How can regulated firms prepare for a visit from the Financial Conduct Authority (FCA)? In this blog, we share some helpful tips.

The prospect of an FCA visit to your firm can be a daunting prospect. But with a bit of forward planning, you can be prepared if the regulator does knock on your door.

Why might the FCA visit my firm?

Understanding the reason behind the visit is a vital first step. It might be because of a sector-wide thematic review by the regulator, or as a result of specific issues with your firm or its financial promotions. Whatever the driver, knowing why the FCA is coming to see you is essential and will help you to prepare.

Will I know if the FCA plans to visit me?

Yes. The regulator will write to your CF10 (the person in charge of compliance oversight) to let you know they plan to visit. Only in very rare situations – when fraud or other serious wrongdoing is suspected, for example – will the FCA turn up unannounced.

What could the impact of an FCA visit be for my business?

Potentially, it could have very serious consequences, including fines, the suspension or withdrawal of your financial promotions or a ‘Section 166’ review. In the most extreme cases, it could result in prison sentences or the compulsory withdrawal of your products from the market. Then there is the long-term reputational damage any of these could cause to your business.

But although any of these could result – let’s keep things in perspective. In many cases, the FCA will be satisfied with what they see. And this is all the more likely if you are well-prepared for the questions they ask and the things they want to see.

What happens in an FCA visit?

The regulator’s objective is to understand your firm and your business model. They will want to know what your business plan looks like, what objectives you have for the firm and how you are working towards them. What are your processes and procedures; are they robust and do they measure up to FCA requirements?

If there are any areas where they have concerns – for example, if your financial promotions have been non-compliant in the past – there will be a specific focus on these areas. In the case of financial promotions, for example, the regulator would want to know things like:

What approval processes do you have to make sure non-compliant promotions aren’t issued?

How do you manage the review and withdrawal of financial promotions?

What is your record-keeping like? Do you have a compliant audit trail of your review and sign-off procedures for financial promotions? Are full version histories and copies of the final promotion kept on file?

How do you approach compliance for digital marketing, including your website and social media? This is often overlooked when it comes to compliant processes, but in fact digital financial promotions need to adhere to the same guidelines as promotions via any other channel.

There are lots of ways you can take a proactive approach to FCA compliance, even without the prospect of a visit. Keeping an eye on the FCA’s plans and objectives; ensuring your risk management strategy is robust and enforced; making sure your documentation and record-keeping is up to scratch; producing compliant financial promotions.

If a visit from the regulator is imminent, there is even more impetus to get organised. We’ve teamed  up with Perivan Technology to produce a useful Guide on How to prepare for an FCA visit, which has much more detail on how to prepare for a visit from the FCA.

The Guide is free, and you can download a copy here. It contains a wealth of tips on how you can be ready for the FCA if they decide to visit your firm, along with 13 questions you should ask yourselves before the regulator arrives.

A visit from the FCA can be a daunting prospect, but with the right groundwork, you can be prepared if they decide to call on your firm.

Author: Christopher Hall

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