The FCA Enforcement annual performance account 2016/17 was published on 5 July 2017 as part of the FCA Annual Report. Director of Enforcement Mark Steward reinforced the Enforcement Division’s mission to open and investigate many more cases of suspected misconduct.
The Enforcement Annual Performance Account (“the Account”) is the FCA Enforcement Division’s annual assessment of whether they are operating fairly and effectively in investigating suspected misconduct and in bringing criminal, civil and administrative proceedings where it is appropriate to do so.
In the foreword Mr Steward reiterated that following the acceptance of the Andrew Green QC report into the HBOS failure; which said that the FCA was too cautious in its approach to opening investigations; the general approach to Enforcement is to begin investigations under section 168 of the Financial Services and Markets Act 2000 where there are circumstances suggesting misconduct. This new approach has significantly increased the number of investigations opened from just over 100 in 2015/16 to over 250 in 2016/17 .
There have also been a number of process changes to the way Enforcement is managing the increased number of investigations and Mr Steward states that they “continue to make investigations sharper and more efficient”. It is evident from the Account however that Enforcement investigations are still extremely lengthy. Whilst the average case length for all regulatory and civil cases fell slightly from 18.5 months in 2014/15 to 17.6 months in 2016/17, the average length of criminal cases rose dramatically from 31.7 months in 2014/15 to 75.6 months in 2016/17.
What is clear from the Account is that more investigations do not result in more Enforcement outcomes with the percentage of cases closed with no further action rising from 24% in 2015/16 to 62% in 2016/17. In fact, in a recent speech Director of Investigations, Jamie Symington, (see here for more) indicated that the FCA anticipated there would be a higher proportion of cases that concluded with no formal Enforcement action.
Those under investigation should not however be lulled into thinking that they do not have to take an FCA investigation seriously or that there is a high probability an investigation will result in no action. Any FCA investigation of an organisation or individual can result in devastating financial and professional consequences. It is important to receive early advice to make sure that you respond appropriately to any request from the FCA to attend an interview or provide information.