A more authoritative authority?

Review your regulatory permissions and get ready for a more hands-on regulator…

We are seeing signs of a more assertive regulator. Inquisitive. Quicker to challenge. More intrusive.

Following publication of independent reports into the LCF and Connaught failures we have seen public apologies and commitments to adopting the recommendations made in each report. There can be no doubt of the regulator’s commitment to its ‘transformation programme’.

We are seeing the impact in Authorisations and Supervision now - applications are taking longer, more questions are being asked in different areas and the FCA is quicker to challenge. There will also be more to come given the aim of becoming a ‘data-driven regulator’ - particularly for smaller firms who have often gone under the FCA radar when priorities are set.

Expect to receive a more thorough examination in any application process, and more thorough questioning if you fall under the FCA’s scrutiny.

The most obvious change (aside from the pernicious Covid surveys) is the “use it or lose it” exercise for firms that have not used their regulatory permissions (based on regulated income). Such firms are at risk of having their authorisation revoked.

Firms who conduct regulated and unregulated activities (including corporate finance firms) should consider fee tariff data disclosures to determine if this is relevant. Those who have not removed unwanted P2P permissions will be ‘low hanging fruit’ for further scrutiny during regulatory interactions.

All firms should ensure they have a business plan which demonstrates how they utilise the regulated activities they have permission for.

We have seen several examples where firms have not reviewed their business model to ensure it is reflected in their permission profile. If they cannot justify how the two fit together they should change this before the FCA does, in a more unpleasant fashion.

If you have been contacted by the FCA and would like assistance responding, or want to take action to prevent the risk, please do get in touch.