PIMFA, the trade association for investment services and financial advice has published a paper on FCA supervision, asking whether it is "fit for purpose".
PIMFA identifies areas where it considers that the FCA is not meeting its regulatory objectives. These include querying how the FCA assesses its own suitability and effectiveness as a supervisor, its data and intelligence gathering and failure to take swift action against firms for criminal offences. Interestingly, PIMFA observes that while firms continue to be concerned about rising FSCS levy costs, they are even more concerned about accountability within the FCA in relation to its supervisory approach and its impact. PIMFA states that "firms are unwilling to provide feedback directly to FCA where they believe that supervisory engagement is unsatisfactory".
PIMFA raises worthwhile questions about the effectiveness of FCA supervision and encourages a wider debate about the future of regulation in the UK, that goes beyond the content of the rule book. While it is accepted that firm defaults will always arise, the regulator should also reflect on whether failures in its supervisory regime have played a factor, and how these could be addressed to avoid them being repeated. For example, the FCA should review its supervisory output, methodology and resourcing, and consider the skills and experience of its staff. Such reviews could be particularly informative in cases where it appears that the defaulting firm has disregarded its regulatory obligations over a prolonged period. Honest and open reflection on these issues would increase both credibility and effectiveness of the supervisory system.
The paper, ‘FCA Supervision – fit for purpose?‘ identifies a number of areas where we consider that the Regulator is falling short in its role as a supervisor in delivering its regulatory objectives