FCA to look to data to better identify firms susceptible to receiving fraud proceeds

It comes as part of the regulator’s 2023/24 Business Plan, for which it has made four commitments – namely preparing financial services for the future, putting consumers’ needs first, reducing and preventing financial crime, and strengthening the position in global wholesale markets.  

Preparing financial services for the future 
A key part of its work will be to implement the outcomes of the Future Regulatory Framework Review, with the regulator taking the opportunity to move a model when independent regulators are responsible for firm-facing requirements operating within a framework set by government and parliament.   

The FCA will use these new responsibilities in the financial services and markets bill to progress the orderly replacement of retained EU law, tailoring provisions as appropriate to better suit UK markets.  

It will also support changes that advance its operational objectives, as well as its new secondary international competitiveness and growth objective – with an eye on maintaining the UK’s position as a “preeminent” financial centre.  

In doing this, it aims to ensure an orderly replacement of firm-facing requirements in legislation in its handbook.

Putting consumers’ needs first 
A key pillar of how it’s looking to put consumers’ needs first is through the Consumer Duty – a core part of its work on the cost of living, financial inclusion and access to cash. 

Its work on financial inclusion, meanwhile, is focused on addressing issues consumers face when accessing the products and services they need. 

Among the outcomes it wants to achieve will be that consumers are sold products and services that are designed to meet their needs, characteristics and objectives and that consumers pay a price for products and services that represent fair value, and poor value products and services are removed from markets. 

It also aims to ensure consumers are equipped with the right information to make effective, timely and properly informed decisions about their products and services, they receive good customer service and are confident in financial services markets. Additionally, it wants firms to innovate through the consumer duty, supporting the growth of the industry and drive effective competition for customers.  

Finally, it wants to make sure appropriate access to financial services is maintained and that firms support consumers to sustainably manage their debts.  

To achieve these, the FCA has said it’s going to review its debt advice rules to ensure they set the right framework for good quality debt advice, and consult on changes to its mortgage, consumer credit and overdraft rules to improve outcomes for consumers in financial difficulties. Over the next year, it’s also going to deliver a robust and proportionate regime for buy now, pay later products. 

Reducing and preventing financial crime 
The main objective behind is work countering financial crime is to ensure consumers and market participants have confidence that the financial services industry is safe, and while the regulator has said it’s improved its cross-organisational response to financial crime, it believes its efforts will only be successful if the response is system-wide – including across public and private partners.  

As part of its work, over the next year the FCA will help to deliver the Economic Crime Plan 2 and will continue to work on slowing the growth in both Authorised Push Payment (APP) and investment fraud.  

Overall, its looking slow the growth of both investment and APP fraud victims, cases and losses and reduce financial crime by lowering the incidence of money laundering through the firms it supervises directly, and improve the effectiveness of supervision by professional body supervisors.  

To achieve this, it will increase its use of data to better identify which firms are susceptible to receiving the proceeds of fraud and ensure they’re doing more to stop the flow of illegitimate funds.  

It’ll also look to increase the volume of its proactive assessments of firms’ anti-money laundering systems and controls and develop further data-led analytical tools to use in its anti-money laundering supervisory work. 

Finally its looking to ensure effective oversight of firms communicating and approving financial promotions including qualifying cryptoassets when they’re brought within the financial promotion perimeter, and that firms only do so if they’ve the relevant competence and expertise.  

Strengthening the UK’s position in global wholesale markets 
The main goal of its work to strengthen the UK’s position in global wholesale markets is develop one that supports both the domestic economy and growth and is open to innovation – with all this being underpinned by high standards of market integrity and consumer protection.  

The regulator has said this will be achieved if the UK continues to be seen as a leading global market for international issuers, intermediaries and investors.  

As part of this work, it wants the regulatory framework to be clear, well-understood and trusted by all market participants and that they regard the regulatory framework as proportionate, both in terms of speed and cost.  

Additionally, where outcomes are not being met, this is clearly communicated, and remediation is swiftly undertaken or enforced. It also wants the UK regarded by market participants as one of the top markets of choice, with innovation viewed as encouraged and supported, and regulation viewed as appropriately evolving to address new opportunities and risks.