Financial Conduct Authority 

FCA reveals cost of enforcement

FCA reveals cost of enforcement

The Financial Conduct Authority has revealed the cost of its civil and regulatory cases ranges between £2,000 to £1m, with the average case resolved by agreement in 2018/19 costing the FCA £195,000.

This rose to £253,000 for cases referred to the regulatory decisions committee and £447,000 for cases referred to tribunal. 

The financial regulator stepped up its enforcement action against firms last year, more than tripling the value of fines it imposed on the industry to £227m.  

In its annual enforcement report published yesterday (July 9) it reported the number of open cases at the regulator had increased across almost all of its supervisory areas when compared with the previous year. 

The regulator had 101 retail conduct cases open in March this year, up from 78 at the beginning of April last year, alongside 25 open mis-selling cases, increasing from 19, and 96 open cases of insider dealing, up from 73. 

The regulator's annual funding requirement meanwhile rose 2.7 per cent for the coming year to £558.5m, partly because of the widening of its remit to sectors such as consumer credit and claims management firms.

But advisers saw cuts to the amount they will be asked to contribute as the adviser contribution for 2019-20 comes to £79.4m, down from the £80.3m collected in the previous year. 

The FCA imposed 16 fines on firms in 2018/19, the same number as last year but with a significantly higher value of £227.3m. 

This was more than triple the £69.9m of penalties in 2018, and consisted of £147m imposed against firms and £80.2m against individuals. 

However, the majority of this money is handed to the Treasury.

In a statement today FCA chairman Charles Randell confirmed the regulator launched 484 preliminary market abuse investigations last year and assessed more than 1,750 whistleblowing allegations, which is reportedly on the rise. 

Of these allegations, in 85 cases the regulator said it took action to mitigate harm and in 10 cases it took "significant action". 

The FCA said: "To ensure whistleblowers are handled consistently and fairly, we are increasing resources in our dedicated whistleblowing team and have rolled out training to ensure our staff, who consider whistleblowing intelligence, act on it appropriately.

"We have also been reviewing our practices on an ongoing basis, to ensure we maintain whistleblower confidentiality, track whistleblowing intelligence properly, and share it across the FCA."

Last month the regulator confirmed it would be reviewing its whistleblowing guidance following a recommendation from the Complaints Commissioner, which asked the FCA to give particular thought to setting out clearly who meets the standard definition of a whistleblower on its website. 

The Commissioner had found a "lack of effective prompt action" by the financial regulator in a number of cases in which advisers and consumers reported concerns about a firm or fund.

rachel.addison@ft.com 

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