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FCA changes policy on compliance guarantees

The FCA is revising its guidance on attestations and plans to publish quarterly data on their use following repeated concerns over transparency and proportionality.

An attestation is a written confirmation that a firm is meeting certain regulatory requirements. They can take the form of a Dear CEO letter and are usually required by the chief executive but can also be required of other individuals holding a significant influence function such as directors or compliance officers.

In July, Money Marketing revealed concerns among regulatory experts that the FCA is not being transparent in the use of attestations.

The regulator also does not track the number of attestations it requests from C3 and C4 firms – the smallest type.

Today the FCA has published an exchange of letters on attestations between FCA Practitioner Panel chairman and Nationwide chief executive Graham Beale and FCA director of supervision Clive Adamson.

In April, Beale wrote to Adamson to ask for clarification on the way in which attestations are used.

He said the panel is concerned at the increasing use of attestations, and the governance and monitoring arrangements around their use. Beale said the panel also believes the tool is in danger of “skewing prioritisation of risk at firms”.

In a letter to Beale dated 22 August, Adamson says: “To ensure increased consistency in our approach to using attestations and address the risks that you identified, we will issue revised internal guidance and supporting materials available to supervisors, emphasising the importance of clarity and transparency when using attestations.

“We are also strengthening our governance processes around attestations including ensuring that all attestations are signed off at head of department level and that they will be reviewed by a central quality assurance function similar to the one used for skilled person reviews.

“We are also changing the way we record and track attestations. Going forward, we are looking to publish data on attestations on a quarterly basis, similar to the information we publish on skilled person reviews.”

The letter also sets out in detail the regulator’s rationale behind attestations and the most common scenarios in which they are used.

It says attestations are used to gain “personal commitment from an approved person that specific action has been taken or will be taken”.

Last week, the FCA published an attestation signed by Nationwide’s group finance director confirming that the lender’s regulated covered bonds comply with FCA rules.


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