The Financial Conduct Authority (FCA) celebrated its second birthday on 1 April, so it seems a good time to take stock of its challenges and achievements.

The press tends to focus on the FCA's enforcement record as the measure of its success, with the size of fines capturing the headlines. Indeed, the FCA imposed fines totalling £1.5bn in 2014 – almost five times the £312m levied by its predecessor, the Financial Services Authority (FSA), in 2012.

Yet last year's figure largely relates to a small number of well-publicised actions against global industry participants. There has in fact been a steady decline in both the number of fines published and prohibitions imposed. As the scope of the FCA's remit has expanded to embrace consumer credit companies, it is inevitable that smaller players get less supervisory attention. The FCA's challenge is to ensure that it can maintain credible deterrence across the full spectrum of companies it regulates.

Individual accountability, though prominent on the FSA's agenda, assumed critical importance once the Parliamentary Committee on Banking Standards (PCBS) began its inquiry. The essence of the new statutory senior management requirements – clear responsibility statements and lines of accountability – are the very least that should be expected of regulated businesses. But they risk mixing over-simplification (for example, the proposed 300-word limit on responsibility statements) with enormous bureaucracy and complexity.

philip-clarke-hsfIn a further response to the PCBS, the FCA has sought to focus the minds of senior managers by requiring board members or senior managers of regulated organisations to certify about compliance with all kinds of regulatory requirements. The approach has proved effective, if somewhat controversial: providing the necessary assurance for the person signing the attestation can be a significant and costly distraction for the relevant business team, potentially diverting attention from other business and control issues. The level of staff turnover remains a concern for the regulator. At a time of considerable cultural change within the FCA, achieving consistency and a level of continuity within its ranks will be central to its ultimate success. Nevertheless, positive remarks have been made, mainly by advisory companies, that the FCA is more approachable and collaborative than its predecessor.

Like the FSA, the FCA has shown itself to be one of the most transparent regulators in terms of its expectations and how it will exercise its powers and discretion. It is, however, finding itself increasingly constrained by European legislation, which it is being expected to implement to a short timetable without being able to nuance its application to UK markets.

Recognising that waves of disclosure reforms have not delivered the required outcomes, the FCA has continued to look at new ways to solve current problems faced by consumers. These include the use of behavioural economics; outcomes-based changes to arrangements between product manufacturers and distributors; the use of product intervention powers to ban the distribution of contingent convertible securities to ordinary retail investors; a statutory redress scheme under which multiple companies would contribute to compensate investors who were mis-sold Arch Cru funds; and the voluntary redress scheme for interest rate hedging products.

On 1 April 2015 the FCA acquired 'competition concurrency' powers, which it in effect shares with the Competition and Markets Authority. The FCA's challenge will be to ensure that staff across the organisation bring a competition mindset into the way they perceive issues in the industry and consider possible proceedings. Two years in, the FCA has an ambitious direction of travel.

Karen Anderson is a partner and Philip Clarke is an associate at Herbert Smith Freehills.