Regulatory Priorities reports replace portfolio letters and are published annually. They act as a guide for firms’ boards and chief executives and pull together all that the FCA is doing in a particular area.
The retail banking priorities for this year include:
- Access to cash and essential banking services. Among other things the FCA states that firms’ digital transformations must avoid causing foreseeable harm to retail customers, especially those less digitally capable. The FCA expects firms to:
- Fill significant gaps in local cash access services in accordance with the Access to Cash sourcebook (where the firm is designated under the regime).
- Avoid causing foreseeable harm to retail customers when implementing digital-first transformations, including by analysing customer need and making sure any proposed alternatives are in place and accessible before a branch closure.
- Comply with the basic bank account regulations (where the firm is designated), making it easy for eligible consumers to apply.
- Ensure financial crime controls do not lead to unnecessary or overlong account freezing.
- Good outcomes from products and services. The FCA has seen firms make good progress driving positive outcomes under the Consumer Duty. The FCA reminds firms that they should keep developing their data for monitoring retail customer outcomes, so they can see where further action is needed to support consumers in pursuing their financial objectives and avoid causing them foreseeable harm. The FCA also states that for retail customers, under the Consumer Duty, firms should:
- Keep improving their data and management information dashboards for monitoring and assessing consumer outcomes, and their governance over these.
- Take action where need is identified to support consumers in pursuing their financial objectives and to avoid causing them foreseeable harm, including for those in vulnerable circumstances, financial difficulties, or where fair value is not being provided.
- Keep consumer outcomes front and centre when designing and delivering products or services, especially new, innovative or AI-based ones.
- Fighting fraud and other financial crime. Firms must monitor their fraud, money laundering and other risks, and continuously refine their defences. The FCA expects firms to:
- Help consumers understand fraud risks and support victims fairly.
- Monitor and mitigate the risks firms and consumers face, refining defences and control frameworks and promptly and effectively remediating any weaknesses.
- Keep improving systems and controls, to combat bad actors’ evolving tactics and technologies.
- Learn from FCA outputs and keep investing in resources and controls, including advanced technology such as AI where appropriate.
- Operational resilience and data security. Firms should identify emerging risks and critical third-party dependencies, refining action plans to address vulnerabilities and remain within important business service impact tolerances. The FCA adds that firms should continue building operational resilience and data security by:
- Identifying emerging risks to resilience, incorporating these in scenarios and testing to refine action plans for remediating vulnerabilities and remaining within impact tolerances.
- Continuing to evolve and improve cyber protection and information protection strategies, with tested recovery plans to mitigate harms from cyberattacks and third-party failures.
- Managing any live issues within impact tolerances, managing the impact on customers and communicating effectively with them.
- Participating in cross-industry initiatives where appropriate, to help improve system-wide resilience and recovery strategies.
Other areas that the FCA will be focussing on include:
- Business banking outcomes.
- Innovations in retail banking.
- Motor finance commission review.
- Senior Managers and Certification Regime.