The FCA have published their enforcement annual performance report for 2017/18. Although shorter than in previous years, it focusses on what the FCA consider to be the “essential enforcement developments and achievements” in relation to its enforcement actions.
We have picked out below some of the highlights:
- The FCA issued 269 final notices last year, including 16 financial penalties totalling £69.9 million. This is down from a total of £181 million in 2016/17, and £884.6 million in 2015/16, perhaps reflecting a relative ‘normalisation’ of enforcement fines following the financial crisis, benchmark rigging and misselling scandals in recent years.
- 302 new cases were opened by the FCA in the past year. The bulk of these have been in relation to retail conduct, financial crime, culture and governance, insider dealing and unauthorised business. The number of open cases has increased from 410 last year to 504.
- Particularly interesting is the dramatic increase in the number of “culture and governance” cases, likely reflecting a heavier focus on the area as a result of the introduction of the senior managers regime in 2016 to banks and the largest investment firms and the FCA’s own focus on “tone from the top”. From 15 open culture and governance cases as at 1 April 2017, there were 61 open cases by 31 March 2018, with 48 new cases being opened during the course of the year. We would expect that this trend of increased investigations into culture and governance is likely to continue in the future, with the extension of the senior managers regime in 2019.
- Of the 10 cases that had an outcome from the Tribunal last year, six were withdrawn and three were dismissed without substantive hearing. Only one resulted in a tribunal decision.
- The FCA is increasingly using its powers of variation, cancellation or refusal of authorisation/approval/permissions. This has gone up from less than half of all published outcomes in 2015/16 to over three quarters in 2017/18.
- The average length of FCA cases in 2017/18 (including those where no further action was taken) was almost 20 months. Cases that settled took, on average, over 30 months. Last year, the average length of a case referred to the RDC took almost 60 months (i.e. five years), which was interestingly slightly longer than the average length for those referred to the Tribunal (52.4 months). The average length for criminal cases was 58.2 months last year.
- The FCA state that they have seen a “significant increase” in reports of potential unauthorised activity in the UK over the past year, including pension scams, investment and insurance fraud, boiler room schemes and unauthorised collective investment or deposit taking business.
- Last year saw the FCA’s first successful prosecution for illegal money lending since the FCA took over responsibility for consumer credit in 2014.