Financial Conduct Authority (FCA) chairman Andrew Bailey has said the regulator will make efforts to ease communication with it for smaller firms.
Bailey highlighted a response to an FCA consultation paper for regulated firms, which said smaller regulated firms risk being driven away from the market as a result of the amount of input required under the FCA supervision.
Speaking to the annual Finance and Leasing Association (FLA) dinner, Bailey said that “two way communication with the FCA is too difficult for small firms”, which constitute the majority of the FCA’s 57,000 supervised entities.
He said that firms that do not have the resources to appoint dedicated supervisors to liaise with the FCA are at a disadvantage compared to bigger competitors, and risk missing out on the possibility to contribute to consultations on regulatory changes.
This, in turn, could discourage those firms, and potentially push them out of the market, said Bailey.
Bailey pointed to the FCA’s use of “portfolios” – grouping firms based on business models and governance – as a means towards enhanced inclusiveness.
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Firms that pertain to a “flexible” portfolio spanning a certain sector interface with the FCA with a portfolio liaison, unlike bigger firms that get appointed with an individual supervisor.
“The portfolios will not be static because we recognise that business models do change,” Bailey said.
“For each portfolio we will regularly agree the principal risks to consumers or markets that the group of firms presents, our programme of work to mitigate these risks, and the steps we will require firms to take.
“We will maintain contact to ensure that firms understand our assessment and the actions we are seeking.”