According to the FCA, what is essential regarding relationships with regulators?

Maintaining an open and cooperative relationship with regulators is essential as it fosters transparency and trust, which are fundamental in the financial services sector. The FCA (Financial Conduct Authority) emphasizes that effective communication can lead to a better understanding of regulatory expectations and requirements. By engaging proactively with regulators, firms can clarify guidance, provide timely feedback, and resolve any concerns before they escalate into serious compliance issues. This approach is not only beneficial for the firms themselves but also enhances the overall integrity of the financial system.

In contrast, strategies like limiting communication to essential issues could lead to misunderstandings or non-compliance. Maintaining confidentiality might restrict transparency, undermining the trust necessary in regulatory relationships. Compliance only during audits fails to establish a continuous dialogue with regulators, which is vital for effective governance and risk management. Thus, dealing with regulators in an open and cooperative manner is a best practice that strengthens regulatory frameworks and supports a more stable financial environment.