The Financial Conduct Authority has said it will assess firms with little or no notice when it has reason to believe that a risk of harm may be present.
Speaking at the Pimfa Financial Crime Conference 2023 today (May 18), Nick Hulme, head of department, advisers, wealth and pensions at the FCA, said the regulator’s focus is prevent, protect and pursue with the regulator investing more resources into new technologies and people to do this.
Hulme said by adopting a more proactive, assertive, data-led approach, the regulator is getting better at how it uses data when it sees problems.
“What is different is that there is now a new dedicated financial crime supervision function within consumer investments,” he said.
“It is a really exciting development for us, and one where we expect to achieve a lot in the fight against financial crime.”
Hulme said this new function by the FCA is designed to proactively identify evidence and act where it establishes red flags.
“Financial crime can be enabled or facilitated through any firm, unwittingly or not, at any time and we can see that in supervision,” he said.
“So we need to be actively searching for the evolving threats and our view is that increased supervisory scrutiny in this way, in this sector, will lead to better anti-money laundering controls and fewer, less impactful frauds across all firms in consumer investments.”
The FCA is improving how it uses data it already collects, looking at new sources and acting on information provided by consumers, firms and other external parties.
It is also reviewing business models, performance against strategic and financial forecasts and considering the suite of products and services being offered to customers.
“All this analysis, holistically looked at, will be vital to our prioritisation and decision making processes. Our resources will be directed towards those firms and individuals which we think present the greatest harm to investors based on what we can see,” he said.
“We will be more externally focused than before - you will see more of us. We will undertake more firm assessments with less and sometimes even no notice where the data and information that we hold tells us risk of harm may be present.”
He added: “We will look for the root cause, take action against firms and individuals and engage other agencies and act to disrupt wider networks in our work which may fall outside our jurisdiction.
“When we become aware of serious concerns and evidence of egregious harm, we will act and we will not, and do not, hesitate to use the full range of tools and powers available to us. So in short, we will take assertive regulatory and enforcement action where needed.”
Hulme said he could not at present share details of specific investigations but argued that the FCA continues to have a mix of significant criminal and regulatory actions to stop illicit activity.
Collective effort
He also said that it requires a collective effort from the industry and urged individuals and firms to talk to the FCA.
“We expect you to make us aware if you identify a firm or individual who could be involved in any wrongdoing, whether that be authorised firms but also unauthorised firms that you see or individuals who are operating without the relevant permissions,” he said.
“Don't sit with that information, come forward and use the standard notification procedures and the FCA whistleblowing procedure as necessary. We want to hear from you.”
He said this year, the FCA's focus on financial crime “will be stronger than ever in this sector”.
“You will see more of us as a result of the wider FCA work, but particularly so given this new dedicated and focused function for the consumer investment sector,” he added.
sonia.rach@ft.com
What do you think about the issues raised by this story? Email us on ftadviser.newsdesk@ft.com to let us know
