FCA will conduct more firm evaluations with little to no advance notification
What has happened?
The FCA has stated that it will conduct assessments on firms with little or no notice when it has reason to believe that a risk of harm may be present.
Speaking at the PIMFA Financial Crime Conference held in May 2023, Nick Hulme, head of the FCA’s advisers, wealth, and pensions department said that the regulator’s focus is to prevent, protect and pursue while investing more resources into new technologies and people to do this.
What are the key points of the review?
Nick Hulme said in his speech that by adopting a more proactive, assertive, data-led approach, the regulator is getting better at how it uses data when it sees problems. There is now a dedicated financial crime supervision function within the FCA’s consumer investments department. This new function is designed to proactively identify evidence and act where it establishes red flags.
The FCA is also improving how it uses data it already collects, looking at new sources and acting on information provided by consumers, firms and other external parties. It is reviewing business models and performance against strategic and financial forecasts and is considering the products and services being offered to customers.
Nick Hulme also explained that all this analysis will be vital to the FCA’s prioritisation and decision-making processes. Resources will be directed towards those firms and individuals which present the greatest harm to investors and the FCA will be more externally focused than before, undertaking more firm assessments with less and sometimes even no notice where the data and information available suggests that risk of harm may be present. In addition, he stated that the FCA will look for root causes, take action against firms and individuals, engage other agencies and act to disrupt wider networks in work which may fall outside its jurisdiction. When it becomes aware of serious concerns and evidence of egregious harm, it will take assertive regulatory and enforcement action where needed.
He also said that this work requires a collective effort from the industry and urged individuals and firms to talk to the FCA, using the FCA whistleblowing procedure as necessary.
What does this mean for firms?
Firms will now need to make sure they are prepared to receive a financial crime visit from the regulator at very short notice. This may apply especially to firms operating high-risk business models, which should make sure they are aware of their risks and monitor the effectiveness of their controls on a live basis to minimise the risk of a visit and to be best prepared if it does take place.
How can we help you?
Thistle Initiatives has supported firms for over 10 years as a trusted financial crime compliance and regulatory advisor. In addition to assisting you as-and-when, its team of specialists can serve as your right hand in meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.
Are you looking for help with your financial crime compliance or FCA supervision arrangements, or more general regulatory questions? Contact its specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to email@example.com.