FCA speaks on CRO role

Sarah Pritchard has spoken on the role of the CRO in regulated firms.  She noted that firms generally want the sector to become more comfortable with taking managed risks to support growth and hopes that the FCA’s 5 year strategy can help with this. But she noted the outcomes-focussed stance of the FCA is a deliberate one – to allow the UK better to support innovation, and this brings with it the risk that firms may feel uncomfortable at the lack of prescriptive rules in some areas.

She said the FCA wants to hear from firms on where there are regulatory barriers that are stopping firms meeting the FCA’s expected outcomes, and where industry norms and practices are themselves forming a hurdle.

She mentioned the targeted support regime and how the FCA has been working with firms to work out where rules are needed. She said that as part of this, a question arose as to why disclosure documents mention risks before benefits – and that her research had shown that this is not because the FCA mandates it, but because it is industry practice. So it is not in fact required.

She also highlighted other areas of the FCA’s work, such as the rebalancing of mortgage regulation which may mead to a worse outcome for some consumers, but where the FCA considers the cost of not making the changes is potentially higher.

She ended by asking CROs to let the FCA know whenever they find sticking points or other matters that could get in the way of smart regulation.