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COVID-19 and the FCA Scams, short selling and more
Philip Salvesen
It sets out its five key priorities over the next one to three years:
The Plan is significantly shorter than usual and the impact, and potential impact, of COVID-19 on the FCA’s ability to engage in any meaningful planning is evident on every page. However, the following points are likely to be of particular interest to regulated firms and individuals:
Finally, the Plan sets out the key outcomes it is seeking to deliver by working with those in wholesale financial markets, investment management, retail banking and insurance.
In wholesale financial markets, the key outcomes which the FCA wishes to achieve are:
The focus for the investment management sector is upon ensuring that investors get high-quality and fair value products and services.
Within the insurance sector, the FCA has identified that the principal drivers of harm are unfair pricing practices in personal lines insurance, unsuitable and poor value products and undesirable remuneration practices in firms. It makes it clear that the key outcomes it is looking to achieve are the delivery of suitable products, consumers not being unfairly excluded from certain products and services and operational resilience.
In retail banking, it is recognised in the Plan that harm in the sector is often caused by financial crime, weak operational resilience and poor access to services for consumers. Weak governance and oversight in smaller banks is also driving harm. The FCA wants firms to build greater resilience to economic crime through sustainable improvement in their systems and controls so that they can spot, disrupt and stop these activities. See our related blog: COVID-19: Scams, short-selling and more.
Though the plan confirms that it may be “weeks or months before we are in a more stable position and can turn ourselves fully to the activities in this plan”, this is not an invitation for those in the sector to take a step back from their regulatory responsibilities and operational compliance. If there is any doubt as to this a final note is sounded: “we will not compromise on our expectations of firms”.
For further information on the issues raised in this blog post, please contact a member of our criminal team.
Jill Lorimer is a partner in our Criminal Litigation team and has an extensive track record in advising firms and individuals facing regulatory and criminal investigations by the Financial Conduct Authority (FCA). Jill has particular expertise in advising firms who are, or who may be, under the scrutiny of the FCA and in taking a proactive approach to head off potentially adverse action. She also advises individuals applying to be FCA approved persons as well as those whose approved status is at risk.
On 13 May 2022, the FCA published a final refusing Alexander Jon Compliance Consulting Ltd.’s (“AJCC”) application for authorisation to provide regulatory hosting services. There is no specific definition of what a regulatory host is, but the FCA generally regards it as a commercial arrangement whereby an authorised Principal firm appoints and oversees a number of unconnected Appointed Representatives (“ARs”) which operate across a range of markets.
Charities are not immune to financial crime, fraud or other wrong-doing; there are a number of ways in which charities may be exploited by criminals.
The Financial Conduct Authority (FCA), in its annual business plan published today, sets out its areas of focus for the year ahead. It is, as ever, essential reading for all those in the regulated sector.
In a case that attracted national media coverage and emphasises the crucial importance of regulatory compliance and the highest standards of professional conduct in the financial services sector, the High Court dismissed a breach of contract claim brought by an investment manager.
In March 2021 the Chancellor announced the establishment of a taskforce to investigate those who may have fraudulently made use of government schemes set up to protect individuals and businesses against the economic impact of COVID-19 – such as the Coronavirus Job Retention Scheme (CJRS) (widely referred to as the Furlough scheme), the Self-Employment Income Support Scheme (SEISS) and the ‘Eat Out to Help Out’ Scheme.
For the fourth year the FCA has published research on the changing relationship between consumers and cryptoassets. In spite of the pandemic, the strong upward trend in public engagement and media coverage has continued, with the FCA estimating 2.3 million adults now hold cryptoassets.
Global financial markets are preparing to transition away from the use of the London Interbank Offered Rate (“LIBOR”) and adopt an appropriate alternative risk free rate (“RFR”) by the end of 2021. What are the reasons for the move away from LIBOR, the progress to date in terms of identifying the Sterling Overnight Index Average (“SONIA”) as the most appropriate alternative rate in the Sterling markets, and the steps still required to be taken to ensure such markets are ready for the phasing out of LIBOR by the end of the year
At the end of last month, the Competition and Markets Authority (CMA) published a letter written to Danske Bank concerning its breach of the Small and Medium-sized Enterprise (SME) Banking Behavioural Undertakings 2002, following loans it had offered under the ‘Bounce Back Loan Scheme’.
In the Budget 2021, presented to Parliament on 3 March, the Chancellor announced that HMRC will establish a taskforce to investigate those who have fraudulently made use of government schemes set up to protect individuals and businesses against the economic impact of COVID-19 – such as the Coronavirus Job Retention Scheme (CJRS) (widely referred to as the Furlough scheme) and the Self-Employment Income Support Scheme (SEISS).
As of 10 January 2021, all cryptoasset firms are required to be registered with the Financial Conduct Authority (FCA) under the Money Laundering Regulations.
FCA focuses on risks associated with unmonitored communications, including the use of unencrypted apps, such as WhatsApp, for sharing potentially sensitive or confidential information when working from home.
As we near the first anniversary of the extension of the Senior Managers & Certification Regime (SM&CR) to solo-regulated FCA firms, the first round of annual fitness and propriety assessments will be topping the to-do lists of many compliance professionals.
One of the impacts of the Covid-19 pandemic is that national income has fallen dramatically. In response to concerns from homeowners unable to meet their mortgage repayment requirements due to a drop in income, the Treasury and Financial Conduct Authority announced a ‘mortgage payment holiday’. This was the result of banks agreeing to allow mortgage-holders suffering from a drop in income to pause their repayments. A ban on home repossessions was put in place at the same time
The FCA announced on 5 November that it has banned three individuals from working in the financial services industry for non-financial misconduct.
HMRC’s criminal investigation policy makes it clear that it will tackle tax fraud by civil investigation procedures wherever possible, with criminal investigations reserved for the most egregious of offending. It is therefore highly unusual for an appellant in the tax tribunal to argue his case is so serious it should only be dealt with by way of a criminal investigation. However, that is exactly what happened in the Upper Tribunal case of L Hackett v HMRC [2020] UKUT 212 (TCC).
The headlines of 23 October 2020, reported the staggering estimate that between 5 and 10 per cent of the £39 billion paid under the Government’s job retention scheme has been claimed fraudulently.
In response to the coronavirus (“COVID-19”) pandemic, the government introduced a number of loan schemes in order to assist businesses struggling financially. Recent reports suggest that these schemes, as outlined below, have become a target for fraudulent loan applications, by both genuine businesses and also organised criminal enterprises. This blog briefly examines the various loan schemes in place and the criminal offences which are likely to be the focus of investigating authorities in the coming months.
How should regulated firms respond when issues come to light which call into question the fitness and propriety of a member of staff? In the second part of their series of fitness and propriety blogs, Jill Lorimer and Nick Ralph consider best practice. You can read the first part of the series by clicking here.
The Financial Conduct Authority (“FCA”) has recently provided information to their regulated firms as to good and bad practice relating to, amongst other things, the carrying out of fitness and propriety (“F&P”) assessments.
The Government announced its intention to introduce an Economic Crime Levy in the Budget 2020. This is designed to fund government action to tackle money laundering and help deliver the reforms committed to in the Economic Crime plan 2019-2020. It has since followed up on this - on 21 July - with the launch of a consultation as to how such a levy would operate.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
Philip Salvesen
Adrian Crawford
Louise Hodges
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