FCA follows the current of reduced regulation
In a major shift from its former 'name and shame' proposed strategy, the FCA is now taking a collaborative approach with firms in order to encourage economic growth by reducing regulatory burdens.
Written by a human
In brief:
- The FCA is the latest regulator to shift towards a more collaborative, growth-focused regulatory strategy
- This marks a considerable shift away from the regulator’s proposals to “name and shame” firms under investigation
- The FCA is not alone in this change, following global peers that are also supporting innovation and scaling back enforcement policies
A recent speech by the Financial Conduct Authority’s (FCA) Director of Market Oversight, Dominic Holland, has announced a major shift in the regulator’s approach. Moving away from its former proposals to “name and shame” firms under investigation, the FCA is now focused on collaboration. to the regulator intends to ensure comprehensive consumer protection and economic growth, by easing regulatory burdens and enabling innovation.
Will the river run dry?
The FCA is now placing stronger emphasis on market growth and raising capital, goals that are central to its evolving priorities. The regulator is removing barriers where possible and looking to better understand how it can work cooperatively with firms. It is doing this by proactively extending a hand to businesses, asking for input to improve decision-making. As Holland stated:
“I want to listen and help to bridge the gap between market participants and the regulator.”
In his speech, Holland compared theFCA’s contribution to the UK economy as that of a quiet, persistent, and impactful river. However, it’s sudden switch in gears denotes more of an unpredictable and weaving current, raising questions as to which way the tide might turn next.
From “name and shame” to engagement
It was not so long ago that the FCA was looking to expand transparency by publicly naming firms under investigation. The basis for this was to hold firms accountable and push them to invest in compliance supervision to avoid public scrutiny. However, after receiving substantial backlash and criticism from financial firms and the government, the FCA confirmed it will not move forward with this policy, making a full U-turn. Now, it will only look to name and shame firms under exceptional circumstances.
Although labeling its new approach and direction as balanced and proportionate, the FCA is actively engaging with firms to help reshape and structure the regulatory agenda, while both highlighting the importance of reporting and acknowledging its potentially burdensome nature.
Following the global trend
This softer regulatory stance is not occurring in a vacuum. The FCA’s pivot aligns with a broader regulatory trend, where agencies such as the Securities and Exchange Commission (SEC), the U.S. Department of Justice (DOJ), and the Commodity Futures Trading Commission (CFTC) are also embracing a shift toward deregulation. The SEC and CFTC have also streamlined enforcement and promoted flexibility, while the DOJ has encouraged firms to proactively self-report misconduct.
Holland’s speech marks a clear departure from hardline oversight and aligns with the FCA’s growing interest in supporting and enabling innovation. It also reflects the agency’s updated five-year strategy, focused on driving competition and supporting growth. What this doesn’t mean, however, is that firms can sideline their existing compliance policies and focuses and expect not to incur regulatory wrath as, while the FCA won’t be looking to raise the enforcement bar, it will likely be staying where it currently is.
While regulators seem to be collaborating with firms and taking a step back in their hard line enforcement stances, the regulatory tide is constantly changing, and firms need to remain steps ahead by ensuring robust and secure monitoring of all their communications.
