Author: Nicola Sharp
2 August 2019
2 min read
The 2019 fiscal year saw the UK’s Financial Conduct Authority (FCA) issue its largest total amount in fines against individuals.
Its annual report shows that the FCA imposed £80.2 million ($97.6 million) in fines against eight individuals, compared with about £900,000 ($1.1 million) in fines against 10 individuals the previous year. Overall in the 2019 fiscal year, the FCA imposed about £227.3 million ($276.6 million) in fines -- more than trebling the total for the year before.
The figures come at a time when the FCA is opening ever more investigations, focusing more on criminal cases and looking to boost enforcement in areas such as retail conduct and financial crime. The number of FCA open cases has increased over the past 12 months in nearly all its supervisory areas. It would be a surprise if this was not reflected in a continued increase in total fines imposed.
More investigations and, therefore, more fines is a trend that is unlikely to be reversed in the near future. This is down to a number of reasons. First, the FCA is looking to both improve the resources it dedicates to working with whistle blowers and the treatment of them.
Second, it is looking to take a tougher stance on enforcement. This was emphasised in its April 2019 “FCA Mission: Approach to Enforcement’’ document (pdf), in which it outlines its aim of driving out behavior that fails to meet FCA standards or is dishonest or unlawful. The document talks of the FCA’s overriding principle being substantive justice and of its need to “carry out investigations in a consistent and open-minded way to get the right outcomes.”
A third reason is that the FCA is also putting much emphasis on anti-money laundering controls and financial crime. Admittedly financial crime has always been a major focus for the FCA but the attention paid to it along with the other factors mentioned make it likely that the FCA graph showing the number of open investigations is set to keep climbing upwards for the foreseeable future.
Yet it would be wrong at this point not to sound a note of caution. A glut of investigations will -- if the subjects are chosen wisely -- most likely lead to more fines. But the success of any investigation will always depend on just how effective the FCA is in bringing offenders to book.
The FCA wants to avoid being attacked for a reluctance to take on the difficult cases -- a criticism that was made of its predecessor, the Financial Services Authority -- but increasing numbers of open investigations will count for nothing if large numbers of them are later abandoned due to lack of evidence.
So while the FCA equation of more investigations equalling more fines may continue to hold true, this will always hinge on the nature of the allegations and the strength of the case that the FCA can put together. The figures that matter are going up for the FCA at the moment. But it will have to work hard and intelligently to ensure that remains the case.
This piece was originally featured on the FCPA Blog.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.