D1A-D2: Compliance monitoring

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FCA has monitoring procedures to ensure compliance - reactive & proactive regulator. Receives regular flow of info from:

accounts & auditors statements

business volumes

sources of business

complaints statistics

FCA can react to concerns expressed by:

Consumer Panel

Practitioner Panel

OFT

Complaints Commissioner

Financial Ombudsman

media

Government

individual complaints

FCA is proactive - regular programme of inspection visits. Enforcement officers check compliance systems at firm to ensure adequacy - checking business operations, personnel matters & customer matters.

Report prepared - firm must take action within specified time limits.

FCA can undertake mystery shopping. Can visit firms without notice, obtain a warrant if necessary.

Internal compliance monitoring

Each firm must have own compliance monitoring procedures to avoid or reduce accidental rule breaches & problems with FCA visits. Firm's Compliance Officer is responsible for all aspects of FSMA compliance. & will typically have dept. to assist in work.

Approved Person holds formal 'Compliance Oversight' controlled function, whilst not a requirement for mortgage & insurance intermediaries, snr mgmnt must delegate function of role to appropriate individuals.

Dept. may have control over advertisement checking, fact-find checking, suitability ltr checking & training.

PRA supervision

Aims to develop rounded, robust, comprehensive view of firms, to judge if being run in safe & sound manner, and whether insurers are protecting policyholders.

Divides firms into 5 categories of 'potential impact', depending on size, complexity & interconnectedness with rest of financial system.

Varied resources applied to firms based on their proximity to failure & resolvability, given possible adverse effects of disorderly firm failure on its objectives. Does not operate zero-failure regime, but seeks to ensure firms fail without significant disruption to supply of critical fin servs. Firms proximity to failure captured within Proactive Intervention Framework.

Firms which have potential to cause significant disruption collectively (small credit unions/insurers) supervised mainly on portfolio basis. Large complex firms subject to detailed supervision individually with named supervisory contact.

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