“Where it doesn’t see change, we can expect the FCA to use the tools at its disposal to oversee change, and if it believes vulnerable consumers have suffered harm, for those consumers to be identified and redressed.
“The FCA also has powers to pause firms’ activities, such as taking on new customers, if it is not satisfied that processes and governance are sufficiently robust,” says Barnwell. “We could expect to see enforcement action for the most serious failures.”
In terms of regulatory consequences, Warren agrees that it is likely to depend on the severity and breadth of the issue, and whether it is isolated to a firm or found to be more systemic.
“If systemic, a ‘Dear CEO’ letter is likely. If not, firms could see themselves brought into enhanced supervision, or have enforcement action taken against them if the breaches are both bad enough and they persist. Most, however, are likely to be given the opportunity to improve.”
Chloe Cheung is a senior features writer at FT Adviser
