Business Plan 2023/24 | FCA – FCA

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Our Business Plan details the work we’ll do over the next 12 months to help deliver the commitments in our Strategy.
Our Business Plan details the work we’ll do over the next 12 months to help deliver the commitments in our Strategy.
We are committed to protecting consumers, enhancing market integrity, and promoting competition in the interest of consumers. 
As we continue to see significant and rapid change in financial services, we remain committed to becoming a more assertive, adaptative and innovative regulator. Our work affects firms, consumers and the UK economy.
Last year we published our Strategy and set out the three themes where we are strengthening our focus and the 13 commitments to support these themes:
Together these themes help to create the conditions for financial services to deliver the outcomes we expect, and delivery of these commitments is well underway. 
This Business Plan sets out how we’ll deliver the second year of our Strategy. Our Annual Report later in the year will report on progress against the activities we set out in our Business Plan 2022/23 and will provide the latest data against our outcomes and metrics.
Our strategic objective is to ensure financial services markets function well. 
Our operational objectives are to: 
We will soon also have a new secondary objective to facilitate the international competitiveness of the UK economy and its growth in the medium to long term.  This is being introduced as part of the Financial Services and Markets Bill which is currently going through Parliament.
As a financial services regulator, we have an important role in the continued success of the UK financial services markets and their contribution to the UK economy.
When markets are efficiently and proportionately regulated and firms are able to compete and innovate in a safe, trusted and stable environment, it benefits consumers and investors, and it ensures the UK economy, including financial services, sustains its international competitiveness.
We fully embrace this secondary objective as already significantly in line with our approach. We will further increase our focus on international competitiveness and growth in delivering our primary objectives, while ensuring that there is no compromise on consumer protection, market integrity or competition in the interests of consumers. 
Our work includes improving the attractiveness and global reach of our wholesale markets. This includes using the opportunity created by the transfer of retained EU law; sharpening our operational effectiveness through continued improvements to our authorisations processes; and providing opportunities for UK financial services companies to invest, innovate and expand in the UK through, our Sandboxes, Innovation Pathways process, leadership of the Global Financial Innovation Network and TechSprint programmes. 
Accountability is a key part of ensuring we as a regulator deliver what is expected of us. We will report each year on how we’re delivering our new secondary objective and are developing how best to measure our success. As international competitiveness and growth are affected by wider Government policy (such as tax and labour markets policy), monetary policy and economic conditions, we will focus on measuring those aspects we can influence directly, and which are relevant to our policy decisions and explain where relevant the interactions with other areas of Government policy. We will focus on the key drivers of productivity and will explain how we expect our actions and outputs to facilitate international competitiveness and growth.
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.
Key uncertainties include:
Wholesale markets have recovered from the gilts markets volatility and the impact on pension funds in the Autumn of last year and are functioning effectively. We will remain alert to potential problems and be ready to act if necessary, and participants in the wholesale markets may need to take action to manage heightened operational and market risks.
Rising interest rates and elevated inflation have contributed to an elevated number of people stretched financially and many consumers face significant financial pressure.
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. Our work to identify and track early indications of problems is vital to enable us to respond proactively. We will continue to look for joined-up solutions, working closely with a range of partners, other regulators, Government and the devolved administrations, such as in our work with debt advice charities. The Consumer Duty which comes into force on 31 July will play a key role in underpinning this work, including for vulnerable consumers.
Many of the activities that we are already doing across a range of commitments also support those who are vulnerable or financially stretched, including those to support our commitments to Reduce and prevent financial crime and to Put consumers’ needs first.
There is also potential for longer term consequences from the current cost of living pressures due to the impacts on consumers, firms and markets, for example in relation to pensions saving.  We will work to understand further these consequences this year.
Our Strategy is designed to be sufficiently agile to deal with and meet new challenges and opportunities. The markets we regulate are dynamic. Going into the second year of our Strategy, and with finite resources, we will keep prioritising our work to respond to these challenges.
To support our growing remit and deliver our ambitious Strategy, we have been recruiting the people we need now and for the future.
Our headcount has grown from around 3,800 at the beginning of 2022 to nearly 4,500 at the end of March 2023.
This has included significant increases in resource in: our Authorisations Division to improve operational effectiveness and deliver a more rigorous gateway; and our Enforcement and Market Oversight Division to build capacity and resilience in our case and investigation teams and enable us to act faster against firms causing harm to consumers and/or markets.  We have also resourced changes in our perimeter. 
We expect to increase our headcount steadily in 2023 to meet a growing remit and to enable us to deliver key aspects of our Strategy, such as the Future Regulatory Framework and in the area of data analytics.
We committed in our Business Plan 2022/23 to develop our national presence. 
We opened our Leeds office in September 2022, with a specific focus on enhancing our digital and data capabilities. The Leeds office will provide capacity for over 200 colleagues based on hybrid working practices.
With over 175 colleagues now based out of our Edinburgh office, we are on track to double the number of colleagues in Scotland to over 200 as well as maintaining a presence in Cardiff and Belfast.
The scale of the FCA ambition to become a data-led regulator means that we are making significant progress across a number of data and digital programmes.  These include exploiting our investment in cloud technology, implementing new digital capabilities and designing new data solutions required by the front line of the business.
Our ambition this year is to complete a major upgrade to our core regulatory system and improve our intelligence capabilities through the automation of analytics tooling, helping us detect and respond to consumer harms faster.
We are making further investments in cyber security and operational resilience, to ensure our services are secure by design, improving technical stability and efficiency for our staff and regulated firms.
We will reduce firm burden further still by implementing additional data collections improvements through our Transforming Data Collections programme which has already resulted in a reduction in firm burden this year through an improved intuitive form for 20,000 consumer credit firms.
We work closely with a range of different partners.  These include consumer groups, trade associations, professional bodies, government departments, and other regulators in the UK and overseas. 
We also work with four independent statutory panels when developing our policies and other regulatory decisions. The panels represent the interests of consumers and practitioners, including smaller regulated firms and financial market participants. They play an important role in advising and challenging us and bring experience, support and expertise in identifying risks to the market and to consumers.  We also work with a panel on listing related issues and we expect this panel along with a cost benefit assessment panel to become statutory panels later in the year.
As proposed by the Treasury, financial promotions relating to certain cryptoassets are being brought within the scope of our regulation. The Treasury issued a consultation on 1 February 2023 on proposals for a broader future regulatory regime for cryptoassets. In preparation for this, we will be investing in additional skills to enable us to deliver on, and make changes to, the systems and procedures needed for the relevant firms, as well as the necessary changes to systems and procedures for the firms who fall within the scope of the Treasury proposals. As of the 3 April 2023, we have registered 41 cryptoasset firms under anti-money laundering rules. 
In 2023/24, following the Treasury’s proposed expansion of our regulatory perimeter to include deferred payment credit (exempt buy-now-pay-later, BNPL) products, we will design and begin to implement our approach, including consultation and rulemaking and our plans for authorisation, supervision and enforcement. We will also continue to act to address harm to consumers in advance of our regulation, eg around financial promotions.
The annual funding requirement ensures we have the right level of resources for people, systems and data improvements to deliver on our Strategy and commitments. 
We are working in an exceptionally challenging external environment while still delivering against, and in some parts accelerating, our challenging three-year Strategy and taking on significant new responsibilities.  
A material increase in funding in cash terms is needed to ensure we can continue to protect consumers from harm, ensure market integrity and foster innovation so our economy can grow. We recognise the rising costs many firms are facing and so we are setting our proposed increase in fees below inflation, including freezing minimum and flat rate fees to ease the pressure the smallest firms and freezing application fees. 
 Over the past year there have been unexpected external and geopolitical events that have required us to divert resources at short notice. Our resourcing model for the year ahead needs to ensure that we can be agile and flexible with our resources.
Additionally, we need to resource activity for the Future Regulatory Framework, cryptoassets and other scope changes, and our ongoing transformation. As we go into the second year of our Strategy, we will intensify focus on driving efficiency and effectiveness in delivering our outcomes.
For more details go to our budget.
We distribute recovery of our costs between fee-payers by putting them in fee-blocks. These group together firms with similar permissions. We allocate costs between fee-blocks to align them broadly with the costs of regulating those activities and each year we adjust the allocations to reflect additional work that we are undertaking with those groups of firms.
Our Fees Consultation Paper sets out what fees we will be charging over the next financial year.
See our commitments and objectives in full (PDF)
We have prioritised our work for 2023/24 to ensure we direct our resources most effectively. While we will continue to deliver across all our commitments at a similar pace as Year 1, we have decided to invest even further in our most critical commitments over the coming year.
We have taken account of the impact of the challenges in the year ahead on the outcomes in our Strategy that we want financial services firms to deliver. And we have factored in the investment and progress we have already made in the first year of our Strategy. 
Where additional resources are available, we will focus on these four commitments:
Preparing financial services for the future
Implementing the outcomes of the Future Regulatory Framework review is a core part of our commitment to prepare financial services for the future. We will work with the Treasury and other regulators on the repeal of retained EU law and replace where appropriate, obligations currently found in that law with Handbook rules. We will adapt these rules so they better suit financial markets in the UK. This is a very significant programme of work, with demanding timetable both for us and market participants over the coming year. It will help ensure that we can continue to advance our operational objectives while encouraging the UK’s wider economic growth and international competitiveness in line with our secondary objective.
Reducing and preventing financial crime
Scams and fraud continue to negatively impact our society. We will continue to invest in the technology we use to gain intelligence to disrupt those committing financial crime earlier, and increasingly prevent harm. We will boost our efforts to proactively identify those intent on committing financial crime trying to enter our perimeter, as well as on fraudsters operating outside our perimeter. We will build further covert capabilities into our systems to identify and disrupt fraudsters. We will also invest in raising standards in authorised firms to improve their abilities to detect and prevent financial crime. This includes a strengthened the gateway, more proactive assessments of regulated firms and more staff focused on investigating and prosecuting offenders. 
Putting consumers' needs first
The Consumer Duty is a significant shift in our expectations of firms and is particularly important as consumers face squeezed incomes and the rising cost of living. We are bolstering our resources to ensure the Consumer Duty is embedded effectively within firms and central to their technology. Alongside the Consumer Duty, we are also planning to allocate additional staff dedicated to working with firms as they support consumers struggling with higher costs of living.
Strengthening the UK's position in global wholesale markets
We are operating in an environment of significantly elevated market risk globally. We are investing very significantly in our technology and data capabilities, including to address data gaps and ingest data quicker so we can oversee markets effectively. To further enhance the UK’s position in global wholesale markets, UK markets need to function effectively and adapt to the changing international context as well as welcome new technology and innovation. For example, this year we will complete upgrades to key systems and continue automating our analytic tools, helping us detect and respond to  harms faster. We will also focus on scaling up our systems, tools and applications, reducing costs. We will keep strengthening the security of our infrastructure, including in relation to cyber threats, and continue to make our systems more stable and efficient. We will reduce firm burden further by implementing more improvements to data collections. We are embarking on a series of significant regulatory reforms to support this. 
This Business Plan does not cover everything we do. The Regulatory Initiatives Grid from the Financial Services Regulatory Initiatives Forum is updated twice a year and gives details of our planned regulatory programme. We also undertake a significant amount of baseline work, authorising firms, and individuals; supporting consumers who contact us – by whatever means; supporting firms with their queries and overseeing them, including responding to incidents and issues as they arise.
We also update our Perimeter Report quarterly. This report helps to explain what we do and don’t regulate. It describes specific problems we see around our perimeter, explains the ways we are proactively intervening to prevent harm and pre-empting or responding to problems. It also identifies existing gaps in legislation, areas of potential harm and our powers to act against unregulated activities, for example BNPL, crypto and artificial intelligence (AI).
The next sections provide details of our planned work against our commitments, including work already started. We provide details of the outcomes we want to achieve. These outcomes were set over a three-year time horizon in line with our Strategy and so will not change materially in Year 2. Each commitment is linked to metrics to help measure progress and performance.
We aim to protect consumers from fraud and mistreatment and our focus is on protecting consumers from the harm that authorised firms can cause. We do considerable work to reduce and prevent harm caused by unauthorised firms. In response to our Strategy, we’ve continued to increase scrutiny on firms wanting to offer services to UK customers. During FY2022/23, 23% of firms applying to operate here did not become authorised. 
We have issued over 1,800 warnings about potential scam firms during 2022, 400 more than the previous year, and our Consumer Hub has prevented just over £7m being lost to fraudsters.
We are increasingly improving our technologies to identify harm. For example, improving the quality of information we use in our decision-making, from the delivery of Single View supervision dashboards to intelligence interventions. 
This section explains the actions we are taking to deliver across our six commitments for reducing misconduct that can cause serious harm. 
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Data table
Embed the wider implications framework, launched in January 2022; working with regulatory partners to tackle common issues to prevent harm and ensure the redress system delivers timely and fair resolution. 
Identify harm and reduce it proactively and quickly including:
Financial crime remains a significant focus both for the FCA and nationally. We want consumers and market participants to have confidence that the financial services industry is safe. Over the past year we have improved our cross-organisational response to financial crime. We have built strong foundations for effectively tackling financial crime. Over the next year we will build upon these, increasingly using data-led approaches to act quickly to identify and close down weaknesses in the system and disrupt those seeking to cause harm.
However, our efforts to tackle financial crime will only be successful if the response is system-wide, including across public and private partners. Over the next year we will play a key role in driving the financial services sector’s contribution to driving down fraud and delivering the Economic Crime Plan 2. 
We will continue to work on slowing the growth in both Authorised Push Payment (APP) and investment fraud, a significant milestone given the scale of fraud in the UK. Over the longer term, as the national effort mobilises with the national economic crime strategy to tackle fraud, we aim to achieve a reduction in fraud.
Our work through this commitment has the dual benefit of both reducing and preventing financial crime and also achieving our commitment to enable consumers to help themselves. We are raising consumer awareness of scams and providing consumers with ways to check against our Register. This will help to reduce the volume of fraud (particularly investment fraud) pushed on consumers. We are also taking action where we identify those intent on committing financial crime.
Market abuse undermines the integrity of the UK financial system, eroding confidence and lowering participation, to everyone’s detriment. Firms are a vital first line of defence. They must have the right culture and safeguards in place to spot, report and reduce the risk of market abuse.
We want to continue to build resilience to market abuse across primary and secondary markets, ensure access to inside information is properly controlled and market disclosures are timely and accurate. Our aim is to have robust detection and investigation capability and deliver deterrents through a range of supervisory, civil and criminal sanctions.
We have made four commitments for improving our rules and standards. These focus on the impact firms’ actions have on consumers and markets.
This commitment includes key areas of work including the Consumer Duty, a core part of our work on the cost of living, financial inclusion and access to cash. The Consumer Duty sets a higher standard of care that firms must provide to consumers in retail financial markets. With firms focusing on delivering good consumer outcomes, we will all benefit from increased competition and innovation and we should see a reduced need for future regulatory and supervisory action.
Our work on financial inclusion is focused on addressing issues consumers face when accessing the products and services they need. We have also added an outcome to this commitment to reflect the importance of appropriate treatment of consumers struggling with debt due to cost of living pressures.  Other elements of our response to cost of living pressures are reflected in existing outcomes and addressed through a number of other business plan commitments, such as reducing and preventing financial crime.
Digital services make it faster than ever to engage in financial services or undertake any 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 illegally communicated by unauthorised persons.
With increasing use of data and new technology, we’re getting faster at finding potential breaches and shutting down misleading promotions. We will continue to focus on making sure firms promote products and services that are suitable for consumers, stopping firms doing unauthorised business and warning consumers about unauthorised activities and scams.  
As our perimeter expands, we will continue our work on non-compliant promotions by authorised firms, as well as activity by unauthorised firms which can lead to mis-selling and financial loss. This will reduce the potential for financial loss from scams and of authorised firms mis-selling high-risk non-standard investments.
Our existing and new activities that support the delivery of enabling customer to help themselves also supports our commitment to reduce and prevent financial crime.
Operational disruptions can prevent consumers accessing essential financial services, disrupt markets and threaten confidence in the sector. Firms continue to face a high, and growing, level of cyber threats and operational resilience risks, against a complex geopolitical backdrop. Firms should be investing in their resilience given the increasing scale and complexity of both current and future threats.
We’re scaling up our efforts to deal with firms who can’t meet our new standards on operational resilience, and making it clearer how they should report incidents to us. We are also developing new rules to address the systemic risk that critical third parties present to firms and markets.  
We want to use competition as a force for good. We will support UK growth and innovation that serves our society, underpinned by widely recognised and respected high standards.
We continue to be a world leader in innovation. For example, we have supported 133 crypto-related firms through our Innovation services, split across 57 in the Regulatory Sandbox and 76 in Innovation Pathways.  
Regarding authorised firms, we have enabled 300 newly authorised or high growth firms to receive greater oversight and support through our Early and high growth oversight function, helping raise standards and promote competition.
We have made three commitments to promote competition and positive change. 
This section explains our actions to maintain our high standards to enable innovation and competition in consumers’ interests. 
Implementing the outcomes of the Future Regulatory Framework (FRF) Review is an important change programme for us. 
Together with the Treasury and the other regulatory authorities, we will take the opportunity to move to a model where independent regulators are responsible for firm-facing requirements operating within a framework set by Government and Parliament. We will use the new responsibilities in the Financial Services and Markets Bill to progress the orderly replacement of retained EU law with requirements in our Handbook, tailoring provisions as appropriate to better suit UK markets. 
In taking forward this work, we will support changes that advance our operational objectives and our new secondary international competitiveness and growth objective. This will help ensure that the UK maintains its position as a preeminent financial centre, and that our standards continue to support access to UK markets while supporting economic growth in the wider economy. This includes taking forward the outcomes from the Wholesale Markets Review (WMR), which amends various parts of the MiFID framework, and Lord Hill’s Listing Review to implement a new regime for admissions to trading and public offers.
As we gain new responsibilities from the FRF Review, it is important to be transparent and accountable for how we deliver these. We will work with Parliament in its scrutiny of our work and focus on embedding the enhanced accountability mechanisms and our new secondary objective in the way we work.
We are making an additional investment in this priority in 2023/24, which will be particularly focused on delivering this transfer exercise in line with the Government’s implementation plan announcement in December 2022.
The digitalisation of financial services is changing how consumers make decisions and markets operate. Technology in financial services is constantly evolving. In May 2022 our Financial Lives survey found that 88% of UK adults had used online or mobile banking for day-to-day banking activities in the previous 12 months and 11% had an active current account with a digital bank.
To be an effective regulator, we need to better understand the risks and opportunities to capture the considerable benefits to consumers and manage the significant harms. The emergence of Fin Techs and the expansion of Big Tech firms into financial services is also changing the landscape. For example, there are over seven million users of open banking in the UK. Using the transition into open finance, we can proactively shape these digital markets and drive economic growth through our innovation services and developing our regulatory approach to enable safe, inclusive and beneficial innovation for consumers. 
In this second year, we will build on our work partnering with other regulators and will focus on how to support consumers to make good decisions in a digital world.
Our annual budget reflects the cost of the resources we need to carry out our work in 2023/24. The key elements of our budget are:  
We give additional detail in our annual fees rates consultation paper.
Our AFR for 2023/24 is £684.2m, an increase of 8.5%. Our AFR includes our ORA budget, Future Regulatory Framework, Transformation, our Consumer Harm Campaign, and the costs we need to recover for changes to our regulated activities ie scope change which includes increased responsibilities for the FCA. The actual fees we collect will reflect the AFR net of rebates from financial penalties collected (forecast at £50.3m). 
The ORA budget will help us target resources towards the commitments set out in this business plan and continue to accelerate delivery of our ambitious three-year strategy.  The budget comprises a below real terms increase with the base ORA budget increasing by 8.0% (£49.1m). This takes account of cost and demand pressures and ensures we can continue to protect consumers from harm, ensure market integrity and foster innovation. It also includes additional charges to reflect changes to responsibilities for Pre-Paid Funeral Plans (£1.0m), and a reduction in the employer rate of National Insurance (£3.1m). This gives a rebased ORA budget of £664.4m, representing an overall 7.6% increase on last year.
The Government is adapting the UK’s framework for financial services regulation, following the UK’s withdrawal from the EU. The Future Regulatory Framework (FRF) will transfer some rulemaking responsibilities to the FCA and strengthen accountability, scrutiny and transparency. Implementing the FRF reforms is a key part of our ‘Preparing financial services for the future’ strategic commitment and to support this programme we expect to invest £12.7m in 2023/24.
The Consumer Duty will set higher and clearer standards of consumer protection across financial services and require firms to act to deliver good outcomes for customers. We will invest £5.3m to ensure the Consumer Duty is embedded effectively.
Our Transformation focus in 2023/24 will be ensuring that we continue strengthening our processes that lead to improved speed and efficiency of our actions. We will recover at a lower level than 2022/23 and previous years to fund integration of our key change initiatives across divisions as well as enhancements to our Enforcement processes.
 
In 2020/21 we sought industry support to undertake a communications and information campaign to tackle areas where we see real risk of consumer harm, building on and supplementing our existing campaign, ScamSmart.  We see positive benefits for the entire market from these campaigns. We continue to recover the costs of our InvestSmart Campaign at the same level as 2022/23. 
In 2023/24 we will recover scope change costs for financial promotions, pre-paid funeral plans, Consumer Duty, cryptoasset Businesses and Pensions Dashboard. The scope change costs are aligned to where the FCA is required to extend the perimeter of its ongoing regulatory activities (ORA).
Our capital expenditure budget reflects the ongoing delivery of IT systems and infrastructure development and refresh. The increase in expenditure is driven by investment in external facing systems and internal technology platforms. Capital expenditure is largely funded through the ORA depreciation charge.
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