This week’s FCA updates emphasize consumer protection alongside the need for financial innovation. The regulator’s focus is clear: stricter oversight on products like CFDs, the importance of combining human expertise with AI in financial markets, and an emphasis on personalized financial wellbeing. Additionally, the FCA is pushing for greater market transparency, especially through consolidated tape systems for both equities and bonds. The liquidation of Tullycarnet Credit Union highlights ongoing risks in smaller financial institutions, reinforcing the need for robust governance and liquidity management.

Key Points to Focus On

1. CFDs and Consumer Protection
   The FCA is stepping up its review of CFDs to ensure fair value for consumers. Firms offering CFDs need to audit their pricing and product governance to comply with Consumer Duty standards. This is a call to action for ensuring full transparency and fair treatment.
2. AI and Human Expertise in Financial Markets
   The FCA’s speech on balancing innovation with human judgment in financial markets emphasizes the growing importance of AI. But technology alone won’t suffice—human oversight remains critical in making complex financial decisions. Firms should focus on integrating AI while retaining key human insights in decision-making processes.
3. Financial Wellbeing: Moving Beyond One-Size-Fits-All
   The FCA is highlighting the need for personalized financial wellbeing programs that go beyond generic solutions. This means tailoring offerings to the specific needs of customers, especially as financial health programs continue to grow. Firms must assess how well their financial wellness products meet the diverse needs of their customers.
4. Risks in the Credit Union Sector
   The liquidation of Tullycarnet Credit Union serves as a reminder of the governance and liquidity risks that small financial institutions face. Firms should take proactive steps to evaluate risk exposure in credit unions and ensure they have strong financial oversight.
5. Market Transparency: Consolidated Tapes for Equities and Bonds
   The FCA’s push for consolidated tape systems in equity and bond markets signals a commitment to improving market transparency. This system will enhance data accessibility, helping firms stay compliant with upcoming regulatory changes. Firms should start preparing for these updates to avoid disruptions.

What You Should Do Next

Firms need to stay aligned with the FCA’s evolving stance on product governance, market transparency, and consumer protection. Whether it’s reassessing CFD offerings, enhancing ESG disclosures, or preparing for the consolidated tape, being proactive will help firms stay compliant and competitive.

Below is a table summarizing the key regulatory updates this week. You should carefully consider these developments and ensure your firm is prepared for the upcoming shifts in the regulatory landscape.