By Liam Edwards

The FCA published an update on its Consumer Investments Strategy on 18 October 2022, which summarises the first year of its Strategy since its launch in September 2021. The update is available here. Alongside this update, the FCA has published its fourth Consumer Investments data review, covering April 2021 to March 2022.

The update outlines work that has already impacted the market over the preceding 12 months and work that is expected to impact the market over the next 12 months. In the update, the FCA also seeks to provide insight into its longer-term work. Key points made by the FCA have been summarised below.

Impact over the previous year:

The update highlights the following key outputs from the Consumer Investment Strategy:

• 20% of new firm applicants in Consumer Investments have been prevented from entering the market;
• 59% more supervisory cases have been opened on high-risk investments or investment scams;
• £34.8m in redress fees have been secured for customers of unauthorised investment businesses; and
• there has been a 40% increase in the number of consumer alters published about unauthorised firms, with the FCA’s ScamSmart website achieving 59% more visitors.

The FCA also draws attention to its exercise of emergency powers against the financial advisors of members of the British Steel Pension Scheme in order to prevent the disposal of assets to avoid compensation liability.

Impact in the next year:

The update outlines the following anticipated milestones for the next 12 months:

• a strengthened regime for requiring firms to take responsibility for their authorised representatives is to be implemented from December 2022;
• the FCA’s strengthened financial promotions regime will be implemented in February 2023; and
• implementation of the Consumer Duty for new and existing products and services is required by July 2023.

The FCA also intends to continue with increasing its efforts in relation to enforcement action, and expects to continue to leverage data use in the identification of high risk advice firms that advise on DB pension transfers and/or non-standard investments within SIPPs.

Longer term market changes:

The update summarises the FCA’s progress on longer term changes to the market as follows:

• Before the end of 2022, the FCA will consult on an advice regime for investing into stocks and shares ISAs, with the aim of producing a more proportionate approach.
• The FCA has announced its intention to conduct a wider review of the advice/guidance framework.
• The FCA is investigating changes to prudential requirements for non-MiFID adviser firms.
• The FCA also plans to publish a feedback statement following its discussion paper on its compensation framework.

The FCA also acknowledges the “deteriorating economic context”, and notes that it will review its Consumer Investment Strategy where further scope for consumer harm is identified.

 For further UK financial services regulatory updates, please visit the Burges Salmon blog.