The Financial Conduct Authority has used its early intervention powers 21 times where it has identified a risk of harm to consumers, its annual 2013 to 2014 report revealed.
The regulator’s early intervention powers allow it to remove products from the market if it suspects consumer detriment may occur.
The annual report said this means engaging earlier than it normally would in the course of an ordinary disciplinary investigation and agreeing an appropriate response.
While this might involve formal action, the FCA stated it is more likely – in the interests of getting a good consumer outcome quickly and efficiently – to involve a voluntary agreement with the firm.
Four of these early interventions involved anti-money laundering at banks, the regulator said.
One of these concerned “very serious deficiencies” in an investment bank’s systems and controls to prevent money laundering, and it obtained a voluntary undertaking that the bank would not take on any new clients until we were satisfied that those issues were resolved.
In September 2013, the City watchdog also revealed it became concerned about the provision of professional indemnity insurance for 500 professional services firms.
The regulator said it secured the agreement of three firms to vary their permissions to ensure clients were advised of the concerns and that premiums received from clients were appropriately segregated and safeguarded.
In other cases firms have agreed to make board changes, carry out customer redress exercises, change their approach to complaints handling, stop selling certain products, not publish or broadcast particular advertisements, cancel their authorisation or prepare a skilled persons report, the annual report said.
Furthermore, in the FCA’s first year of operation, it imposed 46 penalties, totalling £425m, and issued five public censures and 26 prohibitions.
The regulator added it has also taken action against firms and individuals operating a variety of unlawful schemes, such as boiler room frauds, land banking scams, and other ‘get rich quick’ investment schemes.
This has included freezing assets, closing down unlawful schemes and pursuing civil and criminal action in appropriate cases, the report said.
John Griffith-Jones, chairman of the FCA, said: “We are far more engaged in what is happening for consumers; we are using the eyes and ears of the millions of people who use financial products to help inform and direct our work.
“The change in our focus has been broadly welcomed by industry and the response we have had from firms has helped us achieve some positive outcomes.”
“I have seen boardrooms across the country think about how they can put the consumer at the heart of the way they do business. What we want to see now is that change filter down to everyone involved in meeting consumer needs.”
The FCA will host its first annual public meeting on 17 July 2014 at the Queen Elizabeth II Conference Centre in London where members of the public can ask questions about the annual report.
