Trends in FCA Enforcement: the Enforcement Annual Performance Report for 2018/2019
The FCA has recently published its Enforcement Annual Performance Report for 2018/2019. This report provides a summary of the FCA's Enforcement activities during the past year and confirms that Enforcement has been busier than ever and shows no signs of slowing down.
The annual Enforcement Report provides a useful insight not only into the enforcement action taken by the FCA during the past year, but also provides an indication of where the FCA is likely to focus its attention in the coming year.
The key takeaways from the 2018/2019 report are:
• the number of open investigations has increased by 30% from 496 in April 2018 to 650 in April 2019
• the number of Final Notices issued by the FCA remains at almost the same level as the year before – 265 Final Notices were issued in 2018/2019 and 269 Final Notices were issued in 2017/2018
• there has been a significant spike in the financial penalties imposed in the last year. The penalties increased by over 300% from £69.9m in 2017/2018 to £227.3m in 2018/2019
• the FCA's open investigations currently focus predominantly on: (i) market abuse (158 open investigations); (ii) retail conduct (101 open investigations); (iii) financial crime (88 open investigations); and (iv) culture/governance (70 open investigations)
• the FCA is increasingly cracking down on unauthorised businesses. The number of open investigations into these businesses has almost doubled from 77 at the start of the year to 136 by the end of the year
• the FCA continues to develop its international relationships with overseas regulators and received approximately 1000 requests and proactive disclosures from foreign enforcement agencies in the past year.
This report shows that the trend we have seen for the last few years of increasing numbers of FCA investigations is not slowing down - the number of investigations being opened continues to climb year on year. Interestingly, this increase has not led to more Enforcement outcomes against firms and individuals this year compared to last year, but we expect the number of outcomes to increase significantly in the next year as the FCA's backlog of ongoing investigations continues to clear.
It is evident that the FCA's focus for the coming year will remain to a large extent on market abuse, retail conduct and financial crime and we expect the number of investigations into culture and governance to increase once the Senior Managers and Certification Regime is expanded to apply to all regulated firms in December 2019.