FCA Business Plan: Regulator steps up tech focus for 2024/25

FCA business plan consumers in public stock image

The Financial Conduct Authority (FCA), the UK’s financial regulatory body, has released its annual Business Plan for 2024/25, which outlines its key objectives and regulatory priorities for the next 12 months.

The Business Plan restates the FCA’s three main areas of focus:

  • Reducing and preventing financial crime
  • Putting consumers’ needs first
  • Strengthening the UK’s position in global wholesale markets

This period will mark the final phase of its three-year strategy (2022-2025) to drive positive change and create a more customer-focused environment within financial services.

It’s also set to further the ambition of becoming a more ‘outcomes-based, assertive and data-led’ regulator that’s able to meet the challenges of a fast-evolving market landscape.

The FCA’s Business Plan 2024/25: At a glance…

The regulator continues its commitment to protecting consumers from harm

Whilst there are some signs that the economic climate may be returning to relative normalcy after a few challenging years for consumers and businesses alike, the regulator remains committed to addressing the numerous financial challenges putting UK consumers at risk of financial harm. These include geopolitical uncertainty, global financial risks and above-average inflation.

To this end, the FCA has outlined three primary goals that tie into the vision outlined in its three-year strategy:

  • Protecting consumers
  • Ensuring market integrity
  • Promoting effective competition
The green light for new technologies

Crucially, the regulator repeated its assertion that embracing new technologies will form a large piece of this puzzle, providing firms with the visibility and level of granular detail needed to address emerging risks and promote a more personalised service for customers.

Contextualising the agenda for the next 12 months, FCA Chief Executive, Nikhil Rathi noted that the regulator is committed to “embracing the potential benefits that technology presents both for us and the firms we regulate, while also continuing to protect consumers and ensure market integrity.”

What does this mean for firms?

It’s clear that the FCA sees the future of financial services as an increasingly digitised environment – with technological advancement helping to fill the monitoring gaps left by firms’ existing, manual-focused oversight strategies.

The FCA sets its sights on tackling vulnerability and poor outcomes

A core component of the FCA’s mission to protect consumers from poor outcomes will be testing firms to see if they’re adhering to the Consumer Duty – which came into effect in July 2023 for new and existing products and is set to be enforced for closed products from 31st July this year.

It’s also worth noting that the regulator has recently announced a review of firms’ treatment of vulnerable customers, signalling it will be ramping up its efforts to safeguard at-risk individuals and ensure firms are taking proactive measures to ensure good outcomes for customers.

Dedicated technology tools to help improve oversight and evidencing

And that means now’s the time for firms to be conducting an honest evaluation of their customer lifecycle if they haven’t already – and investing in new technologies for better oversight that will allow them to ensure they’re doing all they can to highlight vulnerability and deliver personalised support.

Tech focus: Business Plan highlights growing role of technology to support compliance

As part of its efforts to cement itself as a ‘world-class regulator’, the FCA will continue its investment in smart analytics and process automation for both supervisory and enforcement applications. These tools are expected to help to identify and react to emerging risks in a quicker, more agile and efficient manner, allowing it to target higher risk firms and activities.

Indeed, the regulator notes it’s now ‘making better use of data to spot and stop harm faster and is being tougher on the firms that could cause harm’ – having removed more than 10,000 potentially misleading advertisements in 2023 and issued around 2,243 warnings regarding unauthorised firms and individuals.

Advice to leverage technology within oversight strategies

But not only that: the regulator is also eager for firms to take bold action to explore the possibilities of leveraging technology within their oversight strategies, having announced its intention to collaborate with firms on the ‘safe deployment’ of artificial intelligence (AI) systems over the coming year.

Almost a year after the launch of the Consumer Duty, firms should have a solid understanding of the data and MI they’ll need to conduct their processes and effectively promote good outcomes.

That means firms should actively explore their options for technological solutions—including AI-powered monitoring and QA tools such as Recordsure’s ConversationReviewAI—to fill any gaps in their existing oversight plan now.

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