Our Business Plan details the work we'll do over the next 12 months to help deliver the commitments in our Strategy.
Introduction
Business Plan 2024/25: Quote image
People across the UK rely on the financial services sector, whether for their bank account, mortgage or pension. The sector employs more than 1.1 million people and, alongside related professional services, contributes an estimated £100bn in tax per year. Our role is to ensure that financial services markets function well. We are the financial conduct regulator of firms and markets in the UK and the prudential supervisor for the vast majority of (non-systemic) firms we regulate.
Our operational objectives are to:
- protect consumers [1]
- protect the integrity of the UK financial system[2]
- promote effective competition in the interests of consumers[3]
We have a secondary objective[4] to facilitate the international competitiveness of the UK economy and its growth in the medium to long term, subject to alignment with international standards.
Our 3-year Strategy[5] sets out how we will achieve these objectives, focusing on:
- reducing and preventing serious harm
- setting and testing higher standards
- promoting competition and positive change
We have published outcomes and metrics[6] to measure our progress. We will update on our performance in the summer, including against metrics on our new objective to support the international competitiveness and growth[4] of the UK economy in the medium to long term.
Business Plan 2024/25: Our 3 strategic themes image
The challenges for the year ahead
Although there are some encouraging signs, the economic and geopolitical landscape remains uncertain. Many consumers and businesses continue to struggle with the impact of higher inflation and borrowing costs.
Challenges we are monitoring include:
Higher interest rates and persistent inflation: Inflation has fallen back relatively sharply in recent months but remains above the Bank of England’s 2% target. The restrictive stance of monetary policy is weighing on activity in the real economy and leading to a looser labour market. Looking ahead, monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term.
Global financial risks: adjustment to higher interest rates can pose problems for firms in advanced economies when servicing their debts, with riskier market-based corporate borrowing particularly vulnerable. High levels of public debt in major economies could affect UK financial stability.
Geopolitical risks: remain high, dampening global growth and affecting shipping and trade, with the potential for shocks to cause severe disruption.
Our focus for 2024/25
Focus chapter icon
Our areas of focus for the year ahead take into account the external environment and the new regulatory framework. They are based on this being the final year of our 3-year strategy.
Protecting consumers: We will continue to test higher standards through embedding the Consumer Duty. We will seek to support long-term financial wellbeing for consumers and unlock innovation in retail investment markets through our work on the Advice Guidance Boundary Review. We will work with regulatory partners to ensure pension products deliver value for money. We are also working to ensure that consumers better engage with their pensions. We continue to develop our use of Artificial Intelligence (AI) to help prevent fraud and scams to improve the experience of consumers and firms when they contact us.
Ensuring market integrity: We monitor risks in markets and take action where appropriate. We will finalise far-reaching capital markets reforms. We will continue to lead the debate on how the right form of regulation can support growth for UK markets, with a number of significant policy changes in or approaching consultation. We will continue to invest in our data and technology to support rigorous market oversight.
Promoting effective competition: We will continue to promote competition and innovation to deliver good outcomes for consumers. We will identify where more effective competition can better deliver fair value outcomes under the Consumer Duty. We will continue to look to market reforms that bring the benefits of innovation and digitalisation.
Our secondary international competitiveness and growth objective: We will focus on embedding our secondary objective to facilitate international competitiveness of the UK economy. By enabling the drivers of productivity[7], we can facilitate medium to long-term growth and competitiveness in a way that can secure better outcomes for all consumers, including through greater variety, price and quality of products and services.
We want to improve the attractiveness and global reach of UK wholesale markets. We will provide opportunities for financial services companies to invest, innovate and expand in the UK through our Sandboxes and Innovation Pathways, TechSprint programmes and our leadership of the Global Financial Innovation Network. We will continue to make it quicker and easier for firms and people to apply for authorisation and we will strengthen our data collection processes to reduce the burden on businesses.
Business Plan 2024/25: Our people image
Our people: We could do none of this without our people. To help meet our growing remit, our workforce will be more than 5,000 by the end of March 2024. We continue to focus on ensuring we have the right skills to achieve our business objectives sustainably.
Operational resilience: We will continue to invest in our operational effectiveness and resilience. We will make sure plans are in place in the event of disruption, to protect our colleagues and consumers, ensure market integrity and promote effective competition.
Our commitments
Our commitments chapter icon
We will continue to deliver our 13 public commitments, focusing on:
- reducing and preventing financial crime
- putting consumers’ needs first
- strengthening the UK’s position in global wholesale markets
Business Plan 2024/25: Our 13 commitments image
Commitment 1: Reducing and preventing financial crime
Business Plan 2024/25: Commitment 1 image
In the past 12 months, 2 national strategic documents have been published; the Economic Crime Plan[8] (March 2023) and the Fraud Strategy[9] (May 2023). Our supervision and regulation play an important role towards achieving the national ambition to reduce and stop financial crime.
We will continue to take a data-led approach to identify potential harm for supervisory and/or enforcement action. This will include continuing to take assertive action to tackle scams and fraudulent websites. The financial services sector must continue to take the lead here, but other partners and sectors also play a vital part. We will continue to work with partners to support system-wide improvements as well as using our powers through the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) to improve standards in the legal and accountancy sectors.
Outcomes we want to achieve
- slow the growth in investment fraud victims and losses
- slow the growth in Authorised Push Payment (APP) fraud cases and losses
- reduction in financial crime by lowering the incidence of money laundering through the firms we supervise directly and by improving the effectiveness of supervision by professional body supervisors
Key activities we will start in 2024/25
Increase investment in our systems to use intelligence and data more effectively within our financial crime work, so we can target higher risk firms and activities.
Key activities we will continue in 2024/25
- Use our powers to disrupt, pursue and sanction those committing and enabling financial crime.
- Improve our capabilities to identify and request platforms remove unauthorised financial promotions, associated websites and social media accounts.
- Raise awareness of fraud through our consumer campaign[10].
- Active engagement with partners including the National Economic Crime Centre (NECC) to strengthen the system-wide response to financial crime.
- Expand our intelligence-gathering capabilities and analytics to better spot and track more potentially fraudulent activity and reduce the average amount of money lost to scams.
- Strengthen our proactive supervision through the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), so that we drive improvements in the legal and accountancy sectors.
- Focus on proactive assessments of anti-money laundering systems and controls for those firms deemed higher risk.
- Use data to target the firms that are more susceptible to receiving the proceeds of fraud and ensure they do more to stop the flow of illegitimate funds.
- Strengthen our supervision of firms’ sanctions systems and controls.
Commitment 2: Putting consumers’ needs first
Business Plan 2024/25: Commitment 2 image
The Consumer Duty came into force last year for products and services still on sale to new customers or available for renewal by existing customers. This represents a step change in our expectations of firms, with a significant focus on delivering good outcomes for all consumers. Firms must consider the diverse needs of all consumers when deciding how to deliver good outcomes, including the needs of consumers with characteristics of vulnerability.
From 31 July 2024, firms need to ensure that both open and closed products are delivering the right outcomes for consumers. We will continue to focus our interventions where there is greatest risk of harm or where more work is needed by firms to identify and address gaps and to meet the higher standards of the Duty.
Our wider work also includes our response to cost of living pressures, financial inclusion, access to cash and addressing consumer difficulties in accessing the financial products and services they need.
Outcomes we want to achieve
- firms act in good faith towards consumers, avoid causing them foreseeable harm and enable and support them to pursue their financial objectives
- consumers are sold products and services that meet their needs, characteristics, and objectives
- consumers pay a price for products and services that represents fair value, and poor value products and services are either improved to deliver fair value or removed from markets
- consumers are equipped with the right information to make effective, timely and properly informed decisions about their products and services
- consumers receive good customer service
- consumers have confidence in financial services markets
- the Consumer Duty encourages firms to innovate, supporting growth and driving effective competition in the interests of consumers
- appropriate access to financial services is maintained
- firms support consumers to sustainably manage their debts
Key activities we will start in 2024/25
- Multi-firm work and market studies across different sectors to drive up standards. For example, we will look at unit-linked pensions and long-term savings products to test the transparency of charges across value chains, how firms assess overall product value and their response where they identify unfair value. Our multi-firm work will also look at how swiftly the insurance industry responds to claims, including where customers are more likely to show characteristics of vulnerability.
- A review of firms’ treatment of customers in vulnerable circumstances.
Key activities we will continue in 2024/25
- Supervisory work to test firms’ implementation of the Consumer Duty and to improve firms’ delivery of good consumer outcomes. This includes complaints-handling and root cause analysis, consumer support journeys, consumer understanding, fair value and closed products and services.
- Continue our work to ensure people with savings receive a fair deal and are kept informed of better rates.
- Finalise changes to our mortgage, consumer credit, and overdraft rules to improve outcomes for consumers in financial difficulty.
- Implement new rules to ensure consumers and businesses have reasonable access to the cash they need and continued supervision of branch closures.
- Combine insights on consumers’ needs through our research and partnerships to inform our supervisory and enforcement action.
- Ongoing work exploring the role of technological solutions in enabling financial inclusion, including through a Financial Inclusion TechSprint.
- Consult on changes to our debt advice rules to improve outcomes for vulnerable consumers.
- Undertake an impact evaluation of the effect of our interventions for persistent debt following our Credit Card Market Study.
- Work with the Government and other partners to support consumer access to products and services and tackle financial exclusion. Ensure a cross-sector response to sustained cost of living pressures via the UK Regulators' Network, including for customers in financial difficulty with multiple forms of debt.
Commitment 3: Strengthening the UK’s position in global wholesale markets
Business Plan 2024/25: Commitment 3 image
We want the UK to continue to strengthen its position in global wholesale markets and also to host markets which support the domestic economy and growth. We want markets which are open to innovation, underpinned by high standards of market integrity and investor protection.
Outcomes we want to achieve
- The regulatory framework is clear, well-understood and trusted by all market participants. It supports them to determine fair value. Firms understand and meet our expectations of their conduct and where there are failings, these should be swiftly remediated.
- Market participants view the UK as one of the top markets of choice, recognising innovation is encouraged and supported and regulation as appropriately evolving to address new opportunities and risks.
- Market participants regard the regulatory framework as proportionate in terms of speed and cost.
- Taken together, our interventions contribute toward sustainable growth in the UK economy.
Key activities we will start in 2024/25
Encourage innovation and evolving markets by supporting industry work on T+1 settlement which will increase efficiency.
Key activities we will continue in 2024/25
Updating the regulatory framework
- Deliver our ambitious set of Primary Market policy reforms - concluding our review of the Listing Regime and publishing proposals for a new public offer and admission to trading regime.
- Consult on regulatory changes to introduce more options on how to pay for investment research.
- Ensuring venues are able to deal with and remain resilient in extreme events, including consulting on our proposals for the commodity position limits regime.
- We will ensure derivative markets are ready to implement the new derivative reporting rules under the UK European Market Infrastructure Regulation (UK EMIR) in September 2024. We will continue to ensure the orderly transition away from LIBOR.
Encourage and support innovation and evolving markets
- Work with the Bank of England to support the Treasury’s objective of creating the Digital Securities Sandbox, which will open to applications during 2024.
- Work with the Treasury to meet the Government's objective of launching an intermittent trading platform (Private intermittent Share and Capital Exchange Service (PISCES)) by the end of 2024.
- Work on finalising the design and implementation of the consolidated tape for bonds, before deciding on the approach for equities.
- Concluding our consultation on transparency for bonds.
- Support asset management industry groups on tokenisation.
- Ensure the regulatory framework is proportionate in speed and cost, and support company compliance. We will confirm our final rules for the Overseas Fund Regime applications gateway and will be modernising our authorisations processes during 2024.
Improving our own performance
- Focus on strengthening our capability and capacity through people, technology and data to predict and make us more responsive to heightened market volatility and events in global markets.
- Improve market integrity through increased expertise, capacity and capabilities to carry out increased market monitoring of fixed income and commodities markets.
- Continuously improve how we authorise funds, firms and approve people, recognising the importance of an efficient application process.
Commitments 4-13:
Business Plan 2024/25: Commitment 4 image
Preparing financial services for the future
Business Plan 2024/25: Commitment 5 icon
We have invested significantly in implementing the Treasury’s Future Regulatory Framework, now referred to as its Smarter Regulatory Framework[11] (SRF). This has enabled significant progress, so much so that we no longer consider this needs to be such a highly prioritised commitment as in 2022/23. But this implementation work will continue to be an important programme for us over 2024/25.
Ongoing work this year:
- The Financial Services and Markets Act 2023 enables firm-facing requirements in assimilated law (formerly known as retained EU law) to be moved to the responsibility of independent regulators. We will continue to work with the Treasury and other regulatory authorities to ensure an efficient and appropriately sequenced workflow of the repeal of this assimilated law and its replacement, where appropriate, with rules. We will tailor provisions appropriately to better suit UK markets.
- We will also continue to embed the changes to the regulatory framework, including our secondary objective, our cost benefit analysis, the review of our rules and our accountability.
Dealing with problem firms
Business Plan 2024/25: Commitment 6 icon
We continue to proactively detect and take action against problem firms and individuals.
Ongoing work this year:
- Increase our auto-detection capabilities of problem firms and individuals.
- Quickly identify, and where necessary cancel, those firms that do not meet Threshold Conditions.
- Use of the full range of regulatory tools to prevent harm to consumers and markets.
- Identify any barriers in our regulatory framework that might constrain our ability to take action.
Taking assertive action on market abuse
Business Plan 2024/25: Commitment 7 icon
We will significantly increase our capability to tackle market abuse, within a proportionate framework that supports innovation to lower industry costs.
Ongoing work this year:
- Increase our ability to detect and pursue cross-asset class market abuse. We will also build on our advanced analytics capabilities such as network analysis and cross-asset class visualisations. We will develop improved market monitoring and intervention in Fixed Income and Commodities, covering both market abuse and market integrity.
- As part of the SRF process, we will issue a discussion paper on transferring the MiFID data reporting regimes for transactions (RTS 22), and reference data (RTS 23). We will assist in delivering a proportionate market abuse regime for Crypto Assets and the PISCES facility.
- We will extend our data reporting supervision approach to European Market Infrastructure Regulation (EMIR), Securities Financing Transactions Regulation (SFTR) and Orderbook regimes. We will increase our resources and capability to influence international markets data strategy.
- We will publish the results of our peer review of market abuse systems and controls in providers of Direct Market Access.
- We will publish revised Market Cleanliness Data in Q3 2024, which will capture more anomalous trading compared to our existing metrics.
Reducing harm from firm failure
Business Plan 2024/25: Commitment 8 icon
Our aim is to minimise the adverse impact of firm failure on consumers and markets. It is also critical that we can respond to, and effectively manage, the impact of severe market shocks, especially given the current environment.
Ongoing work this year:
- As the increase in corporate insolvencies is expected to persist in 2024, we will continue to use data and horizon-scanning mechanisms to anticipate firms that are at risk of failure and make sure that we can respond appropriately in the event that they do to protect consumers and ensure market integrity.
- We will also continue to support industry by sharing relevant information we identify through our data, our new financial resilience return and our everyday work, such as examples of good and poor practice of wind down planning.
Our environmental, social and governance (ESG) priorities
Business Plan 2024/25: Commitment 9 icon
We are supporting the financial sector in driving positive change, including the transition to net zero and wider sustainability issues.
Ongoing work this year:
- We will integrate the Sustainability Disclosure Requirements and Investment Labels across the market, including the anti-greenwashing rule and guidance[12]. We will continue to expand the regime, starting with a consultation on Portfolio Management in 2024.
- We are continuing to engage on new and emerging risks with UK and international partners. We will be progressing our work on Transition Finance and preparing to have regard to a ‘Nature’ regulatory principle coming into force.
Shaping digital markets to achieve good outcomes
Business Plan 2024/25: Commitment 10 icon
As technologies continue to transform the way sectors operate, we need to manage the risks to capture the significant benefits to consumers and markets.
Ongoing work this year:
- Working with our stakeholders at home and abroad, we are assessing the impact of AI on UK markets to better understand the risks and benefits. We will build on our pro-innovation and technology-agnostic approach to ensure that the outcomes for consumers and markets are beneficial, while recognising there are risks and opportunities.
- We plan to publish the outcome of our Big Tech Call for Inputs on data asymmetry between Big Tech firms and other financial services firms[13]. We are also collaborating closely with the Digital Markets Unit in the Competition and Markets Authority on the new pro-competition regime for digital markets.
- We will continue to robustly investigate digital consumer journeys and firms using sludge practices.
- We are working with regulatory partners through the Digital Regulation Co-operation Forum[14] to drive greater co-operation on digital issues, including piloting an AI & Digital Hub to support innovators.
Improving the redress framework
Business Plan 2024/25: Commitment 11 icon
We want to ensure that consumers receive appropriate and efficient redress where things go wrong, the Claims Management Companies (CMC) sector delivers fair value and that firms that cause harm bear more of the cost of redress.
Ongoing work this year:
- We will continue our work on redress Guidance for firms, complaints reporting, the Advice Guidance Boundary Review, our proposed capital deduction for redress for personal investment firms and a review of lead generation in the CMC sector.
- We will continue our work on historic discretionary commission arrangements in the motor finance market, during the ongoing pause[15] in the deadline for firms having to resolve complaints and our analysis of the issues and the legal steps which may be necessary. We aim to set out our next steps on this in Q3 2024.
- We will continue to work with the Financial Ombudsman Service and the Financial Services Compensation Scheme on ensuring open working practices on areas we share, using the enhanced wider implications framework[16] (WIF).
Enabling consumers to help themselves
Business Plan 2024/25: Commitment 12 icon
Technological developments make it easier and faster than ever to engage in financial services activity. Consumers need good information to make good decisions – particularly in a challenging economic environment. But this doesn’t always happen. Instead, they’re often targeted with adverts that are unclear, unfair, misleading or unlawful.
Ongoing work this year:
- We will continue our robust assessments of firms’ applications to approve financial promotions for unauthorised firms. Since February 2024, our Register now includes information about firms’ permissions to approve promotions.
- Using new sources of data, we will act quickly against authorised firms approving and issuing non-compliant financial promotions and unauthorised firms whose activity could lead to mis-selling and financial losses.
- We will continue our supervision of cryptoasset firms’ financial promotions, increase our technological capability to detect harmful financial promotions, develop our InvestSmart[17] and Consumer Awareness (currently ScamSmart[11]) campaigns and our work with social media platforms and search engines.
- Following the Online Safety Act, we will continue our work with OFCOM to successfully implement the legislation for financial services.
- We will publish a response following last year’s Advice Guidance Boundary Review[18] discussion paper. This will set out options for future legislative and regulatory reform to enable consumers to have access to the help and guidance they need, at a cost they can afford, to make informed decisions.
Minimising the impact of operational disruptions
Business Plan 2024/25: Commitment 13 icon
Operational disruptions can prevent consumers accessing essential financial services, disrupt markets and threaten confidence in the sector. Firms still face a high, and growing, level of cyber threats and operational resilience risks, against a complex geopolitical backdrop. We are also seeing increasing levels of systemic risk build up in the system due to reliance on critical third parties.
Ongoing work this year:
- We continue to deal with firms that cannot meet our standards on operational resilience. From 31 March 2025, all relevant firms will need to maintain their important business services without intolerable harm to consumers and markets.
- We intend to publish a consultation paper clarifying our expectations on how firms should report operational incidents to us. This will help ensure that we – and firms - are responding effectively to minimise harm to consumers and markets.
- Our Consultation Paper[19] proposes new rules to address the systemic risk that critical third parties present to the financial sector.
Improving oversight of Appointed Representatives
Principal firms are responsible for ensuring their Appointed Representatives (ARs) comply with our rules. But many principals do not adequately oversee their ARs’ activities. Consumers are at risk of being misled and mis-sold, while misconduct by ARs in the financial sector can undermine market integrity. New rules and guidance came into effect on 8 December 2022. These aim to improve principals' oversight of their ARs, increase the information they give us and raise standards across financial services.
Ongoing work this year:
- We will continue to target our resources through deeper analysis of existing data and using significantly improved data, including from updated Gateway forms, new regulatory returns and a dataset covering all ARs.
- We will continue to strengthen our scrutiny and engagement with principal firms as they appoint ARs.
- We will continue our assertive supervision of high-risk principals, through our regulatory tools and appropriate enforcement action.
Our Budget
Budget chapter icon
Our annual budget is driven by:
- the cost of our core operating activities (our ongoing regulatory activity, ORA), primarily our workforce
- the exceptional projects we undertake, and
- capital expenditure to develop our technology and information systems, and new regulatory and operational requirements
Annual Funding Requirement
In 2024/2025, our annual funding requirement (AFR) is £755.0m, an increase of 10.7%. The funding includes:
- our ongoing regulatory activities (ORA) budget, and
- the costs of exceptional projects we need to recover for changes to our regulated activities and new initiatives
The actual fees we collect will reflect the AFR net of rebates from financial penalties collected (forecast at £35.1m).
We will provide additional detail on how the AFR will be distributed across fee-payers in our annual fees rates consultation paper which will be published in April 2024.
The ORA budget
The ORA budget is a significant part of ensuring we meet the commitments in the Business Plan and continue delivery of our 3-year strategy. The budget shows the base ORA budget increasing by 8.7% (£58.1m).
The ORA budget also includes new charges to reflect changes to our responsibilities for Consumer Duty and the Financial Promotions Regime. The addition of these gives a rebased ORA budget of £729.1m, representing an overall 9.7% increase on last year.
Exceptional projects
We raise fees for exceptional projects to extend our regulatory remit and implement government initiatives and legislation. This helps us promote innovation and competition through our regulatory work. It enables us to reduce harm to consumers and help them make more informed choices.
Advice Guidance Boundary Review
Invest £1.9m icon
Access to cash
Invest £2m icon
Open Banking/Open Finance
Invest £1.2m icon
Credit Information Market Study Interim Working Group
Recover icon
Smarter Regulatory Framework
Invest £11.3m icon
InvestSmart
Invest £2.3m icon
Cryptoassets
Recover icon
Funeral Plans
Recover icon
Financial Promotions and Pensions Dashboard
Financial return icon
Capital expenditure
Our capital expenditure budget reflects the ongoing delivery of IT systems and infrastructure development and refresh. Capital expenditure is largely funded through the ORA depreciation charge.
| £m | 2024/25 | 2023/24 |
|---|---|---|
|
IT systems development and infrastructure |
38.6 |
40.0 |
|
Property, plant and equipment |
4.6 |
6.1 |
|
Total budget |
43.2 |
46.1 |
Note: capital budget restated for prior year