FCA enforcement - Not the only show in town

We have published an article on recent UK financial services enforcement and emerging trends. 

There has been a decline in the number and value of financial penalties imposed by the Financial Conduct Authority (FCA) in the last two years. In 2021, the total value of fines was over £576m, in 2022 the total value of fines was less than half this. In 2023, the total value of fines was even lower, at just under £53m. But, as usual, that’s not the whole story as the FCA, which conducts the majority of financial services enforcement actions, is using a wider range of powers including prohibitions, withdrawing authorisation, criminal powers, and requests to media platforms and firms to withdraw promotions.

An emerging trend in UK financial services sector enforcement is that UK financial institutions face investigation and enforcement from a wider range of authorities, which have had powers for a long time but not always used them as regularly in this sector. Whilst FCA still brings more enforcement actions than the Prudential Regulation Authority (PRA), the PRA has been more active as an enforcement agency recently. But firms also face potential investigation and sanction by the Information Commissioner (the UK’s data regulator), the UK energy regulator OFGEM, the Payment Systems Regulator, the Advertising Standards Agency, the Competition and Markets Authority and the usual range of criminal prosecutors including the Office of Financial Sanctions Implementation (OFSI). 

Our article highlights retail sector, financial crime, wholesale market and individual enforcement decisions by the FCA, PRA, OFSI, and even OFGEM.  

And potential enforcement targets to look out for this year include:

• Financial crime – A continued focus on all forms of financial crime, with a particular focus on sanctions, AML, customer fraud and other areas where customers suffer a direct loss.
• Misselling and unsuitable advice – The FCA is considering amending the advice regime but the FCA may bring enforcement action for unsuitable advice and misselling of cryptoassets and other high risk products in the meantime. Questions around the size and disclosure of commission payments that featured in PPI cases now features in other areas, such as motor finance.
• Fair treatment under the consumer duty and other obligations – The cost of living crisis and change in interest rates means many consumers continue to face financial hardship. Firms will face scrutiny in how consumers are treated on mortgage renewals and in other situations.
• Wholesale misconduct – The FCA may announce the outcome of its investigation of the LME’s procedures following the 2022 market disruption. And the FCA will continue to identify key cases for criminal and regulatory proceedings where there is evidence of market abuse or other misconduct.
• Greenwashing – The FCA is scrutinising firms for misleading or inaccurate climate-related  disclosures.