The Financial Conduct Authority (FCA) has seen a significant drop in the number of enforcement cases opened last year, according to a recent Freedom of Information request. While this may seem like a decline in regulatory activity, experts suggest that the FCA’s focus on wrongdoers remains strong.
In the year to March, the FCA opened 67% fewer cases against firms and 33% fewer cases against individuals. However, this decrease in enforcement cases may not necessarily indicate a lack of activity. Instead, it could be attributed to the FCA employing more assertive interventions earlier in the process.
The FCA’s commitment to maintaining industry standards is evident in its cancellation of the authorisation of 201 firms for failing to meet minimum requirements in 2022. The regulator has also denied authorisation to several firms that applied. For example, 80% of crypto firms seeking registration were rejected. Additionally, the upcoming implementation of the Consumer Duty, described as a significant shake-up in financial services regulation, is expected to lead to swift and comprehensive action against firms failing to deliver “good outcomes” for customers.
Experts anticipate an uptick in enforcement activity as the FCA redoubles its efforts in the new financial year. Partner at international law firm Reed Smith, Romin Dabir, suggests that the recent decline in cases may be an aberration, and we can expect increased regulatory action in the not-too-distant future. Furthermore, the introduction of new enforcement rules and increased cooperation with the Prudential Regulation Authority (PRA) may facilitate faster resolution of regulatory investigations.
While the number of enforcement cases opened by the FCA has dropped, it is clear that the regulator remains vigilant in its pursuit of wrongdoers and maintaining industry standards. With the forthcoming implementation of the Consumer Duty and a renewed focus on intervention and cooperation, it is likely that enforcement activity will pick up. Firms must stay proactive in their compliance efforts to navigate the evolving regulatory landscape effectively.
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