What is a Dear CEO letter?
By Tom · Last reviewed · 1 minute read
A Dear CEO letter is a letter the FCA sends to the chief executives of firms in a particular sector, or firms affected by a particular issue, setting out a concern and what it expects them to do about it. It doesn't create new rules, but the FCA expects firms to act on it.
What a Dear CEO letter covers
The FCA uses these letters when it wants a group of firms to pay attention to something specific. Typical subjects include a risk it has seen building up, findings from work it has done with a sample of firms, or a reminder of how existing rules apply in a new situation. The letter is addressed to the chief executive because the FCA wants the issue dealt with at the top of the firm.
Portfolio letters
Portfolio letters are a related kind of letter. The FCA groups similar firms into portfolios, such as financial advisers or wealth managers, and writes to each portfolio to explain the risks it sees and where its supervisors will focus. For an advice firm, the portfolio letter is one of the clearest signs of what the FCA will ask about.
Keeping track of them
Dear CEO and portfolio letters are published as PDFs on the FCA's website and don't always come with a press release, so they're easy to miss. My free FCA updates email includes them when they cover your firm's permissions, with a short summary of what each one asks for. For a wider routine, see how to keep up with FCA changes.
Questions people ask
Are Dear CEO letters legally binding?
No. They don't change the FCA's rules. They explain how the FCA sees a risk and what it expects firms to do under the rules that already exist, so ignoring one can count against a firm if the FCA later looks at the issue.
What's the difference between a Dear CEO letter and a portfolio letter?
A Dear CEO letter usually deals with one issue, such as a risk the FCA has spotted. A portfolio letter covers a whole group of similar firms, such as financial advisers, and sets out the main risks the FCA sees in that group and what its supervisors will focus on.
Where can I find Dear CEO letters?
The FCA publishes them on its website alongside its other publications. They aren't always sent to every firm they're relevant to, so it's worth checking rather than waiting for one to arrive.
What should I do when one is published?
Read it, decide whether it applies to your firm, and note what you'll do as a result. Keep that note with your compliance records, because a supervisor or your network may ask how you responded.