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future of supervision

In 2020, PIMFA put forward considerations and proposals regarding the future of supervision in the sector. Our work outlined where we believe the Financial Conduct Authority (FCA) could make improvements in its role as a supervisor of regulated firms and in delivering its regulatory objectives; these recommendations included:

  • outlining how the FCA can assess its own suitability as a supervisor
  • the need to improve data collection and analysis to understand better the activity of firms and what they do
    improving intelligence gathering and review procedures
  • taking swift action where needed to prosecute firms for criminal offences

In addition, PIMFA called for the FCA to:

  • Demonstrate a more in-depth understanding of the sector so it can supervise it more effectively
  • Ensure staff receive the training they need and to manage turnover of sector expertise and skills
  • Reconsider its level of engagement with the regulated population – there are firms which are supervised on a portfolio basis but that are large enough to warrant a more frequent engagement

In a 2022 PIMFA update to the Future of Supervision paper, we called for the FCA to update its own approach to Supervision paper and illustrate its vision for supervision in the future; the methodology used to supervise and risk assess firms; its vision for a hybrid “data-led” and “human-led” Regulator and the supervisory process as a whole and how engagement between the FCA and the regulated population will improve as a result of the changes in the operating models which are being implemented.

Since the publication of our 2022 paper, and campaign work, the FCA has made a number of significant changes which, in our view, help both the regulator and the regulated population progress, and are ultimately beneficial to the financial sector and the economy as a whole. In particular the regulator has increased its :

  • outward focus on the financial sector’s resilience
  • inward focus on its own resilience, in the form of plans to improve and update its processes including investing in enhanced data solutions
  • breadth and format of communications and outreach across the sector (Consumer Duty being a notable example)

While there is still much more to do to address the issues we have raised in our Future of Supervision work and campaigns, PIMFA welcomes the ongoing and collaborative engagement with the FCA to address the challenges identified for our sector, and we continue to provide support to achieve the outcomes sought.

This paper has been produced ensure that the debate about the future of regulation recognises that the supervisory regime is an integral part of that debate and to provide feedback on firms’ concerns about the current supervisory regime, including the effectiveness of the Financial Conduct Authority’s (‘FCA’s’) existing supervisory methodology, FCA’s internal controls and the nature and scope of FCA’s work.

You can read the full paper here

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