Speaking at The British Specialist Lending Senate, Sinclair (pictured) said eight executive directors have joined the Financial Conduct Authority (FCA) over the past two years who have a “different philosophy, brief and way of thinking” about industry regulation.
Its data-led approach, meant the regulator would be asking for more “granular detail” from lenders and brokers, not just about what a firm has sold but their financial position.
There will be an increased focus on a firm’s capital, liabilities and business management which will be predominantly based on data rather than personal consultations.
Sinclair said that the FCA would use this data to “analyse, scrutinise and work out where the outliers are”. Outlier firms, explained Sinclair, are those that fall outside the normal area of the regulator’s bell curve during data analysis.
From a broking perspective, directly authorised firms would have to hold more capital and there would be a greater focus on financial resilience.
Lenders will need to provide more clarity on the type of business they wanted and were prepared to accept, and it would become more important for them to “stick to it”.
He added that the authorisation process would be tougher and it would be “exceptionally hard” for firms wanting to switch business.
“The [FCA] will use all this data to analyse, scrutinise and work out where the outliers are,” he said.
Sinclair added that while the regulator would be “more selective and more direct and more difficult”, this should not be feared.
“If you’re doing the right thing in the right way for the right reasons, there’s nothing to be scared of,” he said.