Response to FCA independent reviews

Dec 18, 2020 12:00:00 AM

What is happening?

In December 2020, the FCA responded to the two recently issued independent reviews of its regulation of London Capital & Finance plc and of Connaught Income Fund Series 1 and connected companies.

The FCA has accepted the nine recommendations addressed solely to it in the LCF Review and the five lessons identified by the Connaught Review.

What do you need to do?

The significant criticisms levelled at the FCA in the Reviews has led to an acceptance by the FCA that significant mistakes were made in its regulatory processes, with CEO Nikhil Rathi commenting that “My colleagues and I are committed to implementing the recommendations and lessons learned which will require significant and necessary changes to the way we regulate, our use of data and intelligence, and our culture”. The FCA is now proceeding with operational and policy changes to implement the recommendations.

Thistle has reviewed the changes that are intended and believes that there are three to be introduced in the next six months that may have a significant impact on regulated firms; these are;

firms’ permissions

The undertaking of a “use it or lose it” exercise, with firms that have not used their regulatory permissions to earn any regulated income for the last 12 months being at risk of having their authorisation revoked, to reduce the risk of firms having a permission to carry out regulated activity purely to add credibility to their unregulated activities,
supervision of firms’ risks

FCA senior management will ensure that product and business model risks identified in its policy statements and reviews as being current or emerging, and of sufficient seriousness to require ongoing monitoring, are communicated to and appropriately taken into account by staff involved in the day-to-day supervision and authorisation of firms, and
financial promotions

The FCA will have appropriate policies in place which clearly state what steps should be taken or considered following repeat breaches by firms of the financial promotion rules.

How can we help you?

If you’d like to know more about how we can help you with your regulatory permissions, FCA supervision or financial promotions, or with any other aspect of FCA compliance, our expert team is here to help.

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