FCA’s Annual Report and accounts for 2016/17 sets out its highlights from the past year, and includes specific sectoral reports for competition, enforcement, AML and diversity.
FCA regards the year’s highlights as:
- its asset management market study
- its PPI work, leading up to proposals for a time limit on claims
- MIFID 2 and MAR implementation and
- work to encourage technological innovation
It also notes that Brexit preparation work has begun.
The sectoral report on AML notes, among other things, that AML has been a key priority for the past 2 years and is a priority for the current year. It notes it has now completed assessments of all the 14 banks covered in its systematic AML programme (SAMLP), and is now starting the second round of assessments. While it identified a number of failings, especially at senior management level, it is generally encouraged by senior management engagement across firms generally. Outside the SAMLP firms, FCA visits other high-risk firms who move in and out of the category as appropriate. This programme aims to inspect 150 firms over 4 years. The most significant weaknesses found in these firms to date has been in application of EDD to high risk customers, including PEPs. FCA has also carried out desk-based reviews of a sample of random firms’ AML policies. The findings so far validate FCA’s belief that the firms subject to the SAMLP and other high-risk firm inspections do indeed carry the highest risks. FCA also noted the introduction of its financial crime return, and the BoE’s move to extend direct access to RTGS. FCA concludes that most weaknesses are in senior management and lack of resource, but that firms do generally make substantial improvements when FCA informs them of weaknesses. The report includes a number of case studies and also summarises policy developments and international standard setting.
The enforcement report summarises FCA’s most successful outcomes, including actions on insider dealing, AML and listing rules failings. Statistics show lower levels of actions and fines than in previous years, which can be attributed partly to exceptional fines relating to FX and LIBOR issues. FCA has not changed its policy. The report considers its actions over the past year in each major sector of the regulated community.