At the end of last month, the Financial Conduct Authority published a report of the findings from its 2019 survey of FCA-regulated firms. The survey, carried out with the Practitioner Panel, takes place annually and seeks views on the regulator’s performance from among the firms it regulates.
What does this year’s report tell us about the way the regulator is viewed by the firms it governs? We look at some of the key findings.
Who was surveyed and what did the report seek to find out?
A sample of FCA-regulated firms were surveyed between January and March 2019. 2,888 firms completed the survey.
It asked firms for feedback on how well the regulator is achieving its objectives:
- securing an appropriate degree of protection for consumers
- protecting and enhancing the integrity of the UK’s financial system
- promoting effective competition in the interests of customers
How is the FCA performing?
Scores against the first two of the above objectives have risen slightly compared to 2018.
In relation to the third objective, the overall score for all firms decreased from 72 to 70%. The regulator does point out, though, that this bullet had seen a significant rise in confidence in the previous year, following the publication of the FCA’s Approach to Competition in 2018.
Firms are largely satisfied with their relationship with the regulator; satisfaction is 7.6 out of 10, up from 5.9 in 2013 when the FCA was established.
There are some differences between the views of larger, fixed portfolio firms and flexible portfolio firms. Fixed firms overall gave lower scores for satisfaction and effectiveness compared to flexible firms.
There are also some interesting differences by sector, with retail lending firms the most satisfied with the FCA, and pensions and retirement income firms the least.
What areas for improvement have been identified?
The survey highlighted some specific areas for improvement. These include:
- Information requests: firms want the regulator to ensure that the costs they incur in providing information to the FCA are proportionate to the benefits achieved.
- Trust in supervision: there is a lack of confidence amongst FCA-regulated firms that the regulator’s staff have sufficient experience and are appropriately qualified.
Half of fixed firms believe that the FCA is effective in facilitating innovation in UK financial services. This is something the regulator has placed great focus on, with a number of initiatives to promote innovation, among them its FCA Innovate programme, the regulatory sandbox and plans to automate regulation itself.
56% of respondents said that they would like the regulator to simplify its communications to firms, with 55% wanting the usability of the Handbook improved. 52% would like to see targeted communications for different types of firms.
Engagement with some of the FCA’s current communication channels is limited: only just over a third said that they or someone else in their firm had read the FCA’s Mission document, and only a third had read the regulator’s ‘sector views’, released in January 2019.
Culture is improving; this is another area where the Authority has invested significant time and resource in recent years. 64% of fixed firms have reported improvements to the firm’s culture as a direct result of regulation.
What does the FCA do in response to the survey findings?
The regulator says that it ‘will use the results to better understand the issues affecting all firms and help improve how we work’. You can read the full report on the FCA website.
If you would like to understand more about creating a culture of compliance in your firm, you can download our whitepaper, How to embed a compliance culture within your business. The whitepaper is free, and you can get a copy here.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.