These tools may be usefully grouped under four headings:
identify – identifying instances where the UK financial system or firms are harming consumers, have the potential to do so, or where the UK financial system is working poorly and not providing sufficient benefit to consumers2;
diagnose – diagnosing potential harm, including its cause, extent and potential development2;
Tools may serve more than one purpose. For example, supervisory powers can be used to address risks which have materialised or to assist in preventing risks from escalating. In the first instance they are remedial; in the second, preventative.
Some of these tools, for example the use of public statements to deliver messages to firms or consumers1, do not involve the FCA in direct oversight of the business of firms. In contrast, other tools do involve a direct relationship with firms. The FCA also has powers to act on its own initiative to impose or vary individual requirements on a firm (see SUP 7) and to ban or impose requirements in relation to specific financial promotions1. The FCA may also use its general rule-making powers to ban or impose requirements in relation to specific products, types of products or practices associated with a particular product or type of product. The use of the FCA's tools in its oversight of market practices, in ensuring the protection of client assets and for prudential supervision of FCA-only firms, will also contribute to the integrity and orderly operation of the financial markets.
liaison with other agencies or regulators;
meetings with management and other representatives of a firm;
reviews and analysis of periodic returns and notifications;
reviews of past business;
use of auditors; and
use of skilled persons.