The financial services sector in the UK is undergoing rapid evolution, driven by regulatory shifts, technological advancements, and the dynamic nature of global markets. For compliance, risk, and business managers, staying ahead of these changes is crucial. Drawing insights from the Financial Conduct Authority’s (FCA) focus for 2023-2024, we outline the key compliance themes and high-risk areas for 2024, offering a roadmap for strategic adaptation.
Strengthening data and technology-led regulation
The FCA emphasises the importance of leveraging technology and data analytics to enhance regulatory compliance. Firms should prioritise investments in digital capabilities and data solutions to ensure compliance and improve operational effectiveness. This includes adopting cloud technologies, automating analytics to detect consumer harms more efficiently, and enhancing cyber security and operational resilience.
Adapting to regulatory changes in cryptoassets and BNPL
The inclusion of certain cryptoassets within the FCA’s regulatory scope and the expansion to include deferred payment credit products highlight the need for firms to adapt to new regulatory landscapes. Compliance strategies should incorporate the necessary systems and procedures to manage these emerging products responsibly.
Prioritising consumer protection
With the Consumer Duty coming into effect, firms are required to put consumers’ needs first, ensuring that products and services are designed to meet their needs and offer fair value. This shift necessitates a review of product offerings, pricing strategies, and customer engagement practices to align with the heightened standards of consumer protection.
Combatting financial crime
The fight against financial crime remains a top priority, with a focus on reducing and preventing scams, fraud, and money laundering. Firms must enhance their anti-financial crime measures, utilising technology to improve detection and prevention capabilities, and ensuring robust systems and controls are in place to protect consumers and the integrity of financial markets.
Strengthening market integrity and global position
Ensuring the UK’s markets remain attractive on the global stage requires a concerted effort to maintain market integrity and embrace innovation. Firms should focus on improving market surveillance, enhancing transparency, and fostering an environment that supports technological advancements and sustainable growth.
As the UK’s financial sector continues to navigate through a period of significant change, compliance, risk, and business managers must remain agile, informed, and proactive. By focusing on these key areas and aligning strategies with the FCA’s objectives, firms can not only mitigate risks but also seize opportunities for growth and innovation. Adopting a forward-looking approach to compliance will be instrumental in navigating the complexities of the regulatory environment in 2024 and beyond.
This blog offers a condensed overview of the FCA’s focus areas and strategic implications for firms. For a more detailed understanding, refer to the FCA’s Business Plan for 2023/24.