The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets, in line with the regulator's three-year strategy. FCA also provided an update on its consultation on Sustainability Disclosure Requirements (SDR) and investment labels, decided to continue publication of the one-, three- and six-month USD LIBOR settings until September 30, 2024, and launched a virtual Greenwashing TechSprint in collaboration with the Global Financial Innovation Network or GFIN. The application window for the TechSprint will close on May 21, 2023, the TechSprint will launch on June 05, and will end with a showcase day in September 2023. FCA will be among 13 international regulators so far taking part in the first GFIN greenwashing TechSprint.
Business Plan 2023-24. The FCA business plan is focused on work in four key areas related to preparing financial services for the future, putting consumer needs first, reducing and preventing financial crime, and strengthening position of UK in the global wholesale markets. To deliver on the commitments, the business plan sets out the following:
- Strengthen the quality of sustainability-related disclosures, consult on changes to Listing Rules to reference the final International Sustainability Standards Board (ISSB) standards, finalize and publish the rules on sustainability disclosure requirements and investment labels, publish net-zero transition plan, embed environmental, social, and governance (ESG) considerations across all functions, and actively monitor how effectively firms and listed companies are implementing climate-related financial disclosures.
- Encourage and support innovation by testing the use of Distributed Ledger Technology (DLT) for settlement and trading, support industry work on digitalization, and T+1 settlement and continue the work with the government and stakeholders on new pro-competition regime for digital markets, big tech firms’ entry and expansion into retail financial services.
- Publish a Feedback Statement to the DP22/04 on artificial intelligence in financial services. This discussion will support the development of our regulatory approach to artificial intelligence.
- Continue to progress, along with the HM Treasury, the Competition and Markets Authority (CMA), and the Payment Systems Regulator, on the work, through the Joint Regulatory Oversight Committee (JROC), on the future of UK Open Banking. This includes publishing views and recommendations on the future entity, an activity roadmap in the first half of 2023, and overseeing the implementation of the new entity. Also published will be a summary of the Open Finance sprint that took place late 2022 and continued provision of support to government in their smart data proposals, including by considering how the future framework for Open Banking could be scalable for future data-sharing options. JROC will monitor progress against all activities in the roadmap and will publish a progress report in the fourth quarter of 2023. Also, in the fourth quarter of 2023, JROC will set out a detailed plan for the future entity and the Open Banking Implementation Entity (OBIE) transition to it.
- Build on the current risk frameworks to prioritize action against the riskiest firms and those causing harm.
- Conduct specific complex Threshold Conditions test cases to identify and cancel firms that do not meet Threshold Conditions quickly and at scale, removing them from the regulated market.
- Embed the wider implications framework, launched in January 2022, working with regulatory partners to tackle common issues to prevent harm and ensure the redress system delivers timely and fair resolution.
- Embed the Investment Firm Prudential Regime (IFPR), publish findings from the IFPR implementation and examples of best practice, to help firms better understand their financial resource requirements.
- Develop FCA policies and standards for financial resilience requirements for crypto-assets.
- Ensure that firms are properly embedding the new rules across the Appointed Representatives regime.
- Build on the approach for effectively supervising the anti-fraud systems and controls of regulated firms as well as continue the work to supervise crypto-assets firms’ compliance with the Money Laundering Regulations.
- Consult on changes to the mortgage, consumer credit, and overdraft rules to improve outcomes for consumers in financial difficulties, building on guidance introduced during the pandemic.
SDR and Investment Label Rules., FCA sets out its response to feedback received on the proposals for the rules on SDR and investment labels. It also announced its intention to publish the related Policy Statement in the third quarter of 2023, with proposed effective dates adjusted accordingly. FCA plans to consider its approach to the marketing restrictions, refine certain criteria for the labels, as well as clarify how different products, asset classes, and strategies can qualify for a label, including multi-asset and blended strategies. FCA will also clarify matters related to the primary and secondary channels for achieving sustainability outcomes and the requirement for independent verification of product categorization to qualify for a label.
Keywords: Europe, UK, Banking, Business Plan, ESG, Regtech, Greenwashing, Techsprint, IFPR, Cryptoassets, LIBOR Transition, Open Banking, ML TF Risk, Disclosures, Climate Change Risk, Distributed Ledger Technology, FCA
Hasan leads Moody’s Analytics ESG methodology development. He is expert on carbon transition, nature related risks and is a guest lecturer at ESSEC Business school on sustainable finance.
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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