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#Governance, Risk and Compliance

FCA Annual Report July 2015

International Compliance Association

annual report , authorisation , customers , FCA

The FCA has issued a comprehensive review on its progress over the year including how it has achieved its objectives.  This is a quick overview of how it assesses its performance in discharging its powers as a regulator.  In ICT, we explain to our delegates that the regulator has four main powers:

  • To authorise
  • To set standards
  • To supervise
  • To enforce.

Reviewing three of these powers reveals significant evidence of success.

Authorisation: although it admits it did not meet all of its service standards all of the time, the significant fact is that there have been a huge number of authorisation requests from consumer credit providers.  By the end of March 2015 there had been 19,533 applications of which 11,079 had been decided upon.  To date, the number of applications either declined or withdrawn has been relatively low.

It will be interesting to see how the current year’s statistics compare with these figures, as the majority of these applications will be completed by then.

Supervision:  the FCA aims to drive cultural change through its supervision approach, and reviews of the firms’ management of risk, and by questioning whether they are putting the interests of consumers and maintaining integrity of the market at the centre of everything they do.

In proactive supervision under Pillar 1, they provided the following diagram:

Significantly, the deep dives referred to are, in many cases, an investigation of the governance arrangements and controls within the firm.  Pillar 2 event driven work revealed there had been fewer events – down 31% from 2013/14 – but action was taken on a higher proportion (41% compared with 36%).

Enforcement:  unsurprisingly, this subject gets greater coverage in the Annual Report, because it is the most visible part of the FCA’s work. 

Enforcement action was taken against 28 firms and 27 individuals, 43 penalties were levied totalling £1.4bn, 55 final notices were issued, and 95 outcomes achieved.

Enforcements were issued in the following areas:

  • Senior management responsibilities and significant influence functions
  • Treating customers fairly
  • Conflicts of interest
  • Benchmarks (LIBOR, Gold price fixing, FX trading)
  • Transaction reporting
  • Protecting client assets
  • Financial crime
  • Market abuse.

In addition, the FCA’s enforcement action included taking early action to mitigate ongoing or potential risks to consumers or markets, and they have placed a greater emphasis on transparency, both throughout the industry and within the regulator itself.


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