UK FCA's updated webpage on quality controls in benchmarks sector

The UK Financial Conduct Authority (FCA) has updated its webpage on quality controls in the benchmarks sector, which is relevant to benchmark administrators, price reporting agencies and data suppliers. The update sets out the FCA's findings following a multi-firm review of the quality of calculation controls, looking in particular at error identification, classification, prioritisation and notification. The FCA identified two distinct approaches taken by firms: first, a quantitative approach led by data; and second, a qualitative approach which was judgement-led. Quantitative approaches are more easily applied consistently, although the FCA noted that they needed frequent recalibration and there may be data gaps.

Qualitative approaches are less consistent but can allow for judgement to be applied, which may reduce data gaps. The FCA also noted that well-designed management information, i.e., details of how errors were identified and root cause insights, could help identify where there may be recurring weaknesses. However, there are limitations with such record-keeping, which makes it hard for firms to demonstrate that their control and governance arrangements are effective. The FCA also commented that conflicts of interest policies and registers needed to be fully considered and put into practice to be effective in the context of error handling.

The FCA will carry out further work in 2026 on other risks set out in its portfolio letter, including corporate governance. Firms should take note of the FCA's findings and address any weaknesses identified.

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