UK financial services enforcement – Themes and a landmark decision

The FCA’s first criminal prosecution of a bank, which was also its first prosecution for breaches of the UK’s Money Laundering Regulations, was a landmark in the enforcement activity of 2021. Key themes from the FCA's enforcement that are likely to persist include:

• Financial crime – Besides the high profile prosecution of NatWest, the FCA has focused on systems and controls to prevent financial crime. Financial crime is likely to remain a perennial topic for some time to come and the FCA has a substantial number of open investigations in this area.
• Wholesale sector enforcement – The FCA continues to bring a steady trickle of criminal prosecutions against individuals for insider dealing, and enforcement in respect of market manipulation by market participants, when detected. In addition, fund and asset management is in the spotlight – there have been enforcement actions relating to conflicts of interest but the FCA is looking at other issues as well.
• Protection of retail customers – In 2021, the only substantial penalty in this area related to customer communications around insurance renewals, however, the FCA intends to continue to focus on fair treatment of customers, especially vulnerable customers, and use a wide range of tools to reduce the risk of harm to consumers. In the longer term, the introduction of the new consumer duty may give rise to more enforcement actions in the retail sector.
• Enforcement against individuals – The FCA took action against a small number of individuals in 2021, but faced a couple of setbacks in Tribunal decisions relating to conduct which took place outside of work. The FCA will continue to scrutinise the conduct of individuals working within the financial services sector and bring enforcement action.

Tom Clark and I discuss these and other themes in UK financial services enforcement in 2021 in more detail in our article and our podcast.