Find out about our approach to supervising firms.
Our Approach to Supervision and feedback statement explains the purpose of, and our approach to, supervising firms and individuals and the public value it delivers.
It sets out:
- our role in ensuring fair and honest markets
- why and how we prioritise our supervision work
- how, in practice we supervise the firms and individuals we regulate
Find out more about Our Approach to Supervision.
Why we supervise
We define supervision as the continuing oversight of firms and of individuals controlling firms to reduce actual and potential harm to consumers and markets.
We use judgment to supervise against a framework of principles and rules that represent minimum standards of conduct. The firms that we regulate and their people are responsible for ensuring that they act in accordance with our principles and rules. We expect firms and their employees to meet these standards and we hold them to account when they fail to meet them.
We take a forward-looking and strategic approach in our supervisory work. We look at both the conduct of individual firms and, more widely, at how retail and wholesale markets are evolving. To supervise effectively, we need a thorough understanding of the business models and strategies of the firms we regulate.
We also know that firms’ cultures shape the conduct outcomes for consumers and markets. We therefore aim to assess and address the drivers of culture. This includes looking at firms’ leadership, purpose, governance and approach to managing and rewarding their employees.
We supervise nearly 60,000 firms serving retail and wholesale consumers, as well as users of many of the world’s largest and most significant global markets. These firms vary greatly in size, complexity and in the risks of harm they pose to consumers and market integrity. To make the best use of our resources and deliver the greatest public value, we take a proportionate approach to supervising firms.
Supervision by portfolio
We divide the financial sectors we regulate into portfolios, each made up of firms with similar business models. Portfolios are fluid and adapt as business models change. For firms operating across different sectors or markets, we assign the portfolio which reflects their main business.
We analyse each portfolio and agree a strategy to address potential harms we identify, which includes taking action on firms posing the greatest harm.
We use information from a wide range of sources – including feedback from consumers and consumer organisations, data and intelligence from firms and trade associations, insight from other regulatory organisations and information from MPs and whistleblowers. This enables us to identify problems rapidly and, where necessary, intervene swiftly to address harm to consumers or markets.
We communicate our view of the main risks of harm, our expectations and our priorities on each portfolio every couple of years. We publish all the letters we send on our supervisory correspondence page.