Author: Nicola Sharp
18 July 2019
2 min read
The overarching theme in the United Kingdom’s Financial Conduct Authority annual report is one of change, as the regulator looks beyond Brexit and its impact on resources.
“Change is here to stay for all of us, so the FCA must change too,” said Charles Randell, chair of the United Kingdom’s Financial Conduct Authority (FCA) in its 2018-2019 report, while also looking back at its past actions and its current mandate.
Like last year’s report, Brexit remained firmly on the financial watchdog’s mind with Randell saying: “We have started the debate about the future of UK regulation and that will be a priority for the FCA this year.”
One key question, he explained, concerned the freedom to focus more on principles and outcomes than detailed rules, with the duty of care debate part of this, as well as whether UK regulation should “permit ordinary consumers to be exposed to high risk, often unregulated, products. It’s clear that risk warnings alone are not enough to provide adequate levels of protection”.
Andrew Bailey, the FCA’s chief executive, explained that Brexit preparations have been a “resource-intensive area”, which has involved planning for all scenarios.
Technology is also an emerging focus for the regulator, with criminals able to develop increasingly sophisticated ways of targeting consumers. In 2018, it issued 521 warnings about unauthorised firms compared to 328 in 2017.
However, Bailey also noted that under the Markets in Financial Instruments Directive II (MIFID II), the FCA had seen an “encouraging increase in wholesale firms reporting suspicious behaviours”, with the figure 18-times higher than the previous year.
In March 2016, the Senior Managers and Certification Regimes (SMCR) came into force and focused on individual accountability within banks and investment companies regulated by the FCA and the Prudential Regulation Authority (PRA).
The regimes have since been extended to insurers and are soon to include non-executive directors and soloregulated firms – including claims management companies – that fall under the FCA/PRA remit, with that latest extension due to be implemented fully on 9 December 2019.
Whistleblowing was also on the rise, with the regulator assessing over 1,755 separate allegations this year. Resources grew to deal with the workload which included the FCA taking action to mitigate harm in 95 cases, while 195 whistleblowers informed its work but did not lead to specific action, 144 were not relevant and 685 are being assessed.
Nicola Sharp, a legal director at Rahman Ravelli, highlights the increased FCA’s focus on whistleblowing allegations and preliminary market abuse investigations, saying: “The driver in this is the action that is being taken by the FCA when responding to allegations and any incidents of whistleblowing.”
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Nicola is known for her fraud, civil recovery 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.