FCA to change enforcement approach

The Financial Conduct Authority is changing its enforcement approach as it aims to act faster and with more transparency. Therese Chambers, joint executive director of enforcement and market oversight for the regulator, said in a speech that the watchdog is acting to increase public confidence in financial services. The changes will be focused on improving processes and “embracing innovation” in order to intervene earlier and act faster, taking a targeted outcomes-based approach, and “raising the bar” on the fight against financial crime. In her speech to the AFME Annual European Compliance and Legal Conference yesterday, Ms Chambers said that the deterrent effect of enforcement action is greater the faster it happens after the offence and therefore speeding up investigation timescales is a key goal for the regulator’s enforcement team. In 2023/24 FCA investigations closed took an average of 42 months to complete. Ms Chambers said the FCA has already made advances in shortening those timescales. She said: “There are good reasons for these timelines: cases are often highly complex and we, like all enforcement agencies around the world, are adapting to the ever-growing amount of digital evidence that must be analysed. Each case is about 60-70,000 documents! But we believe we can improve on those timelines. We have made significant advances already: 24 outcomes under our belt so far for 2024, compared to 26 for the whole of 2023.” In 2023/24 the regulator closed 60 enforcement operations, in comparison to 38 the previous year. The regulator said there are currently 45 people currently facing FCA criminal proceeding, with offences including fraud, forgery, insider dealing and money laundering. However, Ms Chambers acknowledged that to speed up enforcement, there will be a “streamlining” of the FCA enforcement caseload. She said this does not mean the regulator will shy away from challenging or complex investigations. She said: “Let me be clear: a reduction in the number of investigations does not mean a reduction in effort. Quite the opposite. It’s about making a conscious decision to identify cases where we believe there may be conduct creating the greatest risk of harm, and where an investigation is most likely to drive the greatest deterrence. Neither does it mean going for the low hanging fruit. “We will continue to investigate potential misconduct by individuals and firms, and will never shy away from challenging and complex investigations. So, whilst we may be opening fewer investigations, we expect to see a greater number of outcomes and a greater impact from our enforcement activity.” Ms Chambers said reducing and preventing serious harm from financial crime will remain a significant pillar in its next strategy report, due in 2025. She added that collaboration with firms plays an important role in the FCA’s fight against financial crime. She said: “Enforcement action is not just about dishing out punishment; it’s also about educating the whole market on what we expect, and where others have fallen short.” Transparency around who the regulator is investigating and why is one area the regulator has seen much debate, with consumers groups, whistleblowers and other regulators welcoming the prospect of greater transparency, but companies regulated “overwhelmingly” against. Ms Chambers said the FCA will take its time to consider transparency but would take a case-by-case approach on whether transparency is in the public interest for each case. The regulator plans to provide greater detail on how enforcement transparency could work in practice later this autumn.

FCA to change enforcement approach

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