What the FCA strategy means for the future of your financial firm’s compliance program

In April of 2022, the Financial Conduct Authority (FCA) shared its business strategy for 2022 to 2025 with commitments divided into three focus areas: reducing and preventing serious harm, setting and testing higher standards and promoting competition and positive change. The crux of FCA’s strategy?  To improve the market’s integrity and consumers’ confidence in the UK financial system.

An overview of the FCA’s strategy for 2022 – 2025

The full FCA strategy encompasses a multitude of regulatory compliance initiatives. However, the key focus areas within the FCA’s Business Strategy for 2022 to 2025, all of which have been designed to improve compliance across the UK’s financial sector, can be categorized into three main areas:

How the FCA will reduce and prevent serious harm

  1. The FCA has increased efforts to stop firms with inadequate harm prevention controls from entering the UK market.
  2. The FCA has hired several professionals to increase its bandwidth so the organization can thoroughly monitor authorized firms.

The FCA’s hope is that by creating more robust and efficient authorization processes and monitoring tactics, it can proactively address firms that might present harm to consumers and improve the integrity of the UK market.

How the FCA will set and test higher standards

The FCA recognizes that firms’ actions can influence how well consumers are able to make informed decisions and pursue their financial objectives. As such, the FCA will require that firms are operationally resilient and able to prevent, respond to and recover from operational disruptions. The FCA is also challenging firms to consider the actual impact of their products and services on consumers.

How the FCA will promote competition and positive change

The FCA will implement several strategies in their effort to encourage competition in the market and enable innovation, including monitoring the gateways to the market with the aim of improving their effectiveness. The FCA will also make better use of data to monitor the markets and their participants closely so it can quickly and proportionately respond to misconduct.

Why your firm needs people AND technology to comply with the 2022-2025 FCA strategy

Considering the FCA’s robust strategy for 2022 to 2025, firms must take a proactive approach to their compliance program or risk potential enforcement action. To do so, compliance programs will rely on incorporating both the right people and the right technology.

Meeting the FCA’s requirements by creating a culture of compliance

Compliance requires the backing of your entire firm, however, it can often be difficult to align every member of your firm around your Code of Ethics. The answer? To get your entire employee base on board, firms must create a holistic culture of compliance.

To get started, implement these “key ingredients” throughout your firm:

  1. Get support from leadership.
  2. Get your firm to align on clear and contextualized policies, procedures and an overall understanding of what compliance entails for every individual.
  3. Create and communicate consistent onboarding and training.
  4. Provide employees with ongoing support and incentivize those who go above and beyond.
  5. Implement a technology-backed process that allows your capabilities to grow with your firm’s needs.

Meeting the FCA’s requirements by integrating the right technology

Given the heightened risk and regulations firms face in today’s business and financial landscape, it has become even more crucial to integrate accurate, dependable technology into your firm’s compliance strategy. The core benefits of which include:

  1. Reducing manual processes and incorporating a more streamlined approach to compliance, allowing for a culture of compliance wherever your employees are located.
  2. Aligning your firm’s Code of Ethics and core values across states, countries and continents, with hundreds of data streams feeding into one, easy-to-use platform.
  3. Allowing your firm to focus on bigger-picture compliance projects and allowing team members to add additional strategic value and support your compliance initiatives with a robust solution designed specifically for financial institutions like yours.

By creating and fostering a culture of compliance, your financial firm stands to leverage the unified power of your combined employee base. By amplifying that strength with the right regulatory technology, you enable your firm to more seamlessly meet your ongoing compliance needs and comply with the commitments outlined in the FCA’s strategy.

For more guidance on how chief compliance officers (CCOs) and compliance professionals can address the evolving regulatory landscape, download the 2022 CCO playbook.