How are regulatory engagement and market changes related under FCA oversight?

Proactive engagement plays a crucial role in allowing regulatory bodies, such as the FCA, to address market changes effectively. By maintaining an ongoing dialogue with firms, the FCA can gather insights on emerging trends, challenges, and innovations within the market. This proactive approach enables regulators to better understand the dynamics at play, assess risks, and adapt regulatory measures in a timely manner.

Through regular engagement, the FCA can identify potential issues before they escalate, collaborate with firms to develop frameworks that account for market evolution, and ensure that regulations remain relevant and effective. This anticipatory stance fosters a more stable financial environment, as it allows regulators to work alongside market participants rather than only reacting to challenges after they arise.

The other options suggest a less collaborative and responsive relationship between the regulator and the market, which neglects the importance of proactive measures in effectively managing regulatory oversight.