FCA

Michael Shand, Managing Principal at Capco, a leading consultancy specializing in financial services technology and management, shared his thoughts on the FCA’S (Financial Conduct Authority) newly announced five-year strategy.

According to Shand, the FCA’s plan closely aligns with the UK government’s broader economic growth agenda. However, he emphasized that further clarification on the strategy’s success metrics would be beneficial. He pointed out that measuring progress is particularly difficult due to external influences beyond the FCA’s control, including macroeconomic trends, competition from other financial hubs, and the evolving role of technology in financial services.

“While banks and other financial services will welcome the spirit of the FCA’s strategy – a growth focus, proportionate oversight, and an ambition to simplify, reduce or remove reporting obligations – its implications could vary widely in practice.

“It is welcome that the FCA is placing consumer outcomes at the heart of the new strategy. It is clearly prioritising greater financial inclusion and resilience through a combination of greater participation in more complex, higher risk investing with a robust approach to protection, for example by cracking down on financial crime.

“The FCA has also recognised the power of technology and innovation – from AI to Open Finance – as key enablers. There is a focus both on efficiency – for the FCA and the firms it regulates – and access, including unlocking more sources of funding.

“The strategy provides a useful reference point for banks and other financial services firms to assess their priorities and opportunities in line with these themes. However, they will no doubt welcome greater clarity as the strategy translates into the FCAs specific plans and actions.

Samuel Riordan, Executive Director of Banking & Payments at Capco, shares insights on the FCA’s potential Motor Finance redress scheme, highlighting key steps firms can take to prepare.

“It is highly likely that the FCA will soon launch a consultation on a Motor Finance redress scheme,” Riordan states. “Businesses should take proactive steps now to ensure they are ready for the potential regulatory changes.”

If implemented, the redress scheme would simplify the complaints process, reducing dependence on claims management companies while providing structured and efficient complaint handling. For firms, this presents an opportunity to enhance customer analysis, complaint resolution, and overall customer communication strategies, ultimately improving customer outcomes.

“That said, preparing for a redress scheme will not be plain sailing. In addition to likely causing a spike in operational demands in response to the simpler complaints process, it also brings complexities for firms to mobilise and prepare as they look to comply with the regulator-mandated rules surrounding the scheme.

“While the scheme is yet to be confirmed, firms should view this week’s announcement as an impetus to continue preparations for a redress scheme now to avoid falling short later. A key focus initially should be improving their data quality and data assets to develop their underlying claims management data set; building intelligent models that can compute redress; the management of inbound communications across multiple forms; and as a final step preparing redress operationalisation through ramp up of resources and operational processes.

“Aside from these measures, firms should also consider deploying intelligent technologies to support with redress operationalisation. Such technologies allow providers to reduce operational costs and optimise the customer experience for fair and efficient outcomes. For example, this could include the use of chatbots to capture initial customer complaints,  data analytics to size the impacted population and redress amounts through to the use of generative AI and deployment of AI agents to review submitted cases and conclude customer outcomes.

“Further steps could include call transcription, sentiment analysis and vulnerability identification to enable superior customer outcomes and significant operational efficiencies reducing the traditional human resource burden in scaling these sorts of programmes.

“Firms must use this time to think and act strategically. Embracing advanced technologies will both enable providers to manage heightened operational demands and ensure better customer experiences and outcomes, ultimately reducing the resource burden and broader impact to the financial services sector.”