How accurate is the data your firm submits to the FCA?

The FCA set out in its Business Plan 21/22 how it is changing to improve performance and meet future challenges.  Read our previous article setting out a few of the key areas.

 

Firms can learn from the progress to date on one of the key areas …

The Early Oversight Function (EOF): stronger oversight of newly authorised firms

The results from the first stage of the EOF’s pilot are starting to emerge. The first stage of the Early Oversight Pilot process started in Q4 of 2021 and of the 30 firms selected to be in the pilot, some are still in the first stage of the process, others have managed to complete this stage and have a two month break before the FCA’s next stage will be rolled out.

The interaction throughout this stage included firms completing a questionnaire and providing three sets of data, in a specific format, each covering a one month period. Alongside this firms met with the FCA at the start of the process, throughout where the FCA required to discuss the information provided, and again at the end of the process.

It appears that the time taken to complete this stage is significantly reduced if the firm provides accurate information and the firm displays a good awareness and knowledge of the FCA requirements.

The FCA is gathering feedback from the pilot participants and will use it to shape the process for the 200 firms that will be included in the second year, thereafter all newly authorised firms and firms who have changed their permissions/business model will be automatically included in the process. It is expected that a firm will be in the process for 2 years, possibly 3 years.

These findings indicate the approach being taken by the FCA and the importance placed on accuracy of data and what the data indicates about the firm, worth bearing in mind as we consider another key area from the FCA Business Plan 21/22.

Using new approaches to find issues and harm faster

To enable it to act earlier to prevent or stop misconduct and strengthen its holistic firm assessment, the FCA intends to automate more of the data collection and better analyse data across systems, using advanced analytical techniques to proactively identify and prioritise firms or harms for investigation. Therefore, going forward the FCA will be scrutinising the information provided by firms in greater detail.

Firms have been completing returns for the FCA for several years now with little or no comment regarding the information provided. This is set to change; these returns will now be under greater scrutiny with more of the information interrogated in different ways.

Going forward it is more likely that a firm will be asked to clarify data, explain trends etc. Some of these requests may reveal a misunderstanding in respect of the information required, others will require further detail before it can be established whether any action is required.

As has been evidenced in the Early Oversight Pilot, we believe that accurate, timely data submissions will reduce the possibility of FCA interaction from when the planned technology advances have been implemented.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Until now there has been little evidence of the interrogation of information submitted by firms to the FCA. This would appear to be changing.

Action Required By You

We would suggest that firms review the information being provided within FCA returns, checking against the relevant rules to make sure the correct information is being submitted. Where a firm has only one person competent at completing returns, we suggest that this be reviewed to ensure, where possible, there is adequate coverage in the event of absence etc.. The relevant Senior Managers within firms should become familiar, if they are not already, with the content of returns so that if required they would be able to explain and justify the data provided. ATEB can assist with the completion of Regulatory returns, contact us if you would like to discuss.
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About the Author

Shirley has a wealth of industry experience and proven track record of working closely with firms to deliver high quality compliance and T&C solutions across a wide range of regulatory disciplines.

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