These tools may be usefully grouped under four headings:
diagnostic: designed to identify, assess and measure risks;
monitoring: to track the development of identified risks, wherever these arise;
preventative: to limit or reduce identified risks and so prevent them crystallising or increasing; and
remedial: to respond to risks when they have crystallised.
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 consumers of financial services, 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 promotions. 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.