FCA speaks on approach to investigations

Jamie Symington, Director of Investigations at FCA has spoken on its approach to investigations.

He explained that historically firms have feared investigations which often resulted in an adversarial and quasi-litigious relationship with investigators from the outset . This often prevented both the firm and the investigator doing their jobs properly. In 2014 Treasury recommended that FCA alter its approach to investigations and decision making in order to promote cooperation, consistency and transparency, which was reiterated in the Green Report on HBOS. Reflecting on the lessoned learned from the financial crisis of 2008, FCA’s approach to investigations is evolving into one of longer term strategy for conduct risk.  FCA now sees its purpose as serving the public interest through its statutory objectives and in doing so it needs to clearly articulate what is expected of firms, improve how markets operate, work to prevent harm occurring and help remedy wrongdoings. Ultimately FCA has a responsibility to investigate where the statutory threshold for opening an investigation is met and where the public importance of investigation is high. To support this approach, FCA has developed a defined decision-making framework. Firstly, it will identify where harm is occurring or potentially occurring, then diagnostic tools are used to establish the nature and the cause of the harm, which are then remedied using a range of powers. Finally, FCA evaluates the success of the response. The use of investigations should be seen as one of the options available to the FCA in the diagnostic phase of regulation and must be used efficiently and effectively. Therefore conducting an analysis of the harm or potential harm to market users is critical to the process of deciding whether it is appropriate to open an investigation. There are many alternatives to investigations including supervision, imposing a programme of measures, taking no further action or even a policy response by FCA.