Context
The FCA and the Practitioner Panel have published a report from their 2021 joint survey of FCA regulated firms. The survey gives views across the financial services sector of the FCA’s performance as a regulator and provides the FCA with important information to help it achieve its objectives.
Key points to note
Key themes from the feedback included: A positive view, mainly amongst larger firms which have ‘fixed’ supervision arrangements, of its performance during the pandemic.
- Generally, these larger firms will have a dedicated supervisory contact at the FCA.
- A number of firms told the FCA that it has a reactive, rather than proactive, approach to risk; some firms are concerned that there may be significant or emerging risks in the market of which the FCA is not aware.
- The FCA is concerned about the number of smaller firms that suggested they aren’t engaging with the consultation processes.
- Firms are often unclear about why the FCA collects the data it requests from them. The FCA is feeding these findings into work it is undertaking to reduce regulatory burden.
- There were concerns on the time it takes for authorisations to be completed but many of those that expressed that view pressed for more thorough background checks on owners of failed firms seeking to re-join the industry. The FCA has recently announced changes to its decision-making process, which will ensure it can make faster and more effective decisions for consumers, markets and firms.
Areas on which the Panel and the FCA are particularly focusing include:
- Concerns about the way that the FCA engages with firms, particularly the smaller, flexible portfolio firms. Although most firms have read at least one FCA publication over the last 12 months (hardly surprising considering the nature and volume of those publications), there is particular concern from the Panel (and the Smaller Business Practitioner Panel) that only a third of those who looked at consultations had actually responded. This suggests that the FCA should be considering how to improve engagement with smaller firms to ensure it is aware of their views.
- The issue of data requests needs to be addressed, with a low proportion of firms understanding why they are being asked for data, and a significant proportion of both fixed and flexible firms concerned that the FCA asks for information that is available elsewhere or that it is not reviewed in a timely manner.
Next actions
None – for information and awareness.