FCA Performance Review

We had another great response from a recent Eclipse (our weekly newsletter), so much so, we have decided to turn it into a little news article for you all to enjoy! Below, our MD Cathi explains all about the recent FCA paper that she read…

“I appreciate everyone finds different things interesting, so don’t judge me for saying I read an interesting FCA report a couple of weeks ago!

It was actually the follow up report to the recent survey undertaken with financial services firms, to determine how effective the FCA are, and what areas they could focus on improving.

The survey is categorised into responses from firms that are classed as either:

  • Fixed portfolio firms – those that “based on factors such as size, market presence and customer footprint, require the highest level of supervisory attention”. These firms have a specific supervisor contact at the FCA and regular, proactive supervision and continuous assessment.
  • Flexible portfolio firms – everyone else, and therefore most of the people reading this.

The difference between the two was, perhaps unsurprisingly, quite remarkable. Some of the key areas where the two firm types had vastly different opinions were:

Proportion of firms agreeing that FCA processes are effective: 

Clearly the firms that are used to FCA visits (Fixed portfolio firms), and receive them regularly, value them much more. They recognise that they are there to support, constructively challenge, and help achieve best practice.

For Flexible portfolio firms, they will either have very little in the way of FCA visits, and not felt benefit from them, or just heard stories on the grapevine around them, thus being very unlikely to find them an effective process.

Extent to which firms have engaged with the Mission:

Firstly ‘the Mission’, for those who aren’t aware (and the following chart suggests that is likely to be quite a few of you) is the FCAs mission they published last year.

Their aim was to set out a framework for the way in which they will make decisions about regulation. Here is a link to The Mission, FYI it’s 35 pages…

You can see how Flexible firms are much less aware of the Mission and, even those that do know about it are far less engaged with it.

Just under half of Fixed firms (45%) felt the framework was relevant to their firms; whereas only 17% of Flexible firms felt the same.

Flexible firms were also more likely to have experienced a decrease in their level of trust in the FCA in the last year, and a key issue for them was that they wanted to see the FCA take more decisive action against firms that are involved in wrong doing.

The outcome of all of this to me? Firstly, the closer interaction the FCA has with Fixed firms appears to result in a higher level of trust in the regulator, and a better understanding of their purpose. Clearly applying that level of supervision to all firms is impossible; but there are definitely areas that could be addressed to apply some of this additional support to Flexible firms, thus helping with their engagement.

Secondly, it all reads positively to me; firms actually want to be closely involved with the FCA, they feel disengaged when they have little or sporadic contact, and they want wrongdoers to be dealt with swiftly, to protect the integrity of the profession. And this can only be a good thing.

So – room for improvement, but with some glimmers of hope. I’ll be digesting the report further in the next week or so, might pop a cheeky post up on the website about it.

Oh, and 54% of Flexible firms suggested Simplify communications (use plain English) as a suggestion for the FCA to improve their communications – something I think we can all get behind! Maybe reducing the Mission to a couple of pages would have resulted in a very different response to the question above!”

 Want more content like this? Sign up to Eclipse below!

FCA Performance Review
APCC Member

© Apricity Compliance Ltd. All rights reserved. Registered in England & Wales at Beehive, Lingfield Point, Darlington, DL1 1RW / No: 10824977.

Design by Tony McBride, website by Outlines Design.