards are applied. 

• Successfully deliver the Market Surveillance Refresh project to allow efficiency improvements in our alerting, triage, and enquiry analytics. 
• Increase our detection capability through advanced analytics and better data coverage. 
• Complete our Markets Data Processor refresh which delivers market data to our alerting and analytics tools. 
• Further develop structured machine-readable Primary Market data through our national storage mechanism (NSM).   

• Reduction over time in upheld Financial Ombudsman Service complaints about unsuitable advice and mis-sold products and services.

We recognise that any reduction in complaints will lag behind the changes we make to improve outcomes for consumers, and it will take time to see the impacts of our work. We may also see increases in complaints in the short term as our measures increase consumer awareness of poor practice by firms.  

• Reduction in the proportion of consumers, including those in vulnerable circumstances, who, in the last 2 years, have been offered a financial product or service they wanted, but at a price, or with terms and conditions, they felt were completely unreasonable (this is a question on our Financial Lives Survey).  

We use ‘completely unreasonable’ as it fits the questionnaire design; it doesn’t represent a threshold of for what we perceive as fair value.  

• We are adding new questions to our Financial Lives survey to understand consumer perceptions of the information they are given as one way to help us assess this outcome.

• Reduction over time in upheld Financial Ombudsman Service complaints about: 
  • administration or customer service 
  • account access, delays and terminations  
  • account closure 
  • cancellation of policies 

We recognise that any reduction in complaints will lag behind the changes that we make to improve outcomes for consumers and it will take time to see the impacts of our work. We may also see increases in complaints in the short term as our measures increase consumer awareness of poor practice by firms.  

• Increase in the proportion of consumers, including consumers in vulnerable circumstances, who slightly or strongly agree that most financial firms are honest and transparent in the way they treat them (Financial Lives survey).

• Continued tracking of access to cash. We’ll report our findings until the Government legislates and a level of cash access has been set for us to monitor against.

Our metrics here reflect our current focus on maintaining access to cash.

• Embed the Consumer Duty at each stage of the regulatory lifecycle, from authorisation to supervision and enforcement. We will make the Consumer Duty an integral part of our regulatory approach and mindset - including authorisation, supervision and enforcement priorities and processes. 

• Publish the feedback statement on the proposed Consumer Duty alongside any finalised rules and guidance by the end of July 2022.
• Work closely with firms and their trade bodies, consumer organisations and wider stakeholders during the Consumer Duty implementation period to help identify and work through examples of good and poor practice that assist stakeholders to apply the Consumer Duty.

• Publish final outcome-based rules on the proposed Consumer Duty so firms can find new ways of serving their customers with clarity about our regulatory expectations. 

• Gather insights on consumers’ needs and experiences through our consumer research and partnerships work, for example on the impact of the cost-of-living crisis on consumers. Use those insights to inform our priorities and action.  

• Participate in the Financial Inclusion Policy Forum and work closely with the Government and other bodies to support consumer access to products and services under our consumer protection and competition objectives.
• Collect detailed information about access to cash coverage. Continue to supervise bank branch and ATM closures and conversions to help ensure fair treatment of customers. Continue to support the Government as it develops legislation to protect access to cash.
• We will amend our supervisory strategies and the way we prioritise to reflect the new higher standards of the Consumer Duty and reduce harm as quickly as possible by focusing initially on the highest priority issues and portfolios. 

Take quick and effective action

• Continue to use our regulatory toolkit, including our powers to enforce consumer protection legislation - eg Consumer Rights Act 2015, Consumer Protection Unfair Trading Regulations 2008 - to address harm where we see poor practice. 

• Increase in the number of our interventions on non-compliant financial promotions by authorised firms (interventions means using our regulatory tools to reduce potential or actual harm to consumers/markets).

An increase of interventions over the next three years indicates that we are more effectively able to address promotions that are likely to lead to mis-selling and financial losses. We anticipate an increase over the next one to two years, followed by a flattening. 

• Increase in the number of warnings on our website relating to unauthorised entities.

A rise in the number of warnings issued over the next three years signals that we are more effectively able to address activity by unauthorised entities that potentially leads to mis-selling and financial losses. We anticipate an increase over the next one to two years, followed by a flattening. 

• Reduction in the proportion of consumers investing in high-risk investments whose general tolerance to risk is very low or who demonstrate characteristics of vulnerability (measured through our Financial Lives survey).

This metric indicates that our interventions are helping to ensure consumers invest in products better suited to their needs and circumstances.

• Prepare for a role in giving firms permission to approve financial promotions. This depends on legislative changes.  
• The Treasury says it wants to legislate for a gateway for authorised firms wanting to approve financial promotions for unauthorised persons. We expect to include information about firms’ permissions to approve promotions on the FCA Register[12].

• Help to ensure consumers have access to high-quality information and to understand the risks of their investments. Our proposals in CP22/2[15] to strengthen the consumer journey into high-risk investments will help us achieve this. We intend to publish our final rules in summer 2022.

• We have proposed new rules to increase the information consumers get to enable them to make informed decisions. Higher quality promotions will allow consumers to more easily identify suitable products that meet their investment needs and risk tolerance.
• Equip less experienced investors with ways to reduce risk, by using new and innovative channels. Our InvestSmart[13] campaign will help them to make well-informed decisions and avoid unaffordable risk. 

• Increase resource in intelligence and analytics, helping us to better spot and track potentially fraudulent activity and reduce the average amount of money lost to scams. 
• We are increasing resources for our work on non-compliant promotions by authorised firms, as well as activity by unauthorised firms which potentially leads to mis-selling and financial loss. This will reduce the potential for financial loss from scams and of authorised firms mis-selling high-risk non-standard investments.

Take quick and effective action

• Intervene swiftly and assertively against authorised firms issuing non-compliant financial promotions and against unauthorised firms conducting activity that could lead to mis-selling and financial losses.

• Embed consideration of ESG issues in how we authorise firms and individuals, considering factors such as Diversity and Inclusion (D&I), the nature of the firm and the products/services it wants to offer.

Build on the regulatory framework by:  

• actively monitoring the effective implementation of disclosures by firms and listed companies 
• working with the Government in support of its ambition in green finance  
• leading the ongoing development of a labelling regime for investment products and an effective ESG ecosystem to support integrity in the market for ESG-labelled securities 
• engaging proactively on the design and governance of transition plans 
• strengthening investor stewardship 
• driving improvements in outcomes through D&I transparency, and consulting on this in summer 2022  
• delivering thought leadership internationally, eg through our role as co-chair of the IOSCO Sustainable Finance Taskforce[15] workstream on issuers’ sustainability disclosures, promoting global solutions to global problems 

To support this, we will be transparent in our approach to managing our own climate-related risks and opportunities. In 2022, we’ll publish a report covering the recommended disclosures of the Task Force on Climate-related Financial Disclosures[16] (TCFD). 

Work with international regulators and the FinTech community to solve global problems through innovation. We will continue to work with stakeholders to: 

• enable innovation through our dedicated facilities, such as our Sandbox, building on our November 2021 TechSprint, recent Green FinTech challenge and Digital Sandbox 
• help ensure the industry can address common ESG-related challenges collectively and in line with competition law 

Help ensure consumers:

• can get relevant, targeted key information on the ESG products and services available to them, including through our work on product labelling and consumer-facing product disclosures 
• have the information they need to make informed choices about the ESG credentials of the firms they interact with 

• Monitor firms and take enforcement action as needed on how they manage the impacts, risks and opportunities from ESG issues, including how they ensure customers are treated fairly. We will develop new interventions as necessary. 

Take quick and effective action

• Embed ESG across the organisation so that more of our staff are empowered to take action. We will identify where firm practices do not meet our expectations (eg greenwashing) and intervene swiftly to protect consumers.

• Reduction in impact (scale, severity, time to remediate) of operational disruptions to firms’ important business services, as measured by FCA Technology, Resilience & Cyber Department. 

To measure our success, we will develop a new metric based on the volume, scale, severity, and time to remediate operational disruptions. While developing this metric, we will monitor the overall number of operational incidents. 

• Our authorisation process will include a consideration of how firms that are subject to the Operational Resilience Policy have ensured they meet the expectations of the policy, including the identification of Important Business Services and setting of Impact Tolerances.

• Launch – with the Bank of England and Prudential Regulation Authority (PRA) – discussion on Critical Third Parties (CTPs) in 2022. This Discussion Paper (DP) will propose an oversight regime for the supervisory authorities to set resilience standards, a testing approach, and enforcement powers for CTPs. We intend to use responses to the DP to inform a consultation in 2023.
• We will keep refreshing our approach to firms reporting incidents to us and the PRA, to make it clearer for firms what, when and how they should be reporting. 

• From 31 March 2022 to 31 March 2025, we will assess how able firms are to remain within their impact tolerances – the maximum tolerable amount of disruption to an important business service – ahead of the 31 March 2025 deadline, from which point they will need to show they can remain within their impact tolerances. 

• We will measure our success by how effectively we respond to any change in our remit, accountability arrangements or wider obligations and how we embed firm facing requirements from legislation into our rules.  In the longer term, when any legislative changes have been fully implemented, we will also consider consumer and firm confidence in the FCA and UK financial system.

This metric, and others about the whole financial system and the FCA, are clearly affected by many other factors. So we will consider other ways of assessing the effectiveness of our work in this commitment. 

• We will continue to assess and monitor the regulatory pipeline through the Regulatory Initiatives Forum and Grid, to understand the impact of the transfer on firms.

• Continue to work with the Treasury to design and deliver a new regulatory framework that will transfer firm-facing requirements from legislation into our Handbook.
• Prepare to implement any changes if the Treasury proposes legislation that will change our remit, accountability arrangements or wider obligations (for example, new processes around our rule-making or cost benefit analyses). Help the Treasury prepare any legislation needed to deliver the new framework.

The regulatory framework is clear, well-understood and trusted by all market participants.  

The framework supports market participants in determining fair value. 

Where outcomes are not being met, this is clearly communicated, and remediation is swiftly undertaken or enforced.  

• Working with partners, maintain the UK’s top 5 position in the New Financial global financial centres index. 

This measures the overall financial activity across all sectors and considers qualitative factors related to overall economic performance. It ranks different jurisdictions based on these factors. Our contribution to this is important, but it is also affected by other factors.

• Increased proportion of cases meeting authorisation turnaround targets for wholesale funds, regulated activities, and capital markets.

These measure how quickly we approve new and changing regulated businesses, funds and capital market transactions. This can be skewed by high volumes and/or low quality of applications. 

• Enhance our capacity to approve listed issuers onto UK capital markets.

• Start the transfer of the regulatory framework from legislation into FCA rules through the future regulatory framework.

• Begin a programme of market studies on market data, starting with trade data. 
• Review and update the wholesale markets regulatory framework including Primary Market Effectiveness and Wholesale Market Review projects. 
• Review and develop with the Treasury appropriate regimes for overseas firms to access the UK markets.  
• Further enhance international relationships and contribute to developing international standards, and their subsequent implementation.  
• Support innovation through our flexible approach to regulation eg through launching the financial market infrastructure (FMI) sandbox[20].   

• Reduction in ‘sludge’ and other harmful digital design features in areas where we have taken action. By sludge we mean the excessive friction that hinders consumers from making informed decisions by taking advantage of their behavioural biases.

We will develop appropriate measures for this in different products and services. 

Support competition and innovation

• Work with the Government and stakeholders on the new pro-competitive regime for digital markets.
• We will be proactively identifying the competition risk and benefits from Big Tech entry in financial services to inform our future work.

• Begin to robustly investigate digital consumer journeys across prioritised areas to ensure consumers are empowered to take decisions in their best interest. 

• Engage and collaborate with other regulators in the Digital Regulatory Cooperation Forum (DRCF) on digital markets issues and other online regulatory matters. Our DRCF 2022/23 workplan outlines our priorities for the coming year. 
• Publish a joint discussion paper with the Bank of England on artificial intelligence in financial services.