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The FCA announced its move to a model of being a data-led regulator in 2020, using data and analytics more effectively to help regulate firms under its oversight. Now 3 years into the initiative, firms are feeling the impact with a greater volume and more precise questions being asked by the regulator.
What questions has the FCA been asking around data?
We’ve supported firms receiving queries from the FCA linking back to data reported through their own regulatory returns, communicated on their website, or added to Companies House. As the FCA addresses questions on a particular topic, it’s using the opportunity to make additional enquiries and request supporting documentation. This has ranged from enquiring about a firms’ consideration and implementation of Consumer Duty, to requesting an up-to-date regulatory business plan.
It’s important to be fully aware of what figures are being communicated on your website, particularly when figures are collated as part of a wider group. You should be reconciling the information being completed on your returns and checking the accuracy of those figures with relevant individuals.
We’ve also seen the FCA querying firms frequently changing Senior Management functions. Such changes concern the regulator, and they have been sending questions and speaking with those firms.
Regulated firms should be aware that the FCA also has access to data from other organisations, such as fraud data, which has led them to focus attention on querying financial crime systems and controls.
The regulator interprets the data it has, leading it to raise concerns which, in some instances, relate to conduct. These questions can impact resources and take attention away from other matters. As the FCA make enquiries, there are also likely to be follow up questions which additionally need to be responded to.
In one instance, we spent 36 hours assisting a small asset management firm with responding to FCA queries and follow up questions, with additional time assisting on remedial activities. This can be quite a burdensome and time-consuming process, making it crucial to start out with high-quality data and putting reporting practices in place that achieve this.
How has the FCA been using its powers?
The FCA has been responding by commissioning Skilled Persons reports, also known as S166 reports. These reports impact a firm’s resources, both financially and non-financially with resources being diverted from other projects or work to process the skilled persons requests. Upon completion of a S166 report, you can face similar costs to implement additional controls and will typically require additional resources to support the changes being implemented.
The FCA has commissioned reports at an increasing rate as shown below:
- Q1 2023/24: 11 reports commissioned
- Q2 2023/24: 18 reports commissioned
- Q3 2023/24: 24 reports commissioned
A total of 53 S166 reports have been commissioned so far in 2023/24, with one quarter yet to be reported. For comparison, in the 2022/23 financial year there were a total of 47 S166 reports commissioned by the FCA.
How can Bovill Newgate support
We act as an independent third party to help actively manage risks and can support you with understanding the data you’re reporting to the FCA as well as communicating in the public domain. Our consultants can forensically examine, question, and understand your data to ensure that there’s a clear audit trail for what’s reported to the FCA and published on websites.
We can help you to understand your data and how it may be perceived by the regulator, while ensuring your current reporting practices allow for consistent and appropriate reporting.
Our team regularly undertakes health checks of current practices, performs risk assessments, helps with governance, policies, and training, and can support you through regulatory questions and visits.
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