Five Signs Your FCA Business Needs a Specialist FC

Most FCA-regulated businesses hire their first dedicated Financial Controller at the point where the absence of one has already caused a problem. The CASS reconciliation has failed an internal review. The GABRIEL return was submitted late. The FCA has sent a Dear CEO letter that the compliance team cannot fully answer without financial data the finance function cannot readily produce. The reactive hire is more expensive, more urgent and riskier than the proactive one — and the signs that warrant a proactive hire are usually visible six to twelve months before the crisis.

This piece describes five specific signals that an FCA-regulated business needs a Financial Controller with specialist regulatory finance experience — rather than a competent general FC who will learn the regulatory environment on the job.

1. Your CASS Reconciliation Is Managed by Compliance Rather Than Finance

CASS client money reconciliations are a finance function responsibility in a correctly structured regulated firm. The daily internal client money reconciliation, the custody reconciliation and the periodic external reconciliation are financial processes that require the financial rigour, auditability and control framework of the finance team — not the resource or skill set of the compliance team.

Where the compliance team is managing the CASS reconciliation because the finance team lacks the regulatory knowledge to own it, the firm has a structural vulnerability. CASS reconciliation failures are the most common source of FCA enforcement action against regulated firms, and the firms that have suffered the most significant consequences from CASS breaches are typically those where the reconciliation was managed informally rather than within a proper financial control framework.

An FC with CASS experience will own the reconciliation process, build a control framework around it that satisfies both internal audit and FCA inspection, and produce the reconciliation documentation to the standard the FCA expects. See CASS Accountant Recruitment and FC at FCA-Regulated Firms for the candidate profile.

2. Your GABRIEL Returns Are Prepared by Someone Who Is Not Sure What They Mean

GABRIEL is the FCA’s online regulatory reporting system. The returns submitted through GABRIEL — FSA001 to FSA052 and the various product-specific returns — are the primary data source the FCA uses to monitor the financial health and regulatory compliance of the firms it supervises. Errors in GABRIEL submissions are noticed, and the FCA’s automated monitoring systems flag material discrepancies between a firm’s GABRIEL submissions and what the FCA’s supervisors expect to see based on the firm’s business model.

The FC at a regulated firm who understands what each GABRIEL return is measuring, why the FCA collects that data, and what a material discrepancy in a return will trigger in terms of supervisory attention is managing a significant regulatory risk on behalf of the firm. The finance professional who is filling in the forms because someone has to, without that understanding, is producing regulatory submissions that may be technically completed but are not being managed as the risk management tool they represent.

3. Your Finance Team Cannot Produce a Consumer Duty Price and Value Assessment

Since July 2023, FCA-regulated firms selling to retail customers have been required to demonstrate that the price consumers pay for their products and services represents fair value relative to the benefits received. The price and value assessment requires product-level margin analysis, distribution cost analysis and a documented assessment of value — all of which are finance function outputs.

The regulated firm whose finance team cannot produce a credible price and value assessment without significant external support is carrying a Consumer Duty compliance gap that the FCA’s outcomes-testing supervisory programme will identify. The FCA Consumer Duty framework is now two years into its operational phase and the FCA has moved firmly from implementation review to outcomes testing. A specialist FC who has built price and value assessment capabilities at a previous regulated employer is the most efficient route to closing this gap.

4. Your Last FCA Visit Produced Management Letter Points About Financial Controls

FCA supervisory visits and thematic reviews regularly produce findings about the quality of financial controls at regulated firms. The most common findings relate to CASS reconciliation weakness, inadequate wind-down planning and financial resource calculations, poor management information about regulatory capital position, and insufficient documentation of the firm’s ICARA or ICAAP process.

Each of these findings is a finance function responsibility. Where the FCA is raising them as findings, it is because the finance function has not owned them adequately. A specialist FC who has been through an FCA supervisory visit — either as the FC of a firm being visited or as a member of the team preparing the visit response — understands what the FCA is looking for and can build the control and documentation framework that prevents the same findings recurring.

See Investment Firm FC, Insurance Intermediary FC and FCA Finance Recruitment Hub for the regulatory finance candidate profiles we work with.

5. Your Finance Director or CFO Is Spending Significant Time on Regulatory Finance

The Finance Director or CFO of an FCA-regulated business should be operating at the strategic financial level — the capital structure, the board relationship, the investor reporting, the commercial finance partnership with the business. Where the FD or CFO is spending material time on CASS reconciliations, GABRIEL submissions, regulatory capital calculations or ICARA/ICAAP documentation, the firm does not have the right finance team structure.

This is typically the clearest and most actionable signal that a specialist FC hire is overdue. The FD’s time is the most expensive time in the finance function. When it is being consumed by operational regulatory finance work that an experienced FC should own, the cost of the specialist FC hire is almost always justified by the FD’s time released alone — before accounting for the improvement in regulatory finance quality that a specialist FC brings.

The specialist regulated firm FC hire typically pays for itself within six to nine months through a combination of FD time released, regulatory risk reduced and finance function quality improved. Call 0204 553 8893 to discuss whether your firm is at the point where a specialist FC hire makes sense, or see FC at FCA-Regulated Firms and Wealth Management FC.

The five signs above are individually significant. Where a firm is showing two or more simultaneously, the case for a specialist FC hire is usually clear and often urgent. The regulatory finance risk carried by an FCA-regulated business without an FC who owns the CASS framework, the GABRIEL submissions, the Consumer Duty data and the capital adequacy calculation is a risk that the FCA’s supervisory programme is increasingly likely to surface.

The cost of a specialist regulated firm FC — typically £75,000 to £110,000 for a permanent hire depending on the size and complexity of the firm — should be assessed against the cost of the regulatory risk it manages: FCA enforcement action, s166 skilled persons review, voluntary requirements, and the reputational and commercial impact of a public regulatory finding. See FC Salary Guide UK, Insurance Intermediary FC, Asset Management FC and Investment Firm FC for the full regulated firm FC recruitment picture.

One dimension worth adding to this picture is the interim or fractional option. Where an FCA-regulated business is showing the signs above but is not yet at the scale to justify a permanent specialist FC hire — or where the need is urgent and the permanent search will take three to four months — an interim regulated firm FC can provide immediate cover while the permanent solution is developed. Accountancy Capital maintains an active network of interim FCs with FCA-regulated firm experience who are immediately available or available at short notice.

The interim option is particularly relevant for firms that have received a management letter point from the FCA or their external auditors about regulatory finance quality. The urgency of that situation typically cannot wait for a permanent hire, and an experienced interim FC who has managed FCA supervisory visits before can stabilise the position while the firm conducts a considered permanent search. See Interim Finance Recruitment, Maternity Cover FC and FC at FCA-Regulated Firms for the interim and permanent options.