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FCA warns firms over ‘tick box’ mentality

The FCA has warned the industry to move away from the “tick box” compliance culture created by its predecessor.

Speaking at the FCA’s Canary Wharf offices last night, FCA director of supervision Clive Adamson said a significant challenge facing the industry is compliance is still focused on adherence to a strict set of rules, while the FCA is placing greater emphasis on culture and consumer outcomes.

He said: “This is a big issue for the industry. And arguably the FSA caused the problem – because if the perception was that we were a tick box regulator, that led to a certain approach from the compliance industry.

“The compliance industry was built around the idea that everything will be OK if firms comply with a set of rules, and the challenge is how to move that industry to a different place, which is about looking at outcomes.

“We see some firms are on that journey, but others recognise they have to substantially re-engineer their second line activity and that is a challenge.”

Adamson said firms must ensure the interests of their customers are aligned to the interests of the business.

He said: “The fair treatment of customers is not something that can be reduced to a risk to be managed. That way leads to a tick box compliance approach.

“So while the industry has criticised the FSA for what it regards as a tick box supervisory approach, equally we are asking the industry not to reduce what we are about by adopting a tick box compliance approach.”

He said the long-term alignment of consumer and business interests will only be achievable if “we build trust between the regulator and the industry”.

Adamson said: “We have spent a large amount of time engaging with the industry over the past year and we would like to continue that. It is very important we are a listening regulator and an engaged regulator and that we understand the journey firms are going through.

“We accept this is going to take time to get to the point where we are collectively in a better place than we have been in recent years.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Like the sound of it, but the problem is that consumers have very selective memories of events and that is precisely why boxes need to be ticked, much as we may dislike such practices, they exist to protect our interests against the views exercised by the likes of FOS and others.

    Outcomes invariably depend upon (in the case of investment) positive performance and this is far from a certainty, hence the need to ensure practices which protect the adviser/firm against unscrupulous claims of mis-selling are vital.

    Laudable though it sounds, I am not sure PII companies will agree with the views expressed in this article!

  2. Love this from the FCA, I have just completed my FCA NOTIFICATION OF ON-LINE REGULATORY REVIEW and it was TICK BOX!

  3. Anything that is done to return to a customer/supplier relationship based on mutual trust has to be welcomed. Regulators have to move away from the assumption that all potential customers (and even existing ones) are motivated by criminal intent.

  4. “.. the challenge is how to move that industry to a different place, which is about looking at outcomes.”

    Like the outcome for thousands of savers who have lost their money as a result of regulatory incompetence and the abscence of a credible complaints proceedure.

    Rather than preach to industry, the FCA needs to put its own shambolic house in order, and that means you Mr Adamson.

    investoraction.com

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