The Financial Conduct Authority spent a total of £7.49m on external investigators in the period between 1 April 2014 and 31 March 2015.
This compares to a £6.84m total spend on external investigators during the period between 1 April 2013 and 31 March 2014.
The figures were gathered via a freedom of information request from FTAdviser.
According to the FCA, ‘external investigators’ are disclosure officers, accredited financial investigators and paralegals. These are used because the demands of cases can vary greatly, and as such they have to supplement the case team with additional resource, with experts being retained to advise on technical aspects of financial services.
The cost also includes external providers of legal services, but does not include temporary or contractor staff who are embedded within enforcement.
In 2014 to 2015, the FCA employed external investigators to work on 82 enforcement cases, of which 36 resulted in the regulator taking action.
However, just eight enforcement cases of the 82 resulted in criminal proceedings against a firm or individual during 2014 to 2015.
Richard Burger, partner at law firm RPC, said the spend on external investigators was unsurprising given the number of high profile scandals such as Libor rigging that the FCA had to look into last year.
“The enforcement division gets the most publicity even though it is technically one of the smallest divisions in terms of head count. They have been recruiting so I would expect that spend to come down.”
But Michael Ruck, a senior financial services enforcement lawyer at Pinsent Masons and formerly with the FCA, said the increasing use and cost of external investigators suggests the regulator needs to admit it needs more internal investigators.
“Why not have these people in house? I can see this level of work continuing for the foreseeable future.”