FCA under fire as investigations into senior manager misconduct dwindle
The UK’s financial watchdog is under fire after fresh data revealed the number of investigations into senior manager misconduct has halved.
A freedom of information request by the consultancy firm Bovill found that the Financial Conduct Authority (FCA) opened just six enforcement investigations into senior manager misconduct last year, less than half the number launched a year prior. The drop in investigations came in spite of 50,000 additional firms being added to the Senior Manager and Certification Regime (SMCR).
“In recent years we have questioned SMCR’s ability to hold individual senior managers to account, pointing to consistently low numbers of investigations and enforcement actions,” said Ben Blackett-Ord the chief executive at Bovill. “This year’s statistics show that SMCR currently lacks bite, and is not biting often enough to be considered as an effective enforcement tool.”
The data found that the number of enforcement investigations opened between 2018 and 2020 was consistent – never dropping below 13.
Research from financial regulation consultancy Bovill finds that the FCA launched fewer than half as many investigations into senior manager misconduct in 2021 than in 2020. Almost two-thirds of the 54 SMCR investigations opened by the FCA since 2016 have not yet been resolved. Since 2016 only two investigations have resulted in a penalty being imposed.
“With such low enforcement statistics, it brings into question SMCR’s role as an effective deterrent from poor behaviour by senior management,” Blackett-Ord said.
He added that while the pandemic is likely to have played a role in disrupting and delaying investigations the FCA will need to adapt to these challenges if an “effective regime,” is to be created.