UK FCA regulatory priorities report on retail banking

The UK Financial Conduct Authority (FCA) has published its regulatory priorities report for the retail banking sector. These reports replace the FCA's previous portfolio letters and aim to provide a clearer and more consistent articulation of regulatory expectations.

In the report, the FCA notes that retail banking is undergoing significant change as customers use branches less and rely more on digital channels. Business models are also diversifying, with increased fintech activity and the continued development of open banking and new payment types.

The FCA sets out four priority areas for the next 12 months:

• Access to cash and essential banking services: As firms pursue digital first transformations, the FCA emphasises that firms must ensure these do not create foreseeable harm, particularly for customers with lower digital capability. Alternative services must be in place before any branch closures. The FCA will continue to monitor firms' approaches under its branch closures or conversions guidance and the consumer duty and will intervene where necessary.
• Good outcomes from products and services: Firms are expected to continue improving the data they use to monitor customer outcomes so they can identify where further action is needed. The FCA will take targeted action where it identifies poor outcomes, including poor value or issues affecting vulnerable customers.
• Fighting fraud and other financial crime: Firms are expected to help consumers understand fraud risks and support victims fairly. The FCA will use data analytics and other tools to identify outliers and make proportionate, targeted interventions.
• Operational resilience and data security: The FCA expects firms to identify emerging risks and critical third-party dependencies, refine action plans to address vulnerabilities and remain within important business service impact tolerances. They should continue improving their cyber and information protection strategies, with tested recovery plans. The FCA will use specialist tools to engage firms about their resilience.

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