Business Plan 2024/25

We have invested significantly in implementing the Treasury’s Future Regulatory Framework, now referred to as its Smarter Regulatory Framework (SRF). This has enabled significant progress, so much so that we no longer consider this needs to be such a highly prioritised commitment as in 2022/23. But this implementation work will continue to be an important programme for us over 2024/25.

Ongoing work this year:

• The Financial Services and Markets Act 2023 enables firm-facing requirements in assimilated law (formerly known as retained EU law) to be moved to the responsibility of independent regulators. We will continue to work with the Treasury and other regulatory authorities to ensure an efficient and appropriately sequenced workflow of the repeal of this assimilated law and its replacement, where appropriate, with rules. We will tailor provisions appropriately to better suit UK markets.
• We will also continue to embed the changes to the regulatory framework, including our secondary objective, our cost benefit analysis, the review of our rules and our accountability.

We continue to proactively detect and take action against problem firms and individuals.

Ongoing work this year:

• Increase our auto-detection capabilities of problem firms and individuals.
• Quickly identify, and where necessary cancel, those firms that do not meet Threshold Conditions.
• Use of the full range of regulatory tools to prevent harm to consumers and markets.
• Identify any barriers in our regulatory framework that might constrain our ability to take action.

We will significantly increase our capability to tackle market abuse, within a proportionate framework that supports innovation to lower industry costs.

Ongoing work this year:

• Increase our ability to detect and pursue cross-asset class market abuse. We will also build on our advanced analytics capabilities such as network analysis and cross-asset class visualisations. We will develop improved market monitoring and intervention in Fixed Income and Commodities, covering both market abuse and market integrity.
• As part of the SRF process, we will issue a discussion paper on transferring the MiFID data reporting regimes for transactions (RTS 22), and reference data (RTS 23). We will assist in delivering a proportionate market abuse regime for Crypto Assets and the PISCES facility.
• We will extend our data reporting supervision approach to European Market Infrastructure Regulation (EMIR), Securities Financing Transactions Regulation (SFTR) and Orderbook regimes. We will increase our resources and capability to influence international markets data strategy.
• We will publish the results of our peer review of market abuse systems and controls in providers of Direct Market Access.
• We will publish revised Market Cleanliness Data in Q3 2024, which will capture more anomalous trading compared to our existing metrics.

Our aim is to minimise the adverse impact of firm failure on consumers and markets. It is also critical that we can respond to, and effectively manage, the impact of severe market shocks, especially given the current environment.

Ongoing work this year:

• As the increase in corporate insolvencies is expected to persist in 2024, we will continue to use data and horizon-scanning mechanisms to anticipate firms that are at risk of failure and make sure that we can respond appropriately in the event that they do to protect consumers and ensure market integrity.
• We will also continue to support industry by sharing relevant information we identify through our data, our new financial resilience return and our everyday work, such as examples of good and poor practice of wind down planning.

We are supporting the financial sector in driving positive change, including the transition to net zero and wider sustainability issues.

Ongoing work this year:

• We will integrate the Sustainability Disclosure Requirements and Investment Labels across the market, including the anti-greenwashing rule and guidance. We will continue to expand the regime, starting with a consultation on Portfolio Management in 2024.
• We are continuing to engage on new and emerging risks with UK and international partners. We will be progressing our work on Transition Finance and preparing to have regard to a ‘Nature’ regulatory principle coming into force.

As technologies continue to transform the way sectors operate, we need to manage the risks to capture the significant benefits to consumers and markets.

Ongoing work this year:

• Working with our stakeholders at home and abroad, we are assessing the impact of AI on UK markets to better understand the risks and  benefits. We will build on our pro-innovation and technology-agnostic approach to ensure that the outcomes for consumers and markets are beneficial, while recognising there are risks and opportunities.
• We plan to publish the outcome of our Big Tech Call for Inputs on data asymmetry between Big Tech firms and other financial services firms. We are also collaborating closely with the Digital Markets Unit in the Competition and Markets Authority on the new pro-competition regime for digital markets.
• We will continue to robustly investigate digital consumer journeys and firms using sludge practices.
• We are working with regulatory partners through the Digital Regulation Co-operation Forum to drive greater co-operation on digital issues, including piloting an AI & Digital Hub to support innovators.

We want to ensure that consumers receive appropriate and efficient redress where things go wrong, the Claims Management Companies (CMC) sector delivers fair value and that firms that cause harm bear more of the cost of redress.

Ongoing work this year:

• We will continue our work on redress Guidance for firms, complaints reporting, the Advice Guidance Boundary Review, our proposed capital deduction for redress for personal investment firms and a review of lead generation in the CMC sector.
• We will continue our work on historic discretionary commission arrangements in the motor finance market, during the ongoing pause in the deadline for firms having to resolve complaints and our analysis of the issues and the legal steps which may be necessary. We aim to set out our next steps on this in Q3 2024.
• We will continue to work with the Financial Ombudsman Service and the Financial Services Compensation Scheme on ensuring open working practices on areas we share, using the enhanced wider implications framework (WIF).

Technological developments make it easier and faster than ever to engage in financial services activity. Consumers need good information to make good decisions – particularly in a challenging economic environment. But this doesn’t always happen. Instead, they’re often targeted with adverts that are unclear, unfair, misleading or unlawful.

Ongoing work this year:

• We will continue our robust assessments of firms’ applications to approve financial promotions for unauthorised firms. Since February 2024, our Register now includes information about firms’ permissions to approve promotions.
• Using new sources of data, we will act quickly against authorised firms approving and issuing non-compliant financial promotions and unauthorised firms whose activity could lead to mis-selling and financial losses.
• We will continue our supervision of cryptoasset firms’ financial promotions, increase our technological capability to detect harmful financial promotions, develop our InvestSmart and Consumer Awareness (currently ScamSmart) campaigns and our work with social media platforms and search engines.
• Following the Online Safety Act, we will continue our work with OFCOM to successfully implement the legislation for financial services.
• We will publish a response following last year’s Advice Guidance Boundary Review discussion paper. This will set out options for future legislative and regulatory reform to enable consumers to have access to the help and guidance they need, at a cost they can afford, to make informed decisions.

Operational disruptions can prevent consumers accessing essential financial services, disrupt markets and threaten confidence in the sector. Firms still face a high, and growing, level of cyber threats and operational resilience risks, against a complex geopolitical backdrop. We are also seeing increasing levels of systemic risk build up in the system due to reliance on critical third parties.

Ongoing work this year:

• We continue to deal with firms that cannot meet our standards on operational resilience. From 31 March 2025, all relevant firms will need to maintain their important business services without intolerable harm to consumers and markets.
• We intend to publish a consultation paper clarifying our expectations on how firms should report operational incidents to us. This will help ensure that we – and firms - are responding effectively to minimise harm to consumers and markets.
• Our Consultation Paper proposes new rules to address the systemic risk that critical third parties present to the financial sector.