SUP 1A.1 Application and purpose

1This chapter applies to every firm, except that its relevance for an ICVC is limited as the FCA does not intend to carry out an assessment of an ICVC that is specific to that ICVC.

The Act (section 1L) requires the FCA to "maintain arrangements for supervising authorised persons". Section 1K of the Act also requires the FCA to provide general guidance about how it intends to advance its operational objectives in discharging its general functions in relation to different categories of authorised person or regulated activity. One purpose of this guidance is to discharge the duties of the FCA set out in sections 1L and 1K of the Act. The FCA's approach to supervision is also designed to enable it to meet its supervisory obligations in accordance with EU legislation, where applicable, including in relation to requirements arising otherwise than under the Act (for example, directly applicable EU regulations).

The design of these arrangements is shaped by the FCA's statutory objectives in relation to the conduct supervision of financial services firms as well as the prudential supervision of firms not supervised by the PRA. These objectives are set out in Chapter 1 of the Act. The FCA has one strategic objective: ensuring that the relevant markets function well. In discharging its general functions, the FCA must, so far as is reasonably possible, act in a way which is compatible with its strategic objective and which advances one or more of its three operational objectives:

1. (1)

   securing an appropriate degree of protection for consumers;

2. (2)

   protecting and enhancing the integrity of the UK financial system; and

3. (3)

   promoting effective competition in the interests of consumers in the markets for regulated financial services (or services provided by a recognised exchange in carrying on regulated activities in respect of which it is exempt from the general prohibition by virtue of section 285(2) of the Act).

1. (1)

   In designing its approach to supervision, the FCA has regard to the regulatory principles set out in section 3B of the Act. In particular, the FCA's regulatory approach aims to focus and reinforce the responsibility of the senior management of each firm (section 3B(1)(d) of the Act) to ensure that it takes reasonable care to organise and control the affairs of the firm responsibly and effectively, and develops and maintains adequate risk management systems. It is the responsibility of management to ensure that the firm acts in compliance with its regulatory requirements.

2. (2)

   The FCA will have regard to the principle that a burden or restriction which is imposed on a firm should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction (section 3B(1)(b) of the Act). The FCA will, so far as is compatible with acting in a way which advances the consumer protection or the integrity objective, discharge its supervisory functions in a way which promotes effective competition in the interests of consumers.