FCA enforcement actions. Are there lessons to be learned from the FCA’s approach?

Wealth Management and Private Banking

20 November 2019

FCARegulationWealth Management and Private BankingWealth Management and Private Banking

Key messages: 

  • Assessing how the FCA has approached enforcement actions is helpful. The data shows some of the ways firms can create a positive culture by taking reasonable steps within organisations as well as learning from misconduct cases to avoid mistakes made by other organizations. Supervision is helpful to understand areas like conduct.
  • The data indicates that between 2016 and 2017, companies were fined £118 million by the FCA through enforcement; falling to £70 million between 2017-18; and then rising to £227 million between 2018-19.
  • That means there was a substantial increase in fines over the last 12 months in company fines. The FCA focuses its efforts on four core areas: retail conduct, financial crime, culture and governance, and insider dealing. Details of this can be found in the FCA’s Annual Reporting 1 Annexe 1. 29% of its open investigations are about unauthorised business (i.e. insider dealing).
  • For wealth management, the FCA will look closely at whether the regulatory architecture is suitable for clients in terms of the right outcomes but also on costs and charges. The discussion moved on to examples from the reporting that help illustrate the FCA’s approach. For instance, there was recently a case of a wealth management firm being found to have unfairly treated its retail customers relative to its institutional investors, because it had charged them for services that they no longer received. The observation was that a robust oversight team would be needed to challenge conduct. The failing, then, was not having a Governance Committee.

Expert: Andy Sutherland, Managing Director Advisory Services, Conduct Culture

Facilitator: Tasha Vashisht, Senior Manager, Scorpio