At an APCIMS conference Clive Adamson, FCA Director of Supervision, outlined the FCA supervision approach. Although the emphasis was upon the Wealth Management and Private Banking sector, firms as a whole will have an interest in the approach adopted by the new Regulator.
Mr Adamson commenced by summing up three characteristics of the FCA supervision approach as:
- judgement based (with the FCA requiring a deeper understanding of the sectors it regulates);
- forward looking (using more data and intelligence to head off risks before they crystallise); and
- outcome-focussed (concentrating on outcomes being achieved for customers rather than whether a firm complies with FCA rules).
From a more practical point of view we can possibly expect to see more thematic reviews as they are now recognised as the most effective way of delivering conduct priorities. Additional resource has been added to this area.
Firm risk assessments will move away from the traditional approach of focussing on controls and instead look at how a firm runs itself and so will look at business models, strategy, culture and front-line processes.
One big change is the FCA setting up a new Wealth Management and Private Banking Department which will directly supervise such firms; although the biggest wealth managers, which are nearly all part of wider banking groups, will continue to be supervised by their group supervisors (with support from the new Department), with smaller firms being handled via the Firm Contact Centre.
We are promised further thematic work in this sector. The speech sets out key areas and it may be wise for firms to review these areas now rather than leaving it until later. The areas include AML and anti-bribery, conflicts of interest and oversight arrangements; firms should refer to the speech for further details.