FCA sets out sustainable model of regulation

FCA sets out sustainable model of regulation

The FCA’s Tracey McDermott (pictured) has commended the regulator’s recent restructuring. The FCA has separated its authorisations and supervision arms to retain sector focus as part of structural changes to increase flexibility and evolve its supervisory model.

Ms McDermott, head of the supervision – investment, wholesale and specialists arm, said the new structure aimed to give the UK a “sustainable model of regulation for the 73,000 firms we now supervise”.

She added: “It will have a greater focus on sector or market-based approaches to regulation, and more flexibility in how we use our resources.”

Ms McDermott’s division will cover investment, wholesale banking and markets.

In its latest regulatory roundup, the FCA said that Linda Woodall will head the authorisation arm on an interim basis. Rebranded as supervision retail and authorisation, it will cover retail banking, retail lending, general insurance and protection.

Philip Salter will cover the retail lending sector, also on an interim basis, while Rob Taylor will head the newly created investment management department, which will bring together asset and wealth management.

A number of teams will support both divisions.

Ms McDermott outlined some of the ideas the regulator was looking at over the coming months to improve its supervisory objectives. These include: how it classifies firms, how to take a sectoral approach to the supervision of large firm groups, and how it can make more use of cross-firm work for large and small firms.

Last week, the FCA’s board minutes from 25/26 February revealed its supervision division had shown elements of resources being stretched, and was being reviewed by Ms McDermott.

Adviser View

Tony Catt, compliance consultant at East Sussex-based TC Compliance Services, said: “I am more of a believer in integrating but can see the needs of each department are different because of the types of firm that will be authorised by each of them.

“You would expect they would have a reasonable authorisation template of what to expect from each firm so am not entirely convinced of the need to have separate authorisations. The supervision of each would likely to be different - investment is different to lending and protection - so this is understandable. If the end result was that it provided a better outcome for clients and cut down the authorisation process then it would be good for all.”