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FCA Business Plan 2021/22: a new type of regulator

David Morrey David Morrey

The FCA Business Plan for 2021/22 has been announced and it concerns the future of financial services regulation. David Morrey summarises the key points and what they mean for your business.

This year’s Business Plan can be viewed as an attempt to transition the Financial Conduct Authority (FCA) to become what is hoped to be a new regulator for the 2020s – more “innovative, assertive and adaptive”. The twin pillars of this change are a £120-million data strategy and new a determination to “test its powers to the limit”.

However, both carry risks. Implementing the data strategy will stretch the FCA’s ability to undergo fundamental change while maintaining its operational effectiveness, and more-aggressive use of its powers may lead to a series of long and expensive legal cases.

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Overview of Business Plan key themes


Tackling fraud and increasing firms’ financial and operational resilience are familiar themes that have been given greater relevance by the stresses of the last year. Diversity and inclusion, and ESG are newer for the Business Plan, though neither is a surprise.


As ever, there's a very broad waterfront for the FCA to cover, as it sees more consumers becoming vulnerable over the last year. The FCA is shortly to publish a consumer investment strategy, with the risks of crypto assets at its heart.

Elsewhere, consumer credit and payments remain central to the Business Plan, with the shift to digital providing an overall context. Interestingly, the FCA now describes itself as being as much a data regulator as a conduct one. Looking ahead, the current proposals on a new consumer duty are clearly intended to shift the dial.


Maintaining international standards and giving market participants predictability and certainty remain central to the FCA’s Business Plan, but within this, the regulator is clearly prepared to adapt existing rules to further London’s competitiveness as a financial centre. Away from capital markets, pensions and market abuse are emerging as greater priorities.

Key Business Plan priorities:

  • The transformation programme and implementation of the data strategy
  • Working more effectively with partners, including other UK and international regulators
  • Building up authorisations as a more effective gateway

Key Business Plan priorities over the next one to three years:

  • Successful transition away from LIBOR
  • Implementing the recommendations of the Hill review of primary markets
  • Review of wholesale markets regulation post-Brexit
  • Implementing the recommendations of the Kalifa review of UK fintech
  • Expanding the Edinburgh branch, opening a new branch in Leeds and establishing a presence in Cardiff and Belfast


The FCA Business Plan outlines key priorities of fraud prevention and managing the financial and operational resilience of the firms that it regulates, all of which have been consistent themes for the regulator over recent years.

Less traditional ground includes a focus on improving diversity and inclusion – both within the FCA itself and within the financial sector – and an increased focus on the role of financial services in combatting climate change through environmental, social and governance (ESG) initiatives.

The FCA also highlights its international work, largely focused on co-operation to maintain international standards and, inevitably, continuing to manage the effects of the UK’s exit from the EU.

Key cross-market Business Plan outcomes the FCA wants to achieve:

  • Keeping fraudsters out of financial services, both by preventing their entry at the authorisation gateway, and by detecting and pursuing fraudsters via enforcement action
  • Stabilise and reduce compensation liabilities as firms hold more capital and liquidity to cover redress requirements, and fewer firms cause misconduct requiring large-scale redress
  • Reduce the number, type and duration of business disruption incidents and reduce the level of consumer harm that they cause
  • An increase in diversity and inclusion at all levels within the FCA, regulated firms and listed companies leading to firms designing products that reflect the diverse needs of customers
  • Protecting consumers from misleading marketing of ESG-related products, and promote greater ESG stewardship by institutional investors, including potential further regulatory action if the FCA doesn't see sufficient evidence of progress


The FCA are signalling that the landscape has changed since their last Business Plan, with recent events causing marked changes in consumers’ finances, behaviours and vulnerabilities, as well as the rise of new markets (such as crypto assets) and digital services.

Into this new landscape, the FCA are intending to redefine the obligations regulated firms will have towards their retail customers.

Key retail Business Plan outcomes the FCA wants to achieve:

  • Setting clearer, higher standards for firms’ culture and conduct through the introduction of a new consumer duty, currently subject to a consultation closing on 31 July 2021
  • Enable effective consumer financial decision-making and prevent harm by introducing a new three-year consumer investments strategy and ‘consumer investment co-ordination group’
  • Ensuring consumer credit markets work well by increasing its focus on how firms are tailoring support and addressing the greatest areas of consumer harm and vulnerability
  • Making payments safe and accessible by developing a regime that fosters the benefits of innovation while protecting consumers, and maintaining the FCA’s current focus on the stability of payment services and e-money firms
  • Ensuring that financial service firms deliver fair value in a digital age by better understanding firms’ business models, developing a framework to assess potential harms and benefits from digitalisation, and collaboration through the Digital Regulation Co-operation Forum

Wholesale financial markets

Market integrity remains the FCA’s focus for wholesale financial markets and the desired outcomes it's pursuing are consistent with previous years.

The FCA recognises that retail consumers are increasingly able to access regulated and unregulated products in wholesale markets via asset managers and, in particular, via the use of online platforms. But, potentially, with fewer protections or the ability to assess their potential losses and associated risks.

The FCA sees improving the level of protection offered by wholesale firms to what may ultimately be retail consumers as a key objective.

Key wholesale Business Plan outcomes the FCA wants to achieve:

  • A rules framework that supports the needs of both investors and companies raising finance and managing risks through capital markets
  • An orderly transition away from LIBOR to alternative risk-free rates
  • The effective prevention of market abuse and reduction of financial crime risk by regulated firms
  • Fair value investment products that meet investment needs and offer appropriate levels of protection
  • Good value pension products offerings from pension providers and useful consumer guidance to support them in effective decision-making
  • Competent and financially stable principals and appointed representatives, who ensure fair consumer outcomes