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Enforcement actions taken by the UK financial watchdog fell in the last financial year ending March 31, 2023. The number of cases opened against companies and individuals fell 67% and 33% to 26 and 74, respectively. Similarly, the number of cases closed fell by 10% and 44% respectively.
Overall, the UK’s Financial Conduct Authority (FCA) handled a total of 100 new cases during the period and closed 107 cases, compared to 190 and 159, respectively, the previous year. The figures are based on three-year data obtained by global law firm Reed Smith through Freedom of Information (FOI) requests to the FCA.
However, the data, which the UK watchdog has confirmed to finance tycoons, shows that despite falling enforcement activity, insider trading cases make up the largest number of actions against individuals that the regulator has taken over the past three years. The financial watchdog opened 61 such cases during the period and closed 52.
“Insider trading is always a priority for the FCA and improvements in technology have made it easier for the FCA to monitor suspicious activity,” said Laura-May Scott, attorney at Reed Smith. “It’s no big surprise to see that opportunistic insider trading accounted for the majority of investigations opened and closed against individuals.”
On the other hand, most of the investigations (13 in total) opened by the FCA against UK companies during the three-year period concerned unlicensed collective investment schemes. Comparatively, the regulator closed 27 money laundering checks cases, representing the highest number of closed investigations against organisations. This is followed by 15 closed cases on pension advice.
“There was a noticeable spike in enforcement activity in February 2022, with cases opened against businesses 155% higher than the monthly average over the past three years, and cases opened against individuals 121% higher than average,” explained Reed Smith. .
Is the FCA adopting a ‘lighter regulatory touch’?
In a recent summary of its regulatory actions in 2022, the FCA said it has increased its enforcement actions and employed 1,000 new agents to better protect consumers against financial harm. It also revoked the licenses of 201 companies that failed to meet regulatory standards during the period.
But what does the sharp decline in equities or execution cases mean in the past fiscal year? Are they translating into fewer instances of misconduct or is the FCA softening its approach?
Romin Dabir, a partner at Reed Smith, believes the drop in enforcement metrics could be linked to a backlog from the COVID-19 period. Dabir noted that the FCA may be busy closing cases it had previously opened.
“The relative decline in enforcement activity may also reflect the government’s current focus on increasing the competitiveness of the City of London,” Dabir added. “The FCA may take a lighter regulatory approach on some issues than in previous years.”
However, the FCA told Finance Magnates that its approach to addressing serious misconduct remains “unchanged”.
“The number of enforcement cases we open naturally varies from year to year. Law enforcement investigations are a tool we use to protect consumers and market integrity,” the FCA explained. “We are also increasingly resorting to prior assertive interventions, such as closing businesses when they fail to meet standards.”
Meanwhile, FCA earlier this year launched its business plan for 2023-2024, noting that it would focus on four main areas: focus on consumer needspreparing financial services for the future, strengthening the UK’s position in global wholesale markets and reducing and preventing financial crime.
New warning from the CNMV; recurring payments by Praxis; read the news nuggets of the day.
Enforcement actions taken by the UK financial watchdog fell in the last financial year ending March 31, 2023. The number of cases opened against companies and individuals fell 67% and 33% to 26 and 74, respectively. Similarly, the number of closed cases fell by 10% and 44% respectively.
Overall, the UK’s Financial Conduct Authority (FCA) handled a total of 100 new cases during the period and closed 107 cases, compared to 190 and 159, respectively, the previous year. The figures are based on three-year data obtained by global law firm Reed Smith through Freedom of Information (FOI) requests to the FCA.
However, the data, which the UK watchdog has confirmed to finance tycoons, shows that despite falling enforcement activity, insider trading cases make up the largest number of actions against individuals that the regulator has taken over the past three years. The financial watchdog opened 61 such cases during the period and closed 52.
“Insider trading continues to be a priority for the FCA, and improvements in technology have made it easier for the FCA to monitor suspicious activity,” said Laura-May Scott, attorney at Reed Smith. “It’s no big surprise to see that opportunistic insider trading accounts for the majority of investigations opened and closed against individuals.”
On the other hand, most of the investigations (13 in total) opened by the FCA against UK companies during the three-year period concerned unlicensed collective investment schemes. Comparatively, the regulator closed 27 money laundering checks cases, representing the highest number of closed investigations against organisations. This is followed by 15 closed cases on pension advice.
“There was a noticeable spike in enforcement activity in February 2022, with cases opened against businesses 155% higher than the monthly average over the past three years, and cases opened against individuals 121% higher than average,” explained Reed Smith. .
Is the FCA adopting a ‘lighter regulatory touch’?
In a recent summary of its regulatory actions in 2022, the FCA said it has increased its enforcement actions and employed 1,000 new agents to better protect consumers against financial harm. It also revoked the licenses of 201 companies that failed to meet regulatory standards during the period.
But what does the sharp decline in equities or execution cases mean in the past fiscal year? Are they translating into fewer instances of misconduct or is the FCA softening its approach?
Romin Dabir, a partner at Reed Smith, believes the drop in enforcement metrics could be linked to a backlog from the COVID-19 period. Dabir noted that the FCA may be busy closing cases it had previously opened.
“The relative decline in enforcement activity may also reflect the government’s current focus on increasing the competitiveness of the City of London,” Dabir added. “The FCA may take a lighter regulatory approach on some issues than in previous years.”
However, the FCA has told finance tycoons that its approach to cracking down on gross misconduct remains “unchanged”.
“The number of enforcement cases we open naturally varies from year to year. Law enforcement investigations are a tool we use to protect consumers and market integrity,” the FCA explained. “We are also increasingly resorting to prior assertive interventions, such as closing businesses when they fail to meet standards.”
Meanwhile, FCA earlier this year launched its business plan for 2023-2024, noting that it would focus on four main areas: focus on consumer needspreparing financial services for the future, strengthening the UK’s position in global wholesale markets and reducing and preventing financial crime.
New warning from the CNMV; recurring payments by Praxis; read the news nuggets of the day.
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