The Financial Conduct Authority has published its 2023/24 business plan, and chief executive Nikhil Rathi says it “remains committed to becoming a more assertive, adaptative and innovative regulator”.   

The watchdog says its work will focus on three board areas:  

• reducing and preventing serious harm  
• setting and testing higher standards   
• promoting competition and positive change  

Rathi says rising interest rates and high inflation has led to a cost-of-living crisis which “has left many consumers face significant financial pressure”.  

He adds: “Our role is to make sure firms treat customers fairly, support those in difficulty and give them the information they need to make good decisions.  

“The Consumer Duty which comes into force on 31 July will play a key role in underpinning this work, including for vulnerable consumers.”  

The watchdog will spend £5.3m administering Consumer Duty this year, which it says will “fundamentally improve how firms serve consumers” by setting out “higher and clearer standards of consumer protection across financial services”.  

It adds that it will “make Consumer Duty an integral part of our regulatory approach and mindset at every stage of the regulatory lifecycle — including authorisation, policy development, supervision and enforcement priorities and processes.   

“We will focus initially on the highest priority issues and firms.”   

The FCA annual budget is £684.2m, up 9.5% from a year ago, with which it will oversee the UK’s 60,000 regulated financial firms, including the mortgage industry’s roughly 100 lenders and 18,000 brokers and broker firms.  

The body says it wants to see “stronger oversight by principal firms” over appointed representatives that act for them following new guidance it introduced last August.  

It adds: “Principal firms are responsible for ensuring their appointed representatives comply with our rules.   

“But many principals do not adequately oversee the activities of their appointed representatives.   

“Consumers are at risk of being mis-led and mis-sold, while misconduct by appointed representatives in the financial sector can undermine market integrity.   

The regulator will “test that firms are properly embedding the new rules across the appointed representative regime”.  

The body also plans to deal more quickly with problem companies.  

It says: “Firms who don’t meet our minimum standards put consumers and markets at risk.

“To reduce these risks, we are acting faster and identifying consumer harm more proactively. We will continue to develop and enhance data-led and assertive capabilities in our proactive identification of problem firms.”  

On customer complaints, the watchdog says it wants to improve “redress when things have gone wrong.   

“Too many firms fail owing redress to consumers. We want to see more consumers get redress from the firm that owes them money so that a smaller proportion of the costs are passed on to other regulated firms.”  

It adds that it is “encouraging” that the Financial Services Compensation Scheme levy “has been steadily decreasing in recent years”.  

But to improve this, the FCA will consult on guidance for firms on redress calculations this year and review its rules on access to the Financial Ombudsman Service for small- and medium-sized enterprises.  

It will also develop new proposals to improve complaints reporting to “spot issues earlier”.  

The FCA says the year ahead, across the world and in the UK economy, is “highly uncertain”.   

FCA’s Rathi says: “Over the past year we have seen record levels of volatility. We expect the economic and geopolitical environment to remain highly uncertain over the year ahead.   

“While there are some positive developments in the UK economy the situation will remain uncertain over the coming year, including a heightened risk of firm failure.   

“Events over recent weeks including the resolution of Silicon Valley Bank UK and interventions in relation to Credit Suisse have underlined this.”  

The body says “key uncertainties” in 2023 include interest rate and inflation levels.  

Aslo, whether unemployment rises more than currently projected, as the Bank of England forecasts “a wide range” of possible unemployment rates between the fourth quarter of 2022 and the first quarter of 2026 of between 3% to 8%.  

The regulator adds that potential further declines in household disposable incomes and the prospect of further market volatility may also hurt the UK economy.