{"id":1902,"date":"2026-03-12T07:30:00","date_gmt":"2026-03-12T07:30:00","guid":{"rendered":"https:\/\/iqeq.com\/gb\/?p=1902"},"modified":"2026-03-16T07:59:53","modified_gmt":"2026-03-16T07:59:53","slug":"fca-supervisory-action-it-starts-with-a-survey","status":"publish","type":"post","link":"https:\/\/iqeq.com\/gb\/insights\/fca-supervisory-action-it-starts-with-a-survey\/","title":{"rendered":"FCA supervisory action \u2013 it starts with a survey"},"content":{"rendered":"
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By Harry Barnes,\u00a0Principal Compliance\u00a0Consultant<\/span><\/i>\u00a0<\/span><\/p>\n

Firms regulated by the\u00a0UK\u2019s\u00a0Financial Conduct Authority (FCA) will be well used to\u00a0completing regular FCA surveys.\u00a0However, what firms may not realise is that these surveys are\u00a0increasingly\u00a0the starting point\u00a0for\u00a0FCA\u00a0supervisory action.<\/span><\/b>\u00a0<\/span><\/p>\n

The\u00a0UK financial\u00a0regulator is using\u00a0its survey findings to\u00a0determine\u00a0which firms to investigate, rather than waiting for a specific issue to arise.\u00a0And in cases where the FCA is finding issues during this supervisory action,\u00a0they\u2019re\u00a0increasingly exercising their more intrusive VREQ\/OIREQ powers.<\/span>\u00a0<\/span><\/p>\n

In this article, we explain how FCA surveys can\u00a0evolve into\u00a0further supervisory investigation, the significance of VREQs and OIREQs, and\u00a0why\u00a0it\u2019s\u00a0critical to ensure that\u00a0initial FCA\u00a0survey responses are completed carefully.<\/span>\u00a0<\/span><\/p>\n

FCA sectoral surveys are now a regular occurrence, but can be \u2018one size fits all\u2019<\/h2>\n

Over\u00a0the last few years, the FCA\u00a0has\u00a0been implementing annual surveys for most\u00a0categories\u00a0of firm\u00a0under its supervision\u00a0\u2013\u00a0corporate finance firms, asset management and alternatives firms,\u00a0wealth\u00a0management\u00a0and stockbroking firms. These surveys, which rely upon the FCA\u2019s powers under S165 FSMA,\u00a0are used to collect a wide range of information\u00a0that\u00a0isn\u2019t\u00a0otherwise gathered through\u00a0regular FCA reporting.\u00a0The annual surveys\u00a0may also\u00a0be supplemented by thematic reviews\u00a0addressing\u00a0certain issues, such as a recent review into\u00a0<\/span>private market\u00a0valuation practices<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

Given the broad nature of the\u00a0FCA\u2019s\u00a0supervisory categories, surveys may not entirely align with how a recipient firm\u00a0operates. Unless a firm believes it should be in a different supervisory bucket, the FCA will expect\u00a0completion of\u00a0the survey on a\u00a0best-efforts\u00a0basis\u00a0\u2013 even if\u00a0some\u00a0of the questions are\u00a0not\u00a0relevant.<\/span>\u00a0<\/span><\/p>\n

It is often these situations \u2013 where questions\u00a0aren\u2019t\u00a0well aligned to a firm\u2019s business model \u2013\u00a0that\u00a0lead to a\u00a0firm\u2019s\u00a0response raising\u00a0concerns\u00a0with the FCA.<\/span>\u00a0<\/span><\/p>\n

FCA surveys are often now the trigger for supervisory action<\/h2>\n

It has become increasingly common for these surveys to\u00a0raise red flags and\u00a0trigger the FCA to take further supervisory action\u00a0against a particular firm.\u00a0Typically,\u00a0this comes in the form of follow-up S165 requests for information and\/or documentation.<\/span>\u00a0<\/span><\/p>\n

From here,\u00a0the FCA\u00a0may\u00a0progress to on-site visits and follow-up questions on the information\/documentation received.\u00a0There\u2019s\u00a0always a risk at this point that the scope of\u00a0the FCA\u2019s investigation is broadened and\u00a0further topics become the subject of questioning.<\/span>\u00a0<\/span><\/p>\n

What is a VREQ and what does it entail?<\/h2>\n

When the FCA has\u00a0serious concerns about a firm, particularly when it comes to potential investor harm, financial promotions, client\u00a0categorisation\u00a0or\u00a0anti-money laundering (AML),\u00a0it\u2019s\u00a0increasingly seeking agreement from firms to impose a\u00a0\u2018Voluntary Requirement\u2019,\u00a0or\u00a0<\/span>VREQ<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

A VREQ is, strictly speaking, a\u00a0voluntary measure. However, the FCA will present the firm with the specific requirement\u00a0it\u2019s\u00a0seeking\u00a0to impose and a\u00a0short\u00a0deadline by which the firm must choose if\u00a0it\u2019ll\u00a0comply. This requirement can vary, with potential restrictions including:<\/span>\u00a0<\/span><\/p>\n