For the first time, the FCA's Annual Report contains an annual review from its Regulatory Decisions Committee (RDC). This contains not only the usual interesting insights into its recent activities but (against the background of a consultation into Enforcement, that closed on 14 July) the RDC's thoughts on its year ahead.
In relation to performance, the review notes that the RDC opened more cases than in the previous year. It opened 204, although most related to so-called "straightforward" matters such as a firm's failure to submit returns or pay its fees. Of greater interest, there were 21 cases opened relating to the commencement of civil or criminal proceedings by the FCA in the Courts. There were also 21 instances of "non-straightforward" cases involving Supervisory or Enforcement steps.
The RDC notes that it closed around 200 matters in the same period. Again, the bulk of these were so-called "straightforward" matters. However, 25 related to Enforcement and Supervisory matters. Of the 25 matters closed, there were 9 prohibition orders, 4 supervisory notices (limiting firms' activities), 3 cancellations of permissions, 2 financial penalties, 2 refusals to revoke prohibitions, 2 settlements, 2 cases discontinued by FCA enforcement and 1 public censure. It is easy to see therefore that to the extent cases reach the RDC, they tend to result in sanctions being handed down. Of course, this data does not reveal to what extent the RDC's determination was lower than that advocated by FCA Enforcement – save in relation to the discontinued cases.
The figures above are higher than for last year, when the FCA opened only 80 cases and closed only 120. However, the closed cases for last year, included "action" against 28 firms and 27 individuals, including 43 financial penalties. Therefore, whilst 2015/16 saw more cases opened and closed, it does appear that 2014/15 saw a larger number of sanctions for firms and individuals.
In relation to the role of the Upper Tribunal, over the period to 31 March 2016, 6 Decision Notices were referred to the Upper Tribunal. Whilst not a high number, it is a relatively significant proportion of the cases closed by the RDC. Many cases referred to the Upper Tribunal in fact settle before they reach a hearing. However, at the very least this demonstrates a certain level of dissatisfaction with the RDC's determinations and may also indicate an increasing willingness on the part of subjects of FCA action to seek a hearing that has the benefit of time to review evidence, live-witness testimony and cross-examination.
Finally, in relation to its future, the RDC had some interesting comments to make. In general, whilst noting that the number of new cases arising from the financial crisis will decrease, it appears that the RDC sees its workload as set to increase:
- First, it anticipates an increase in its work as a result of the implementation of both the Senior Management Regime and the Certification Regime. It is surprising and noteworthy that the RDC expects this increase to happen in the next 12 months.
- Second, it also anticipates an increase in workload due to the new breadth of the FCA's remit. This is for example in relation to consumer credit matters, where we have already seen cases reaching the Upper Tribunal.
- Third, the reforms under current consultation may see it take a role in determining partly contested cases (where there are so-called "focused resolution agreements" on facts and liability), where the penalty cannot be agreed. These proposals were in fact intended to better stream-line the enforcement process.