Financial Conduct Authority Faces Decline in Satisfaction Among Firms

What's Happening?

The Financial Conduct Authority (FCA) has experienced a notable decline in overall satisfaction among firms, according to the latest Practitioner Panel survey. Satisfaction levels have dropped from 84% in 2023-24 to 74% in 2024-25. The survey highlights a decrease in the perceived effectiveness of FCA regulation, with fixed firms—those receiving the highest level of supervisory attention—reporting a drop from 84% to 67%. Flexible firms, which are subject to lighter supervision, maintained a stable satisfaction rating of 75%. The survey also revealed an increase in information requests perceived as excessive by fixed firms, rising from 28% to 47%, and flexible firms, increasing to 31%. Additionally, fixed firms reported challenges in collating requested information, with 66% finding it difficult and 49% feeling they lacked sufficient time to compile data. The survey indicates a significant drop in the belief that FCA regulation enhances the UK's reputation as a financial center, with fixed firms' agreement falling from 84% to 57%.

Why It's Important?

The decline in satisfaction with the FCA among firms is significant as it may impact the regulator's ability to effectively oversee the financial sector. A decrease in perceived effectiveness and satisfaction could lead to challenges in implementing regulatory measures and maintaining trust among financial institutions. The increase in information requests and the difficulty in collating data may strain resources and affect compliance efforts. The drop in confidence regarding the FCA's role in enhancing the UK's financial reputation could have broader implications for the country's position as a global financial hub. Firms' dissatisfaction with the FCA's proportionality in weighing costs against benefits may also influence future regulatory approaches and policy decisions.

What's Next?

The FCA may need to address the concerns raised by firms to restore confidence and improve satisfaction levels. This could involve reviewing the frequency and nature of information requests to ensure they are necessary and manageable. Enhancing communication clarity and consistency may also be crucial in rebuilding trust. The regulator might consider engaging with firms to better understand their challenges and collaborate on solutions that balance regulatory oversight with operational efficiency. Additionally, the FCA could explore strategies to reinforce its role in promoting the UK's financial reputation, potentially through targeted initiatives or policy adjustments.

Beyond the Headlines

The survey results may prompt discussions on the broader implications of regulatory practices and their impact on the financial sector's competitiveness. The perceived decline in the FCA's effectiveness could lead to debates on the balance between rigorous oversight and fostering innovation within the industry. Ethical considerations regarding the proportionality of regulation and its effects on consumer outcomes may also arise. Long-term shifts in regulatory approaches could be influenced by these findings, potentially affecting the UK's financial landscape and its attractiveness to international investors.