The Financial Conduct Authority publishes 2024/2025 enforcement plans

In 2022, the Financial Conduct Authority (FCA) revealed a three-year plan outlining three primary elements for change. These include decreasing and averting significant financial harm and crime, establishing and evaluating loftier standards, and nurturing competition and beneficial change through increased regulatory transparency.

Currently in its final year, the FCA is concentrating on accomplishing a strong conclusion. As such, it recently publicised its Business Plan for 2024/25 (the Business Plan), which details challenges, focus areas, and strategies to deliver on its commitments in the upcoming 12 months. This alert investigates the regulator’s primary enforcement objectives and the planned steps for the next year to combat financial crime.

Reducing and preventing serious financial harm

The first focus of the FCA’s three-year plan is the minimisation and avoidance of grave financial damage. The FCA acknowledges that while only a minor fraction of authorised firms cause life-altering harm, it can occur rapidly. Here are six of the commitments that the FCA pledged to meet, centred on consumer protection by reducing and, when feasible, preventing harm:

• Handling problematic firms more swiftly and amplifying early intervention
• Enhancing the compensation framework and firms’ financial durability so that they can account for a substantial part of their compensation liabilities without dependence on the Financial Ombudsman Service or the Financial Services Compensation Scheme
• Decreasing harm from firm collapse, including the FCA exercising its powers more boldly to initiate insolvency processes to lessen harm
• Strengthening supervision of appointed representatives, with the FCA employing more assertive supervision of high-risk principals through regulatory instruments and suitable enforcement action
• Minimising and averting financial crime, which includes the FCA intensifying scrutiny on firms and mandating them to have solid financial crime systems and controls. The FCA stated firmly that it won’t hesitate to utilise its enforcement powers to chase and penalise those committing, or aiding, financial crime
• Taking decisive action against market abuse, including making sure firms and issuers adequately shield inside information and report it to the market accurately and promptly when necessary. The FCA also acknowledges the significant role different data, intel, and artificial intelligence (AI) tools will play in identifying and thwarting market abuse

Tackling financial harm in 2024/2025

The FCA’s Business Plan for 2024/25 clearly indicates that the key enforcement objective is to reduce and prevent financial crime.

The Business Plan details the intended outcomes that will guide the FCA’s approach to combating financial crime in the next 12 months, namely:

• Decelerating the increase in investment fraud victims and losses
• Slowing the rise in authorised push payment fraud cases and losses
• Reducing financial crime by decreasing the incidents of money laundering in FCA-authorised firms and enhancing the effectiveness of supervision by professional body supervisors

To accomplish these outcomes, the FCA will commit itself to initiating, and continuing with, the following workstreams throughout 2024/25:

• Augmenting its systems’ investments to use intelligence and data more effectively within its financial crime efforts. This will ensure the FCA has enough resources to target higher risk firms and activities
• Utilising its powers more broadly to disrupt, chase, and penalise those committing and enabling financial crime
• Concentrating on unauthorised financial promotions by augmenting its detection capabilities and requesting their removal from platforms, related websites, and social media accounts
• Persistently raising fraud awareness through continuous campaign initiatives
• Actively collaborating with partners, including the National Economic Crime Centre, to fortify the system-wide response to financial crime
• Enhancing its intelligence-collection capabilities and analytics to better identify and trace potentially fraudulent activity and to lessen the average amount of money lost to scams
• Actively assessing anti-money laundering systems and controls implemented by firms perceived as higher risk
• Using data to target firms more likely to receive fraud proceeds and ensuring they do more to curb the flow of illegitimate funds
• Boosting its overall supervision of firms’ sanctions systems and controls