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Grant Thornton on the FCA’s new business plan

David Morrey, partner, Financial Services Group, Grant Thornton UK LLP explains his thoughts on the FCA's new Business Plan for 2022/23

In this year’s Business Plan, the Financial Conduct Authority (FCA) attempts to move away from a sector focus and instead takes a more thematic approach covering three focus areas; reducing and preventing serious harm, setting and testing higher standards and promoting competition and positive change. It is also a move away from previous standalone documents, with this year’s Plan appearing as a webpage with hyperlinks to 30 other documents that arguably makes navigating its content more challenging.

When you drill down into the detail, it’s clear that it largely continues to pursue initiatives that featured in the previous Plan and does not introduce any materially new developments. As many of the 2021/22 Plan commitments are still in flight and require a lot of further work, by both the FCA and regulated firms, the stable and continued agenda is likely to be welcomed.

One of the big initiatives the FCA has been promising for some time is its data strategy, critical to its ambition of becoming a ‘data-led regulator’. This year’s Plan tells us that we can expect the long-awaited publication during 2022 – a strategy that is likely to be heavily scrutinised when it appears.

Within the Plan, the FCA has outlined the outcomes it intends to measure to assess its success, repeating prior commitments to hold itself accountable against published performance metrics. One risk the FCA faces is that some of the outcome measures, such as the number of regulated firms facing solvency issues, may be more (and negatively) influenced by the cost-of-living crisis than by any positive effect the FCA is trying to achieve.

In one of the interlinked documents the FCA published with the Plan, it has calculated that its work produces a positive benefit of £11 for every £1 spent on its operating costs. As this outcome is largely based on forecasts of benefits rather than actual realised benefits, this particular approach to outcomes measurement could come in for criticism.

In terms of funding, the like for like budget is increasing by a material 7.3%, while the total funding requirement grows by a more modest 4.3%, reflecting the end of the additional budget for one-off events such as EU withdrawal.

Not discussed in the Plan are the delivery risks to which the FCA are exposed. This includes the disruptive effects of its internal Transformation programme, staff shortages and the potential for strike action where the results of a ballot of staff will be announced next week.

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