The FCA and PRA commission such reviews when concern arises over compliance and regulation within a firm.
When a review is launched, an independent third party, often an accountancy firm, will visit the firm in question to examine possible failings in anti-money-laundering controls, regulatory reporting and other similar areas.
BDO says that financial services firms should expect a further increase in such reviews, as regulators are predicted to “step up their scrutiny of controls” in the coming year.
The firm also said that the FCA and PRA will begin to use these reviews to “investigate concerns over poor corporate culture, inadequate whistleblowing channels and inaccuracy of information provided to regulators”.
The PRA recently imposed a £44m fine on a global bank that provided them with inaccurate information under review. Following this, regulators are increasingly cracking down on firms to provide the correct data in these such reviews.
Leigh Treacy, head of financial services advisory at BDO, said: “The first rise in reviews for almost half a decade shows that regulators are now putting firms under even more scrutiny.”
“The FCA and the PRA have made it abundantly clear that they expect firms to implement their recommendations in their latest guidance letters as soon as possible and that Skilled Persons reviews will follow.”
She added: “These reviews are an essential part of the regulator’s tool kit. They allow the regulators to rapidly scale up their activity without having to drop other urgent issues from their list of priorities.”
Fiona Raistrick, financial services economic crime partner at BDO, said: “Regulators have been increasingly using these reviews to crack down on companies where there is a higher risk of money laundering activities.
“Online trading firms have come under particular pressure from regulators in this area. The FCA has urged them to tighten transaction monitoring to help reduce their exposure to potential money laundering and fraud.”