FCA sets out its Approach to Supervision and Enforcement

The Financial Conduct Authority (FCA) has today published its Approach to Supervision and its Approach to Enforcement.

When the FCA launched its Mission, it committed to publishing a series of documents that would explain its approach to regulation in more depth. These articulate how the FCA carries out its main activities, aiming to provide transparency to its thought process and decision-making. 

The Approach to Supervision shows how the FCA aims to be more forward-looking and pre-emptive in its supervision of firms. Firms’ strategies and cultures are at the root cause of most major failings. Supervision’s proactive engagement with firms will focus on business models and the drivers of behaviour in firms. Supervision will prioritise its activities according to the greatest risk of harm. The Approach document explains how the FCA has an intelligence-driven and data-led approach that enables it to take prompt and incisive action once harm has been identified.

The Approach to Enforcement outlines how the FCA conducts investigations and its powers. It also shows how enforcement sets out to achieve fair and just outcomes in response to misconduct and to ensure FCA rules and requirements are obeyed. The overriding principle in the FCA approach to enforcement is substantive justice – to ensure we carry out investigations in a consistent and open-minded way to get the right outcomes.

Andrew Bailey, FCA Chief Executive said:

'The most visible parts of the FCA’s work, supervision and enforcement are critical to helping us fulfil our objectives. For supervision this means overseeing regulated firms to identify, prevent or reduce harm to consumers and markets. And for enforcement our overriding principle is to provide substantive justice, aiming to achieve fair and just outcomes in response to misconduct and to ensure our rules and requirements are followed.

'We hope today’s Approach documents outline clearly and in a transparent way, exactly how we fulfil our objectives through supervision and enforcement activity and why we make the decisions in the manner that we do. We are committed to continually improving our models and driving progress.'

Both approach documents ask whether they set out the FCA’s respective approaches to supervision and enforcement clearly and whether there are other issues that could benefit from further clarification.

Both approach documents are open for consultation until 21 June 2018. The final approach documents will be published later this year.

Notes to editors

  1. Our Approach to Supervision.
  2. Our Approach to Enforcement
  3. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  5. Find out more information about the FCA.