NAO to probe FCA over its effectiveness
The review is understood to include examining the FCA’s governance, strategy, and culture and well as its approach to regulating diverse types of firms and markets
The National Audit Office (NAO) has opened an investigation into the Financial Conduct Authority (FCA) which will help the watchdog “fine tune” its future processes, according to Dr Henry Balani, global head of regulatory affairs at Encompass Corporation.
The NAO initiated the review on 17th July in response to the “significant changes” introduced or proposed for the FCA’s regulation of the sector. These include the Future Regulatory Framework, a new Consumer Duty for regulated firms, and a new proposed statutory secondary objective for the FCA to facilitate the international competitiveness and growth of the UK economy in the medium to long term.
Additionally, the NAO said technological innovations like cryptoassets and artificial intelligence present challenges and opportunities for regulating financial services from an external perspective.
The NAOs ‘work in progress’ notice aims to inspect how the FCA collaborates with organisations like HM Treasury and to how it has adapted to the recent changes.
The FCA says that it appears before the Treasury Select Committee (TSC) and is now benefiting from the enhanced scrutiny of the TSCs Sub-Committee.
‘Review represents a step forward’
Encompass Corporation’s Balani said: “Organisations like the FCA play a critical role in the development of the financial services industry, providing institutions with key guidance, as well as supporting them to operate at the highest standards.
“At a time when financial crime, particularly, remains a pertinent global issue, keeping up with the pace of change should be a top priority.”
In May 2023, UK Finance released it annual fraud report, disclosing that over £1.2 billion was stolen by criminals through authorised and unauthorised fraud in 2022, a slight drop from the previous year (8%).
“This review represents a step forward and will help the FCA to fine tune its processes, improving operations and ensuring it is fully prepared to assist businesses in navigating an increasingly complex regulatory landscape,” added Balani.
Reacting to the news, an FCA spokesperson said: “We welcome the National Audit Office’s review of the FCA and how we adapt to change, as it could help us to ensure we continue to meet our objectives.
“We have a clear strategy in place about what we want the FCA to be, and we are well underway to achieving that.”
