As the UK rolls into the New Year, the country’s Financial Conduct Authority (FCA) has underscored the importance of the financial sector to Britain’s economic performance.
However, the financial regulator has also highlighted the need for continued consumer protection, building on previous efforts in this area over 2023. The regulator is currently in the second year of its three-year strategy, which includes harm reduction as a core goal.
Moving into 2024, the FCA expects the Consumer Duty – introduced in July last year – to continue to play an important role in shaping financial sector actors’ business activity.
The duty ‘marks a major shift for both firms and consumers’, the regulator asserts, by setting ‘higher and clearer standards’ of consumer protection across financial services, with companies having already made changes to savings rates and fees as a result.
‘The financial services sector is vital to the UK economy, and we are committed to supporting its role in long-term economic growth,” said Nikhil Rathi, Chief Executive of the FCA.
“At the same time, our commitment to reducing and preventing harm remains unwavering, and the introduction of the Consumer Duty reaffirms this.”
Against the backdrop of the costs of living crisis, providing support for financially struggling consumers remains another priority. Reflecting on 2023, the FCA highlights how it has banned certain debt advice providers from receiving referral fees from debt solution providers.
This serves to limit potential unnecessary fees faced by indebted people and ensure debt advice providers are acting in consumers’ best interests and not in the interests of profit.
In addition, the regulator has worked with ‘almost 100 lenders’ throughout the year on treating mortgage and consumer credit borrowers in financial difficulty, calling for ‘significant improvements from many’.
Consumer support has been extended to cover actions made by the FCA. The authority has acted to reduce online financial harms, particularly with regards to investments such as cryptoassets.
In October 2023, financial promotions rules for cryptoassets were introduced, which the FCA explained ‘have been designed to help people make informed decisions about where they put their money’.
Lastly, to shape and guide the UK financial services sector throughout 2024, the FCA remains set on the development and maintenance of regulatory frameworks, with a goal to promote competitiveness and drive long-term growth.
The authority is currently in the process of assembling a panel to scrutinise cost-benefit analyses and is working with parliamentary committees on enhancing accountability mechanisms, the latter in line with the greater policy making powers it gained post-Brexit.
Rules are currently under review to ensure ‘they remain right for the UK market’ given changing political and macroeconomic situations, and the FCA asserts that it is working to shape domestic and international work on sustainability disclosures to shore up the UK’s global market standing.
The FCA’s ambitions for UK finance – and the country’s leadership position in global financial markets – mirror the ambitions of the Conservative Party government, which has earmarked fintech as a key area of focus.
PM Rishi Sunak has been particularly vocal in his desire for fintech to play a leading role in Britain’s economic growth and development. Meanwhile, in the Autumn Budget, Chancellor of the Exchequer, Jeremy Hunt, unveiled plans to invest £500m in tech development, particularly Artificial Intelligence (AI).
However, UK finance has been cautioned that there are other areas that require improvement – notably, the Future of Payments Review called for progress on Open Banking.
This call has been echoed by others across the financial sector and is currently the focus of a joint FCA and Payments Systems Regulator (PSR) probe, the Joint Regulatory Oversight Committee (JROC).