The Financial Conduct Authority (FCA) published its business plan for 2024-2025 on 19 March 2024. The FCA set out its ambitious programme of work for the final year of its three-year strategy to achieve better outcomes for consumers and markets.
We have seen over the last year that the FCA is certainly ramping up its supervision of firms and will continue this through 2024-2025. In their business plan, they confirmed they are increasing their workforce to more than 5,000, so this supervision is only going to increase.
One of the FCA’s major commitments is “Putting consumers’ needs first” and the introduction of the Consumer Duty in July 2023 enabled the FCA to set higher and clearer standards of consumer protection across financial services.
The two biggest issues that have affected our members in the last few months have been the FCA’s announcement that it is reviewing how firms have been dealing with discretionary commission arrangements and its concern that customers are not getting a fair deal on GAP (Guaranteed Asset Protection) insurance products.
Most recently, the FCA has warned firms to keep their social media advertisements lawful. “The FCA has set out how adverts across social media channels must be fair, clear and not misleading, meaning they must have balance and carry the right risk warnings so people can make well-informed financial decisions.”
We suggest you familiarise yourself with the FCA’s finalised guidance on financial promotions on social media.
Another FCA review currently being conducted that our members should be aware of is the reassessment of firms’ treatment of customers in vulnerable circumstances. This is another review to come off the back of the Consumer Duty, where firms should act to deliver good outcomes for all customers, including those with characteristics of vulnerability.
What is clear from the FCA’s work is that firms must be proactive in the way they do business and have an emphasis on the consumer from the outset. Unfortunately, so far, the work of the FCA has meant a reduction in profit margins due to lower finance commissions and the removal of GAP sales. Firms will need to look at other income streams that may not be impinged by regulatory sanction and, if you haven’t already, read the following legal update on the subject: Dealers pivot to new profit avenues amid GAP and finance commission challenges – Lawgistics.
If you need any assistance or require further information relating to anything mentioned in this update, please do not hesitate to contact Lawgistics.
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