15 Jan 2021

The Financial Conduct Authority’s (FCA) ability to supervise the more than 4,000 firms deemed “at-risk” in its coronavirus (COVID-19) financial resilience survey data could be hindered by the same skills and gaps raised in a report on its regulation of London Capital & Finance (LC&F).

The FCA has said the data published last week shows the pandemic’s “real-time effect” on the firms it prudentially regulates and that it provides more “granular” monitoring “to give an early warning about weaknesses in firms’ financial resilience”. This characterisation of its abilities looks like an overstatement, however. There are gaps in the data. In many cases it is stale, and the regulator is seemingly unable to join it up with data it already holds to perform specific analyses.

The idea that the FCA has asked 4,000 firms to answer some questions about their financial position — that it’s done that using its formal powers, and those firms haven’t replied — is rather troubling, because it suggests that many (and perhaps most) of those firms are already in trouble. So much trouble, in fact, that they don’t have the resources they need to reply; or they’re choosing not to do so, for fear of where an honest set of answers might take them,” Finney said.

This article was first published in Thomson Reuters Regulatory Intelligence on 15 January 2021. Registered users can access the full article and Chris’ comments, here.

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