In banking, there is no such thing as a neutral relationship with your regulator. Either you are building trust, or you are slowly eroding it, and once it slips, it is a long road back.
Our discussions with senior risk professionals show a clear truth: the firms that get regulation “right” do not see it as a compliance chore, they see it as a relationship to manage, just as strategically as their client portfolios.
Respect the Human Side of Supervision
Supervisors are not robots. They juggle constant policy updates, limited time, and regular changes in firm assignments. That is why:
- Regular, frank conversations matter - not just when something goes wrong.
- Face-to-face is better than Zoom - when the stakes are high, show up in person. It signals respect and avoids misunderstandings.
- Clarity over spin - regulators can smell nonsense. Be transparent, concise, and ready to evidence your story.
Preparation is Everything
The worst way to undermine trust is to walk into a meeting unprepared. That means:
- Train your people - from first to third line, everyone should understand the regulator’s lens, their objectives, and your board’s position. One misplaced word from a junior can cause unnecessary alarm.
- Own your MI and reporting - a reputation for sloppy or inaccurate data forces regulators to probe deeper, every single time. Clean data buys goodwill before the conversation even starts.
- Know your audience - a policy expert, a supervision lead, and a senior advisor will each probe from different angles. Tailor your preparation.
Follow-Through Builds (or Breaks) Trust
Promises are cheap but delivery is everything. The fastest way to lose credibility is with missed deadlines and radio silence.
- Debrief internally after meetings - capture what was said, allocate actions, and track them to completion.
- Report progress before being asked - proactive updates show seriousness.
- If plans change, say so early - regulators understand course correction but they do not forgive surprises.
- PRA: “Do the right things and do them well.” Industry backgrounds among staff help them empathise with commercial realities.
- FCA: More formal, more conservative in writing, and quicker to push firms toward external advisers.
The PRA vs FCA Divide
Firms I encounter consistently describe the PRA as more collaborative, while the FCA holds firms at arm’s length. Both expect high standards, but the playbooks differ:
The smart move is to calibrate tone and strategy to the regulator in front of you.
When Banks Get It Wrong
Recent headlines remind us of what is at stake:
- Monzo (UK): Fined £21m for systemic anti-money-laundering failures. FCA: “The FCA imposed a requirement preventing Monzo from opening new accounts for high-risk customers. However, between August 2020 and June 2022, it repeatedly failed to comply with the terms of the requirement.”
- Barclays (UK): Hit with a £42m penalty for money-laundering lapses linked to James Stunt, plus £3m for wealth-management failures. FCA: “Barclays secured a significant reduction in its fine through its extensive co-operation with our investigation and through making a voluntary payment to affected consumers at our request.”
SocGen (Australia): Penalised A$3.9m for allowing suspicious futures orders to distort markets. ASIC: “Despite ASIC’s contact, SocGen failed to take timely and effective action, and permitted additional, suspicious orders to enter the market.”
Each case shows how the quality of engagement with regulators can impact the outcomes of issues that inevitably arise in this complex industry.
The Bottom Line
A good regulatory relationship will not guarantee a soft landing in every case, outcomes still go through panels and peer comparisons, but it will:
- Buy you the benefit of the doubt when genuine errors occur.
- Smooth the dialogue when issues flare.
- Reduce scrutiny creep that otherwise drains management bandwidth.
In short, treating regulators as partners rather than adversaries is not just good compliance. It is good business.
October 2025
