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FCA reviews approach to enforcement and penalties

28 March 2018. Published by Ash Daniells, Senior Associate and Sarah Dowding, Senior Associate

The FCA has announced plans in its recent consultation paper on enforcement to review how it applies penalties which have gone from record highs to record lows over the past 5 years.

In a move which will see the FCA attempt to achieve its mission statement and meet its goals of protecting consumers and market integrity, the FCA plans to release several consultation papers between now and 2019 which will review its approach to enforcement and how it imposes penalties.  The consultation paper released on 21 March 2018 confirms  the FCA's overriding principle in its approach to enforcement is its commitment to achieve fair and just outcomes in dealing with misconduct


In publishing its recent paper, the FCA recognises that more is required, stating that "Increasingly, severe penalties and sanctions alone are not enough to reduce and prevent serious misconduct. We must increase the likelihood of detection in tandem with efficient investigations." 


This is against the backdrop that the FCA levied fines of £22.2 million in 2016, the lowest on record since 2013, when its predecessor, the Financial Services Authority, was criticised for its "light-touch" approach in the lead up to the financial crisis.


Two consultation papers have already been issued by the FCA this year (Our approach to enforcementand Our approach to supervision), in an attempt to ensure greater transparency in its procedures.


The FCA's March 2018 consultation paper titled "Our Approach to Enforcement", sets out:


  • How the FCA identifies harm.

  • How the FCA diagnoses harm through its investigations.

  • The sanctions and remedies available to the FCA.

  • How the FCA evaluates its approach to enforcement and measures its performance.


Consultations with respect to those papers close on 21 June 2018. The FCA also announced that it would be carrying out a fuller review of its Enforcement Guide.


The FCA has invited feedback on whether it has set out its approach to enforcement clearly, and if, not, what it can do to improve and clarify its position.