Females exiting the building.

FRC plans to focus on disciplinary action

08 March 2012

The FRC has published its Draft Plan & Budget for 2012/13.

Firms subject to the FRC's funding levy will be pleased that its operational costs are projected to decrease by £0.4 million, and that the levy will be frozen for the upcoming year, following last year's 7% decrease. Yet, eyebrows will be raised at the significant projected increases in operating costs for disciplinary action and the increased reserves set aside for undertaking public interest cases.

Much of the increase in case costs for the upcoming year will come from transferring £0.8 million from the 2011/12 budget to the 2012/13 budget because of delays in a particularly large and complex actuarial public interest case. Nonetheless, although some of the increase comes from deferred case costs, the total case costs reserve stands at a substantial £4.4 million in the draft budget, and this should be considered alongside the FRC's stated disciplinary objectives for 2012/13.

The Draft Plan & Budget sets out the FRC's four primary objectives for the upcoming year.  Notable among these is the FRC's determination to "focus on the effectiveness of [its] monitoring, oversight and disciplinary work".  It has promised to "review further the scope of our work and seek to enhance the speed and effectiveness of our disciplinary work, including by reviewing sanctions."

This commitment suggests that the FRC, through the AADB, wants to undertake more disciplinary cases in the coming year and speed the progress of those that are already open.

This conclusion is supported by looking at the specific goals for the year within the FRC's ongoing 'conduct' objective.  The FRC commits itself to speeding the progress of existing cases by "making significant progress on, and where possible finalising, the disciplinary cases with which the AADB is currently dealing."  It also commits itself to "identifying and investigating other matters which meet the criteria for investigations", thereby increasing its case load.

But the FRC also appears to be keen actively to solicit cases from the public as it promises to respond "to matters drawn to … [its] attention as a result of complaints or public comment, and encouraging referrals from the investment community, professional advisers and others."

Although the FRC budget is dwarfed by the budget available to the Enforcement and Financial Crime Division of the FSA, it seems from this draft plan that the FRC has the same lordly ambitions when it comes to enforcing discipline.