UK independent public spending watchdog the National Audit Office (NAO) has launched an enquiry into the Financial Conduct Authority (FCA)’s effectiveness and the ability of the financial services regulator to manage a growing list of responsibilities.
The review will examine how the FCA is working with others, particularly HM Treasury, and assess what action it has taken to meet the “new challenges and take advantage of the opportunities posed by recent changes”.
The FCA was established in 2013 to oversee the conduct and regulation of firms within the financial services sector. Technological innovations, such as crypto assets and developments in artificial intelligence (AI), have broadened its remit in recent years as the regulator wrestles with the “challenges and opportunities” these bring for the regulation of financial services.
Other significant changes have also been introduced or proposed recently that will affect the FCA’s industry regulation. These include the Future Regulatory Framework, a new Consumer Duty for regulated firms, and a new proposed statutory secondary objective for the FCA to facilitate the international competitiveness and growth of the UK economy in the medium to long term.
An FCA spokesperson said: “We welcome the National Audit Office’s review of the FCA and how we adapt to change, as it could help us to ensure we continue to meet our objectives. We have a clear strategy in place about what we want the FCA to be, and we are well under way to achieving that,” according to a report in The Guardian.
The NAO last audited the FCA in 2014, a year after its formation. This review assessed the value for money to customers it provided along with fellow newly created financial regulator the Prudential Regulation Authority.
You can read the results of that report by clicking here.
The NAO’s review of the FCA comes shortly after the Treasury opened a consultation into how anti-money laundering and counter-terrorism financing (AML/CTF) is regulated in the UK.
In the Government’s consultation document that was published on 30 June 2023, a single state regulator features in two of four proposals which will see the re-structuring of the supervisors into one public body. This is in consultation until 30 September 2023.
The consultation document also highlights that “currently, there is [an] inconsistency in supervisors’ approach to risk-based supervision” and states that “all firms intending to carry out regulated activity should be subject to effective gatekeeping assessments”.
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