The FCA and the future of credible deterrence in the financial markets
5th July 2012
At the FSA’s Enforcement Conference on 2 July, Tracey McDermott, acting director of the Enforcement Crime Division set out the FSAs record over the last 2 years and confirmed that there will be significant changes in the way in which the FCA regulates in the future: many of those changes are already starting to take place within the FSA.
Since January 2010 the FSA has:
- Published 260 final notices and 16 decision notices (following power given in 2010)
- Imposed penalties in excess of £248m, including £29m on individuals
- prohibited 129 individuals from the industry
- Obtained redress in excess of £290m (not including PPI) for customers of regulated firms
- Secured criminal convictions against 10 individuals for insider dealing, with another 10 currently standing trial for market offences
- Fought 22 disciplinary cases in the tribunal and succeeded in 16 (awaiting decisions in 5)
- Dealt with almost 2,000 requests for assistance from overseas authorities
- Taken action to tackle the threats presented by unauthorised business.
The FSA had experienced some failures during this period but she noted that a good enforcer cannot operate if it is not prepared to lose: this does not mean making rash or ill-considered decisions, however it was recognised that intervening earlier will be a test of that resilience and self-confidence.
Future FSA and FCA objectives include:
- Effective enforcement, particularly focusing at senior management failures related to risk management, inappropriate sale of products and failures to prioritise the interests of consumers
- Quicker response to emerging issues and increased early interventions by working with supervision and others on both thematic and firm specific work
- Utilisation of new tools, such as the power to make rules to ban products on a temporary basis, and existing tools, such as own initiative variation of permission (OIVOPs)
- Low tolerance for firms and individuals that are repeat offenders
- Protecting the integrity of the markets through policing the wholesale as well as the retail markets
- Educating customers in how to avoid losing money to fraudsters.
As the FSA faces its final months in existence, it is clear that a path has already been set for the FCA to be a more rigorous, active and pre-emptive regulator, for sanctions to increase (both for firms and individuals) and for increased use of criminal prosecutions even for the more difficult cases.