City watchdog ramps up enforcement as it faces political pressure to act
The Financial Conduct Authority (FCA) has ramped up its investigations in the face of political pressure to crackdown on wrongdoing in the financial services sector, according to research published today.
FCA investigations into individuals doubled in 2018, with the number of individuals being referred to the watchdog’s regulatory decisions committee (RDC) rising to 27 from 13 the year before.
The number of businesses referred to the RDC increased 14 per cent last year, rising to 543 in 2018 from 476 in 2017 and 289 in 2016.
The RDC is the final stage of decision making within the FCA and decides on the appropriateness of sanctions such as financial penalties and suspensions.
Jonathan Cary, commercial disputes partner at law firm RPC, said: “Political pressure on the FCA to take a tough stance against misconduct remains intense.”
“As a result, the FCA is going to maintain a no-nonsense approach to wrongdoing by directors. It believes penalising an individual is a far better deterrent than just fining a corporate entity.”
The pressure on the FCA to act has increased this year in the light of scandals such as the collapse of mini-bond firm London Capital & Finance and the suspension of Neil Woodford’s flagship equity fund.
RPC said the level of regulatory enforcement could continue to rise as the Senior Managers and Certification Regime (SMCR) is extended to all financial services firms by the end of this year.
The SMCR, which was introduced in March 2016, aims to make individuals more accountable for their conduct and competence.
Cary said: “The Senior Managers Regime has increased the scope for FCA action across the whole financial services sector. As the SMCR continues to expand, so too does the possibility of the FCA taking increasing enforcement action against firms and individuals.”