The Financial Conduct Authority (FCA) has today published its paper disclosing how it will investigate and report on regulatory failure.
The report follows the Financial Services Act 2012, which obliges the FCA to publish its policy of whether or not to carry out investigations on possible regulatory failure.
Martin Wheatley, chief executive of the FCA, said the instances where it will report “significant events and serious failures” to the Treasury.
He explained: “A regulatory system that removed all risk would be prohibitively expensive and could stifle innovation and competition.”
The now-defunct Financial Services Authority (FSA) published three reports in which it considered the effectiveness of its regulation of firms and markets.
The new framework set out by the FCA states what should and what should not be classified as regulatory failure, explaining how the FCA is to meet these new requirements in possible investigations into instances of regulatory failure.
Today’s paper outlines when levels of heightened scrutiny would or would not be justified. It also details the meaning of a ‘significant failure’ or what constitutes a ‘significant adverse effect on the integrity of the UK financial system’.
For readers who would like to read the report in full, they can do so at the site below: