FCA Calls On Fast-Growing UK Financial Firms To Strengthen Governance

The UK Financial Conduct Authority (FCA) has called on fast-growing asset management, wealth management and payments firms to ensure their governance, risk management and control systems keep pace with business expansion.

The regulator published findings from its high-growth pilot, which examined governance practices at firms experiencing rapid growth. It outlined practices covering board composition, risk oversight, succession planning, operational resilience and consumer protection. The FCA said firms should update governance structures, policies and procedures when their business models change. It also highlighted the need for clear responsibility for risk oversight, accurate records of board decisions and systems to escalate risks to senior management.

The review also identified cyber risk, data governance, third-party oversight, change management and operational resilience as areas requiring attention, particularly when firms introduce new technology, automation or artificial intelligence (AI).

The FCA also stressed monitoring of consumer outcomes and financial resilience. It has admitted five firms to its Scale-up Unit, established with the Prudential Regulation Authority to support firms managing regulatory requirements during expansion.