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Is the FCA’s name and shame policy now dead in the water?
Jill Lorimer
Our clients have included senior management in banks, traders, hedge fund managers, brokerage houses, London branches of overseas institutions, wealth managers and administrators, mortgage brokers, investors and company advisers as well as IFAs, fintech companies, cryptocurrency providers, accountancy firms, insurers, FDs and CFOs within corporates amongst others.
The financial services sector has long been highly regulated. Since the 2008 financial crisis, however, scrutiny, regulation and intervention have increased substantially with the Government demanding greater accountability and regulators needing to be seen to take a tougher and more proactive approach.
As a result, in recent years we have seen record levels of fines and a rise in prohibitions and restrictions against individuals and companies in the industry for regulatory misconduct and disciplinary breaches.
Investigations in the financial services sector are conducted by a number of agencies, including:
Parties based in the UK may also find themselves subject to multi-jurisdictional investigations, involving the US Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and/or other international regulators and prosecutors.
We have an established and highly experienced team of defence lawyers representing individuals and companies from all parts of the financial world on regulatory and criminal issues.
We provide intelligent and tactical representation to protect and advance the interests of those under investigation and have been involved in a wide-range of matters from technical regulatory beaches to complex criminal trials. We are widely considered the go-to firm for those in the financial sector facing potential criminal action.
Please see below for more information about the specialist services we offer or contact a member of our Financial Services team:
Kingsley Napley is a strong firm for when you need individual representation.”
Chambers and Partners 2024
Kingsley Napley were the ultimate professionals. Nothing was too much trouble."
Chambers and Partners 2024
Highly experienced and personable team that is quick to respond to all matters. Produce outstanding and detailed work, and break down complex concepts in a way that is easy to understand."
Legal 500 UK 2023
Particularly good at working with individuals under regulatory investigation."
Legal 500 UK, 2022
The firm has a good mix of people with backgrounds in both criminal and more corporate/commercial type matters and both are highly relevant to this sector."
Legal 500 UK, 2022
An exceptional team in every department, providing complementary skills for every eventuality. the financial services offering is particularly strong: from market abuse to pension fraud via international corruption this team is rightly seen in the City of London as the most ‘human’ of the top ten London providers."
Legal 500 2022
Louise Hodges – first choice for City traders and other professionals – she speaks their language and knows their markets inside out. Nicola Finnerty – founding partner of boutique outfit Corker Binning, she has now stepped up to the multi-disciplinary field, where her remarkable drive and innovative thinking have cemented her reputation as an opponent to be admired and feared."
Legal 500 UK, 2022
An excellent team doing excellent work."
Legal 500 UK, 2022
Jill Lorimer – conscientious, hard working and tactically astute."
Legal 500 UK, 2022
They have an excellent reputation, they have a very broad team and they have strength in depth."
Chambers UK 2020 - A Client's Guide to the UK Legal Profession
One of the few original boutique white collar firms to truly develop an expertise in corporate contentious financial services work."
Legal 500 UK 2020
Straddles the overlap between contentious regulatory work and financial crime."
Chambers UK 2020 - A Client's Guide to the UK Legal Profession
First choice for traders and City individuals under investigation."
Legal 500, 2019
...they are one of the only firms who can represent individuals in tricky financial cases."
Chambers & Partners, High Net Worth Guide, 2019
They are excellent - really experienced, careful practitioners."
Chambers and Partners, 2019
Their strength in depth is superb, and they've got expertise at all levels"
Chambers and Partners, 2019
They have a very measured, effective way of dealing with the opposition. They are a very collaborative and cohesive team, and completely reliable."
Chambers and Partners, 2019
They are excellent - really experienced, careful practitioners."
Chambers and Partners, 2019
They pick up some fantastic work, they have some fantastic clients and they have a skill of trying to get rid of matters before they go too far."
Chambers High Net Worth Guide 2018
The country's premier niche white-collar firm. They're very savvy and understand how the corporate world works."
Chambers UK, 2017
...'Widely regarded as a go-to team for contentious financial services matters involving a criminal litigation element. Excels at representing individuals and corporates in FSA and SFO investigations'."
Chambers UK, A Clients Guide to the UK Legal Profession
Kingsley Napley LLP does an ‘excellent job representing individuals involved in financial services disputes and regulatory investigations'. The firm excels at handling enforcement matters where there is a potential criminal law element such as insider dealing and market abuse."
Legal 500 UK
HM Treasury has published a draft statutory instrument which, when brought into force, will introduce a new regulatory regime for cryptoassets in the UK.
On 6 February the House of Lords Financial Services Regulation Committee published its response to the latest iteration of the FCA’s proposals to “name and shame” firms under investigation by the regulator.
In March 2024 the FCA published a clear warning to those advertising trading and investments on social media about the risks of doing so, making it clear that it will “will take action against those touting financial products illegally.” Just two months later, in May 2024, the regulator announced that it had commenced criminal proceedings against a number of individuals for advertising foreign trading schemes on their social media platforms.
The FCA is conducting a review into whether motor finance customers were overcharged as a result of the widespread use of discretionary commission arrangements in the motor finance industry. It had expected to set out its next steps in light of this review in September 2024. However, it has announced that it will not now do so until May 2025.
Maintaining the integrity and cleanliness of the financial markets remains a key FCA priority and, indeed, is a statutory legal obligation on the regulator. Against that, however, is the fact that FCA’s track record in taking enforcement action against insider dealing and other forms of abusive behaviour is relatively poor. Since 2017 it has only achieved three criminal convictions for insider dealing, whilst its record for imposing civil fines on firms and individuals for breaches of the Market Abuse Regulation (“MAR”) is also unimpressive.
The FCA’s long awaited anti-greenwashing rule came into force on 31 May 2024. This rule is part of the wider Sustainability Disclosure Requirements regime and reflects the FCA’s strong commitment to ESG and to supporting the Government’s commitment to achieving net zero by 2050.
The FCA’s recent consultation (CP24/2) on changes to its enforcement process has provoked what appears to be unanimous opposition from government and industry bodies. Of particular concern is the proposal in consultation paper (“the CP”) that the FCA will publish information about its enforcement investigations, including the identity of the subject of the investigation, where it assesses it to be in the public interest to do so.
For firms regulated by the Financial Conduct Authority (FCA), it is vital that the business – and its relevant employees – ensure that its conduct is without reproach in order to avoid supervisory or regulatory difficulties. This extends to issues of governance and administrative matters, as well as more obvious issues of conduct (such as, for example, financial misconduct) which often receive more press.
This article first featured in Employee Benefits in November 2023.
A recent sequence of adverse decisions by the Upper Tribunal could have significant implications for future Financial Conduct Authority cases.
Under the Senior Managers and Certification Regime (“SMCR”), which was introduced by the Financial Conduct Authority (“FCA”) to seek to remedy perceived industry wide failings following the 2008 financial crash, regulated staff must meet certain standards of fitness and propriety and will be personally accountable to the FCA for any failure to do so.
Firms covered by the SMCR are required to assess, both at the point of recruitment and on an annual basis, whether SMCR staff are fit and proper to perform their role. In the case of senior managers, firms that are covered by the regime must also seek approval from the FCA prior to appointment and in many cases the FCA may wish to closely scrutinise any such application.
Non-financial misconduct has been an area of increasing regulatory focus for the Financial Conduct Authority (FCA) over the last five years. To date, published regulatory outcomes have focused on the most egregious end of the spectrum, with the FCA handing out bans and fines for those already convicted in the criminal courts of serious sexual offences. However, these cases provide little guidance for FCA-regulated firms grappling with allegations of more nuanced conduct, such as the inappropriate use of social media on a personal
Pre-Brexit, some 8,000 financial services firms based in the EA or EEA relied on the mutual passporting regime to do business in the UK. Since 1 January 2021, such firms have been able to operate under a transitional temporary permissions regime (TPR). While some of those firms have now exited the UK market, most of those intending to continue to operate here are required to apply for full UK authorisation. The deadline for applications is 31 December 2022.
The FCA’s transformation to becoming an assertive, front footed regulator has been accelerated by three recent developments, all of which prioritise the protection of consumers.
This half-year update provides an overview of recent enforcement activity by the Financial Conduct Authority (“FCA”) in the period from January to June 2022.
As the cost of living continues to rise, and subsequent demand for credit increases, the FCA has been clear with lenders as to its expectations for their treatment of customers. Indeed, with inflation predicated to reach 14%, consumers will see a significant reduction in disposable income and many may experience financial vulnerability for the first time. In this context, the FCA has clearly identified that a potential increase in dependence on credit poses significant risks to consumers.
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.
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’.
Jill Lorimer
Julie Matheson
Anna Holmes
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