In April, the Financial Conduct Authority (FCA) set out a new three-year strategy designed to improve outcomes for consumers and markets.  

The strategy focuses on three areas - reducing and preventing serious harm, setting and testing higher standards, and promoting competition and positive change. 

In response to its new strategy, the FCA has removed or amended over 8,000 potentially misleading adverts in 2022 – 14 times more than 2021. It has also cancelled the authorisation of 201 firms for failing to meet minimum standards. This action reflects the FCA’s increasingly data-led and assertive approach, which enables the regulator to find and deal with problem firms and misleading adverts swiftly. 

Nikhil Rathi, Chief Executive of the FCA said: 

“This has been a difficult year for many people who have been struggling with the cost of living. So it is all the more important that financial companies meet our standards and treat their customers fairly, particularly those who are facing financial difficulties. 

“As well as protecting consumers and supporting the vulnerable, we have been dealing with unprecedented market events and reviewing our rules to ensure our regulatory regime is fit for the future. We are working on reforms to the way companies are listed in the UK, which will support growth and competitiveness and continue to support innovative and fast-growing companies. 

“We are pleased to have welcomed over 1,000 new colleagues to the FCA this year, and to have opened our new office in Leeds and accelerated our expansion in Edinburgh.”   

Reducing and preventing serious harm 

Action by the FCA has seen over £30 million returned to people from businesses operating without authorisation. The FCA has issued over 1,800 warnings about potential scam firms so far in 2022, 400 more than the previous year, and the FCA’s consumer hub has prevented £7 million being lost to fraudsters. 

The FCA responded to cost of living pressures in line with its strategy to prevent serious harm. The regulator reminded 3,500 lenders of how they should be supporting borrowers in financial difficulty. The regulator also told 32 lenders to make changes to the way they treat customers, which led to seven firms paying £12 million in compensation to their customers. Insurers were also warned to ensure payouts remain fair as inflation bites. 

Steelworkers who received unsuitable advice to transfer out of the British Steel Pension Scheme (BSPS) will receive redress of, on average, £45,000 as a result of the FCA’s scheme to get financial advisers to pay for unsuitable advice they gave. The FCA also fined Pembrokeshire Mortgage Centre £2.4 million for serious failings in the way they advised BSPS members. 

The FCA has also continued to oversee the orderly wind-down of LIBOR through use of its powers and collaboration with industry and regulators globally. It announced that the remaining GBP LIBOR settings would cease by end-March 2024 and proposed that the remaining USD LIBOR settings would cease at end-September 2024. This will see a contract value of more than 265 trillion US dollars transition from LIBOR rates to alternative rates when the wind-down is completed. 

Setting higher standards 

In July, the FCA confirmed plans to bring in a new Consumer Duty which is leading to a fundamental shift in how firms serve their customers. The FCA welcomes the considerable progress and efforts made by a wide range of firms to meet the requirements of the Duty by July 2023 and confirms it will take a pragmatic approach to oversight of its implementation. The Duty will allow the FCA to take quicker action when it sees practices that do not deliver the right outcomes for consumers.   

The FCA has also acted to help consumers who want to invest their money to do so with confidence, as part of its Consumer Investment Strategy. It has set out plans for simplified financial advice for those who want to invest in stocks and shares ISAs and introduced new rules to improve how high-risk products are marketed to potential investors.   

The FCA has continued to increase scrutiny on firms seeking to offer services to UK customers. In 2021/22, one in five firms applying to operate here did not become authorised, up from 1 in 14 in 2020/21. To support improvements in the authorisations process, the FCA has added 133 new colleagues to this area over the course of 2022. This has reduced the number of applications in the system by 50% since last December alongside increased scrutiny on applications and an expanding remit. 

The FCA continues to be proactive where activities are outside its remit, including securing changes to unfair and unclear Buy Now Pay Later contracts. Ahead of taking over regulation of the sector, the FCA also worked with funeral plan providers, including those that did not get authorisation, to make sure consumers were protected.  

The FCA acted quickly following Russia’s invasion of Ukraine. It introduced new, practical measures to allow asset managers to separate the problem assets from the rest of a fund. The FCA also supported UK government efforts on sanctions and acted swiftly to ensure financial firms were meeting their obligations, which included testing their sanctions controls and writing to over 10,000 firms. 

Promoting competition and positive change 

As part of its work to boost growth and competitiveness in the UK, the FCA plans to reform the way companies list in the UK, aiming to attract more high quality, growth companies and give investors greater opportunities. Separately, the FCA introduced rules to enhance transparency for investors on the diversity of Boards and executive committees of listed companies. 

The FCA has set out its ideas for reforming Listing Rules that have not been changed since the 1980s. This includes removing complexity, expanding access to the market and empowering investors to make better decisions about the companies they invest in. Alongside this, the FCA has proposed ways to clamp down on greenwashing and build trust in ESG products. 

The FCA is also working on the Wholesale Markets Review, which will improve the competitiveness of the UK’s wholesale markets and maintain its high regulatory standards.  

The FCA continues to be a world leader in innovation, with 56 firms being supported through its innovation services, such as the Sandbox, in 2022. It is providing up to 300 newly authorised or high growth firms with greater oversight and support, helping to raise standards and promote competition.   

This year, the FCA ran its first every policy sprint, bringing 184 participants from across the industry together to explore what cryptoasset regulation could look like in the future. So far, 39 cryptoasset firms have received registration under anti-money laundering rules.