Number of FCA fines marks steep decline, RPC data shows
The UK Financial Conduct Authority (FCA) issued just four fines during the January 1, 2020 – September 15, 2020 period, down 75% from 16 issued in the same period last year, according to City-headquartered law firm RPC.
RPC believes disruptions to enforcement activities due to COVID-19 and lockdown may have hindered the FCA’s ability to impose fines. For instance, the regulator has been hampered in its ability to conduct witness and suspect interviews during lockdown, as these are typically carried out in person at its premises.
Further, RPC attributes the slowdown in enforcement activity to the gap between Andrew Bailey’s departure from the FCA for the Bank of England and Nikhil Rathi’s appointment as the new Chief Executive of the FCA.
In 2020, three of the four fines imposed to date were due to unfair treatment of retail customers in the consumer credit, mortgage and claims management sector. The combined value of these fines was £66.9 million.
The other fine was related to poor AML controls in Commerzbank which amounted to £37.8 million. As FX News Group has reported, the failures occurred between October 2012 and September 2017.
The FCA stated that Commerzbank London was aware of these weaknesses, and failed to take reasonable and effective steps to fix them despite the FCA raising specific concerns about them in 2012, 2015 and 2017. These weaknesses also persisted during a period when the FCA was publishing guidance on steps firms could take to reduce financial crime risk as well as taking enforcement action against a number of firms in relation to AML controls. Despite these clear warnings, the failures continued.
Commerzbank London agreed to resolve the matter at an early stage of the investigation and therefore qualified for a 30% discount. Without the discount, the financial penalty would have been £54,007,800.
RPC says it is anticipated that more fines will surface in consumer-facing markets, as the FCA shifts the focus of compliance work away from wholesale capital markets.
Jonathan Cary, Partner at RPC says: “While the FCA has issued relatively few fines in the last few months, it will want to make up for time lost during lockdown when it will, understandably, have experienced disruption and delay in a number of investigations.”