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Home > Regulation > UK Regulation

By Donia O'Loughlin | Published Jul 12, 2012

Two-thirds of financial professionals say FSA ‘ineffective’

Just over 30 per cent of financial services professionals believe that the Financial Services Authority effectively deters, investigates and prosecutes misconduct, data from securities litigation law firm Labaton Sucharow reveal.

Despite the low figure, the research found that professionals across the US feel their financial regulators and law enforcement authorities are less effective, with just 26 per cent and 27 per cent respectively saying the Securities and Exchange Commission and the Financial Industry Regulatory Authority are effective.

Back in the UK, 34 per cent of respondents, who were drawn from senior positions across the sector in both the UK and US, believed the Serious Fraud Office is effective in performing its duties.

In addition, over a quarter of industry professionals said they have observed or had firsthand knowledge of wrongdoing in the workplace

The report showed that 24 per cent of the 500 respondents feel that financial services professionals may need to engage in unethical or illegal conduct in order to be successful, while 16 per cent said theywould commit a crime, including insider trading, if they could get away with it.

The survey also revealed that 39 per cent of respondents reported that their competitors have definitely or are likely to have engaged in illegal or unethical activity in order to be successful.

Dominic Auld, partner at Labaton Sucharow, said: “It is shocking that four years after the global economic crisis began there continues to be a fundamental lack of integrity in the financial services industry.”

Jordan Thomas, former assistant director at the SEC and partner and chair of the whistleblower representation practice at Labaton Sucharow, previously told FTAdviser that whistleblowers in the UK need to receive anonymity as well as a monetary reward to encourage them to report corporate corruption or securities violations.

The US Congress recognised this problem when it established the SEC Whistleblower Program by mandating that the SEC also provide potential whistleblowers with the ability to file anonymously and receive significant monetary awards.

According to Mr Thomas, the UK took its first “significant step” in this direction by announcing the launch of SFO Confidential in November 2011, a new service to allow whistleblowers to report suspected fraud or corruption in confidence.

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