What is a key feature of the FCA’s approach to supervision?

The focus of the FCA's approach to supervision being risk-based assessments tailored to individual firms is rooted in the regulator's objective to ensure that resources are allocated efficiently and effectively. This approach allows the FCA to identify and prioritize risks associated with specific firms and their activities, recognizing that different firms pose different levels of risk to consumers and the financial market as a whole.

By employing risk-based assessments, the FCA can adapt its supervisory activities based on the unique characteristics and behaviors of each firm, rather than applying a one-size-fits-all methodology. This enables the regulator to engage more constructively with firms, fostering a collaborative environment where potential issues can be addressed proactively. It aligns with the FCA’s mission to promote competition and innovation while ensuring consumer protection and market integrity.

In contrast, options that suggest strict rules with no flexibility or periodic reviews without notification do not align with the FCA’s supervisory philosophy, which values adaptability and responsiveness to the evolving financial landscape. Similarly, while public consultations are important for transparency and accountability, they do not represent the core feature of the supervisory approach, which prioritizes tailored risk assessments.