FIN.

FCA gives investigations update

Mark Steward has spoken on partly contested cases, the pipeline and AML investigations. Key points included:

  • the partly contested case process has, since 2017, allowed those subject to FCA disciplinary action to choose to have part of the dispute determined by the RDC without losing the chance to get credit for agreement. FCA has found the new approach avoids a “deal making” approach to imposing penalties and sanctions as well as getting the RDC more involved and giving the opportunity to test some of FCA’s penalty discretion without losing possible cooperation benefits;
  •  there have now been 3 cases completed under the new process and in all 3 the only thing under dispute was the amount of the penalty. 2 of the cases have now finalised and one has gone to the Upper Tribunal. FCA hopes more parties will choose this process in future
  • recent cases have shown a trend of foreseeability – Mr Steward referred to the Tesco Bank case where, while giving Tesco credit for how it had acted after the event, noted that what happened was “wholly foreseeable”, as, to a slightly lesser extent, was the Carphone Warehouse problem. Meanwhile, the Santander case showed what happens when senior management has inadequate horizon scanning processes and a firm has inadequate escalation processes while UBS and Goldman Sachs showed what happens when firms cannot regulate, supervise and understand their own activities properly. He commented the problems those firms had should never have persisted for so long. There are lessons to learn from all these actions.
  • finally, in the pipeline, there are a number of financial crime prevention-related cases. He commented that FCA now pursues investigations into breach of the MLRs with a view to imposing either civil or criminal penalties and says it is right that this should be so. FCA feels this is the right way to proceed, although it expects that only exceptional cases will end in criminal prosecution.
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Emma Radmore