Learn about our approach to supervising firms, including why we supervise and how we divide the financial sectors we regulate.
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Supervision is the oversight of firms and individuals to reduce actual and potential harm to consumers and markets. We supervise around 41,000 firms in both retail and wholesale markets. These firms vary greatly in size, complexity and in the risks of harm they pose to consumers and market integrity.
Our Approach to Supervision (PDF) explains the purpose of supervising firms and individuals, the approach we take, and the public value it delivers.
It sets out:
- our role in ensuring fair and honest markets
- why and how we prioritise our supervision work
- how we supervise the firms and individuals we regulate
Our approach
We supervise against a framework of principles and rules that represent the minimum standards of conduct we expect from firms and individuals. These are known as Threshold Conditions. We expect regulated firms and their employees to meet these standards and we hold them to account when they fail.
We take a forward-looking and strategic approach to our supervisory work. We look at both the conduct of individual firms and, more widely, at how retail and wholesale markets are evolving. To supervise effectively, we need a thorough understanding of the business models and strategies of the firms we regulate.
We also know that the culture in firms shapes the outcomes for consumers and markets. We assess and address the drivers of culture by looking at firms’ leadership, purpose, governance and approach to managing and rewarding their employees.
To make the best use of our resources and deliver the greatest public value, we take a proportionate approach to supervising firms.
Supervision by portfolio
We divide the financial sectors we regulate into portfolios, each made up of firms with similar business models. Our portfolios can adapt as business models change. For firms operating across different sectors or markets, we assign the portfolio which reflects their main business.
We analyse each portfolio and agree a strategy to address any potential harms we find. This includes taking action against firms posing the greatest harm.
We use information from a wide range of sources, including:
- feedback from consumers and consumer organisations
- data and intelligence from firms and trade associations
- insight from other regulatory organisations
- information from MPs and whistleblowers.
This approach helps us to identify problems quickly and, where necessary, we intervene to address harm to consumers or markets.
We communicate our view of the main risks of harm, our expectations and our priorities for each portfolio every couple of years, and publish the letters we send to firms.
How we supervise firms
We use a number of tools to supervise firms, including:
To help us use our regulatory tools efficiently, we have a decision-making framework that guides how we identify and mitigate risks.
Thematic reviews
Thematic reviews are a significant part of our approach to supervision. We use them to assess current or emerging risks across a number of firms in a sector or market. A review can focus on finding out what's happening and can then suggest ways of tackling the problem.
We can apply this process to a large variety of situations, firms and groups of consumers. It means we can investigate specific risks and do detailed work on particular concerns.
Thematic work is done by teams with specialised expertise, enabling them to tackle complex issues. Our teams complete extensive desk-based reviews of information, alongside site visits, and work closely with industry practitioners and professional trading bodies, where appropriate.
Browse our thematic reviews