On 26 April 2022, the Financial Conduct Authority (FCA) launched Early and High Growth Oversight, which provides enhanced supervision for newly authorised firms. The FCA will offer their support as firms get used to their regulatory status and understand their obligations to ensure they align with the FCA’s standards. It also allows the FCA to quickly identify and address harm developing in these new firms. The Early and High Growth Oversight has four objectives:
- Spot harm or misconduct.
- Raise the standards.
- Promote competition.
- Better firm experiences.
In 2021, the FCA piloted Early Oversight with 32 newly authorised firms to help improve their understanding of the FCA’s regulatory requirements. Common themes that emerged included:
- Financial promotions: the FCA helped firms better understand the requirements on marketing and financial promotions and how to adapt their promotions where firms weren’t meeting them.
- Regulatory submissions: firms are required to complete and submit regulatory data in a timely way. The FCA worked with firms to better answer the questions, which resulted in timely and better quality regulatory submissions during the pilot.
- Regulatory permissions: during the pilot, the FCA ensured that firms used the correct regulatory permissions as firms often hold permissions that they do not use, or that they may have applied for incorrectly.
- Financial projections: as firms start to trade, they often find that their revenues do not reasonably track against their projections so the FCA worked with firms to make sure they had appropriate business plans.
- Business model changes: the FCA worked with firms to have a better understanding of what regulatory requirements apply to their business and which permissions they should apply for.
- Innovative firms: innovative firms may not have the same resources as more traditional financial services firms to engage with and understand regulation. Early Oversight helped these firms understand which regulatory requirements and guidance applies to their business.
Over 2022 to 2023, Early and High Growth Oversight will take in up to 300 newly authorised firms. Firms do not need to apply to be part of Early and High Growth Oversight, the FCA will contact them directly if they are included.