FCA has published its approach to investigating and reporting on regulatory failure. The paper makes clear the circumstances in which FCA will investigate possible instances of failure and report to Treasury. The Financial Services Act 2012 (FS Act) imposed two conditions which, if met, would mean FCA should launch an investigation. These are:

  • a significant failure to secure appropriate consumer protection, or a failure that could have had a significant adverse impact on UK financial system integrity or market competition; and
  • a serious failure of the regulatory system or of FCA might have caused the events, or made them worse.

The report looks at what a regulatory failure is, the powers of Treasury to require reports and FCA’s right to suspend or postpone an investigation. It also sets out what the report must include, such as the lessons FCA could learn. PRA has separately published its approach to meeting these requirements (see below). (Source: FCA Publishes Regulatory Failure Approach)