If you were just to look at the projected level of fines for the FCA’s 2017-18 financial year, you would think that the FCA’s enforcement activity had stepped down from the activity we saw in the aftermath of the financial crisis. The number in 2016-17 was £181m – the projection for 2017-18 is £88.5m.
However, this statistic does not tell the full story. The FCA have said publicly that their approach to enforcement has changed – they are using it to find out what happened, not just as a precursor to a contemplated enforcement action. This has been reflected in what we have been seeing on the ground – in particular, a big increase in the number of new FCA investigations. In fact, the FCA said in September that it had opened 75% more investigations than in the previous year. So we know that the FCA are looking into more potential issues, but how this impacts the FCA’s enforcement statistics for 2018 is of course yet to be seen. If enforcement is no longer only a precursor to enforcement, will we see more investigations being discontinued too?
FCA enforcement actions in 2017 cover areas including market abuse, financial crime, listed companies, systems and controls, and retail customers. There has also been an increased focus on securing compensation for affected customers/investors, with the first use of a compensation scheme in the market abuse area, and examples of firms paying redress for customers without having an additional financial penalty imposed on them.
For a summary of the key enforcement decisions in 2017, see our article ‘FCA enforcement round up for 2017 and looking ahead’.