As regular readers will recall, the purpose of the Performance Account is to communicate statistical data and information regarding the preceding year's enforcement activity. However, as explained elsewhere in this issue ("Greater transparency on Enforcement planned"), this is also the first Performance Account being used to further the FCA's objective of increased transparency.
Because much of the information contained in the Performance Accounts relates to past enforcement activity1 (and in the case of this Performance Account the activity is that of the FSA), it is of limited interest save for the purposes of benchmarking against future years. Subject to that, it is noteworthy that in the year to April 2013 the FSA achieved 79 Final Notices, £423.2m in financial penalties (up from £76m in the previous year) and 13 convictions (from four trials). It is assumed that of greater interest to readers of this publication will be what the Performance Account tell us about existing and future enforcement work.
First, as at March 2013 there were some 134 "open" cases being worked on by the FCA. Importantly, this data treats a case against multiple firms and/or individuals as being one case; therefore the number of firms and individuals subject to enforcement activity will in fact be considerably higher. Subject to that, the number of open cases is roughly the same as it was in March 2012 (132 open cases). It is reasonable to assume that we will see (as we have already) a continuation in the level of enforcement activity as a manifestation of the credible deterrence agenda.
Second, the Performance Account reports a thematic focus on the accountability of individuals, particularly holders of significant influence functions. In the year ending March 2013, £5m of fines were levied against individuals and 43 prohibitions were imposed (although no doubt in most cases the enforcement activity will have been commenced some time before 2012/13). The FCA notes that it has found cases against individuals to be particularly resource intensive, but that it hopes to make its handling of such cases more effective in the future. This is against the backdrop of a reported increase in the general complexity of all types of enforcement cases. All the indications, including the public clamour, are that this thematic focus will continue into 2013/14.
Third, the Performance Account includes data regarding the number of Warning Notices converted into Decision Notices. In 2012/13 only one in 26 cases where the Warning Notice was contested resulted in no Decision Notice being published. This is roughly the same rate as the previous year (to March 2012) (one in 25 cases). However, as the FCA notes, this data does not tell us what changes were made by the RDC between the respective Warning Notices and Decision Notices. This is often critical in enforcement cases.
Fourth, although the numbers are down from the previous year (855 as against 1085), the FCA reports a continuing trend of requests for assistance from overseas regulators. Co-operation with US regulators in the last year was apparently particularly noteworthy as a result of the investigations into allegations of LIBOR fixing (an issue on which the FCA anticipates it will continue to expend substantial resources in 2013/14). As we set out in Enforcement Watch 1 ("A boost in assisting Overseas Regulators" ), the steps that the regulator takes in responding to requests from overseas regulators are relatively unconstrained.
Finally, the average length of cases from the point that the case was referred to Enforcement to its conclusion makes for sobering reading for subjects of investigations. This information is being published for the first time, as part of the FCA's transparency agenda (See On the Horizon "Greater transparency on Enforcement planned"). Those cases that settled took on average 19.6 months to reach that outcome, whereas cases taken to the RDC or the Tribunal took on average 37.8months and 50.1 months respectively.