In July, the Chief Executive of the FCA Martin Wheatley addressed the FCA Financial Crime Conference ("The changing face of financial crime"). His speech was fairly wide ranging, reinforcing and building on a number of themes for future activity. Those of most interest to those looking to future enforcement activity are as follows.
He paid some lip service to Europol's view that the uptick in financial crime is due to the effects of the global economic crisis. However, he said that, in actual fact, it was known that periods of economic growth are as likely to cultivate financial crime as periods of contraction. This seems a clear signal to avoid complacency as we stumble out of recession.
It is no surprise to those of us dealing with enforcement matters, that there is increasing co-operation between international bodies. This was another theme of Wheatley's speech. He talked of the amplified Butterfly Effect, said that the effect of global co-operation becomes more important by the day, and took the opportunity to thank all who contributed to this.
He spent some time talking of the successful prosecutions in the well-known insider dealing Blue Index matter, highlighting the sheer scale of the investigation itself. What was interesting here was his statement that this "new brand of enforcement work [ie vast operations] will continue", and his reference to what was in the line of fire. This was stated to be sanctions, investment fraud, bribery and corruption, and money laundering.
In terms of prevention, Wheatley spoke about the area of pension liberation that the FCA is investigating with the Pensions Regulator. The suggestion coming out of the speech is that we will see enforcement activity in this area in the future.
Finally, Wheatley spoke of a matter we have long been writing about, that is, the desire of the regulator not only to take more cases against executives, but also to crystallise the idea of personal accountability. By way of example:
- He stated that the focus on individual culpability, particularly at a senior level, will underpin the work already started by the FSA. Wheatley noted that between 2010 and 2012, 67 applications for approval to senor bank executives were withdrawn prior to results being announced, compared to 21 in preceding years.
- Going forward, there will be an increased use of attestations to "focus the minds" of senior executives by requiring them to sign and confirm that their firm is dealing with a regulatory issue, that they are responsible for it and that they will stake their reputation on the quality of the compliance processes in place. In our view, not only will this focus minds, but the FCA is likely to seek to use attestations as a disciplinary tool. That is, if an attestation is breached, or is shown to be wrong, the FCA is likely to use that itself as a ground of disciplinary action.