Financial services interventions and enforcement: what fintechs and payments firms should expect in 2024, Duncan Campbell, Sara Cody

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In our recent report we reviewed last year's key developments in FCA and PRA interventions and enforcement activity and we identified key focus areas for the year ahead.

As we approach the end of the first quarter of 2024, it's worth outlining some of the themes in the regulators’ spotlight that are particularly relevant to fintechs and payments firms.

01| Operational resilience

This year will see UK firms preparing for March 2025, when under the UK's operational resilience rules firms will need to begin to remain within their impact tolerance levels in the event of a severe but plausible disruption.

Last October BoE's Financial Policy Committee (FPC) member Elisabeth Stheeman reminded firms that cyber-attacks remained the most prominent operational risk that the FPC is monitoring.

To avoid failing and mitigate enforcement risk, firms need solid and well-rehearsed contingency plans, reflecting advance thinking about steps to mitigate harm and to engage effectively with the public, regulators and other stakeholders during a crisis.

02| Customer communications: crypto promotions

Financial promotions have attracted particular FCA supervisory and enforcement attention recently. This will continue.

Since October 2023 firms promoting cryptoassets in the UK to retail consumers must be FCA authorised or registered or have their promotions approved by an authorised firm. The FCA has been quick to enforce this new regime: on 10 October 2023 it announced that it imposed restrictions on Rebuildingsociety.com Limited after it agreed to approve promotions for Binance.

And the FCA is applying stringent criteria to assess MLR registration applications, with 93% of such applications rejected, withdrawn or refused last year.

03| The bigger picture

In the next couple of months, we'll see new FCA enforcement co-heads Therese Chambers and Steve Smart articulate their vision and direction for interventions and enforcement under their leadership.

They've prepared the ground by rationalising their caseload. But they've continued to conclude cases with a particular focus on AML and retail harms.

Meanwhile, the PRA continues apace with targeted enforcement, most recently clarifying "reasonable steps" for senior managers and enforcing depositor protection rules.

Both regulators continue to enforce against a backdrop of an uncertain economic climate and unpredictable geopolitical developments.