Action stations at FCA enforcement
13 January 2023
13 January 2023
It has been all systems go at the FCA Enforcement Division since December last year. In the FCA's Annual Report 2021/22, they noted that the purpose of its enforcement function is to demonstrate that "…there are real and meaningful consequences for firms and individuals" and it was certainly living up to this promise during the final weeks of December and early this month. We saw a major uptick in FCA enforcement outcomes with five final notices being published in the month of December and already another two have been published in the New Year.
We have summarised each of these briefly below:
|type of Firm
|The FCA fined the firm for breaches of Principles 3, 7 and 9 which occurred between 8 June 2015 and 7 December 2017 in relation to providing unsuitable advice to 420 consumers regarding the transfer out of defined benefit pension schemes (including the British Steel Pension Scheme).
|3 Broker firms
|The FCA fined the firms for breaches of Article 16(2) of the Market Abuse Regulations and Principle 3 occurring between July 2016 – January 2018. During this time, the firms were found to have inadequate surveillance processes in place which did not properly address market abuse risks.
|The FCA fined the bank concerned for breaches of Principle 3 relating to gaps in its AML controls and for its failure to manage and oversee these systems which significantly affected 560,000 customers between December 2012 and October 2017.
|The FCA fined the bank for breaches of Listing Rules 1.3.3R relating to the publication of incorrect information in its trading update on 24 October 2018. The bank was aware at the time that the information was inaccurate and they failed to explain or qualify the figure.
|The FCA fined the bank for breaches of Principles 2 and 3 relating to operational risk management and governance failings arising from the bank’s IT upgrade programme which took place between 2015 – 2018. Large errors were encountered during the main migration event resulted in customers not being able to access banking services.
|The FCA fined the bank for breaches of Principle 3 for its failure to organise and manage its AML processes and have in place adequate risk management systems between October 2014 and July 2019. During this period, the bank failed to undertake adequate monitoring and risk assessments.
|The FCA fined the bank for breaches of Principle 3 for its failure to have in place adequate AML controls between April 2015 and November 2017 for its failure to carry out sufficient checks on accounts and to provide adequate training to staff in this area.
Whilst there are common themes coming out of each of the notices, for example, the FCA's focus on AML systems and controls, governance failings and failure to cooperate and remediate issues flagged by the FCA, what should be noted is the historic nature of a number of these events (dating back as far as 2014 in one case).
As the year ahead unfolds, we shall see whether the FCA keeps pace with its recent record on enforcement outcomes.
Authors: David Capps and Laura Bell