Statement of Policy on statutory investigations into regulatory failure and producing reports [PDF]
Executive Summary
The FCA's updated Statement of Policy outlines its approach to statutory investigations into possible regulatory failures under Part 5 of the Financial Services Act 2012, including criteria for triggering investigations and producing reports for HM Treasury. It matters because it clarifies when the FCA must self-scrutinize serious lapses in regulation, helping firms anticipate rare but high-profile probes into systemic issues affecting consumer protection, market integrity, or competition. The primary update adjusts inflation-linked monetary thresholds for assessing "significant" consumer detriment, ensuring the policy remains relevant. #
What Changed
- Inflation-adjusted monetary thresholds for consumer detriment: Detriment exceeding £210 million is more likely deemed "significant," while below £45 million is unlikely to meet the threshold unless qualitative factors (e.g., consumer vulnerability, widespread impact) apply. These replace 2013 levels and will be reviewed periodically. - No other substantive changes from the 2013 policy; refinements emphasize internal "lessons learned" reviews for non-statutory cases to avoid resource duplication in formal probes. - Clarified two-part statutory test: (1) Events indicating significant failure in consumer protection or adverse effects on integrity/competition objectives; (2) Events might not have occurred (or effects reduced) but for serious failure in FSMA system or its operation (e.g., fla
What You Need To Do
- Monitor for triggering events
- Enhance internal reviews
- No direct firm obligations
- Document qualitative factors (e
Key Dates
Compliance Impact
Urgency: Medium. This update signals FCA's commitment to accountability without imposing new firm-level rules, but it heightens focus on significant failures (£45m+ detriment), potentially leading to public reports exposing industry-wide gaps. Firms with high consumer exposure (e.g., retail-facing) should prioritize as probes, though rare, amplify reputational and remedial risks via Treasury publi
Who is Affected
Summary
Policy and guidance