Investigations soar under new regulator

24 Mar 2014 | 11:34 am | 1 min. read

The UK’s new financial services watchdog is on track to open at least 50% more investigations in its first year of operation than its predecessor, the FSA.

According to data obtained by international law firm Pinsent Masons, the Financial Conduct Authority's Division of Enforcement has already opened at least 70 investigations into firms and individuals since its inception in April 2013.

That compares to just 49 investigations launched by the Financial Services Authority in FY 2012/13.

Pinsent Masons highlights that, on average, the FCA has been opening more than six investigations per month compared to the FSA's rate of around four per month.

If that rate continues it would mean the FCA will be on track to launch at least 50% more investigations in its first year than its predecessor.

Among the investigations launched will be the ongoing probe into foreign exchanges, the controversy around which last week extended to the Bank of England’s alleged knowledge of forex manipulation.           

The increase in investigations also coincides with a 38% increase in whistle blowing during the FCA’s first six months of operation*.

Commenting on these findings Michael Ruck, a financial services litigation expert at Pinsent Masons and former FCA lawyer, says:

"The new watchdog is certainly bearing its teeth, but we do not yet know whether its bark is worse than its bite. The real test will be when we see how many of these investigations result in penalties, sanctions or prosecutions and, in turn, whether any of those lead to convictions."

"The FCA's Business Plan and Risk outlook for 2013/14 highlighted that addressing misconduct and taking action on market abuse would be among its key priorities, so the focus on investigations in this area is perhaps not surprising. What is striking, however, is the sheer volume at which investigations are being launched across all aspects of the regulatory regime."

“Regulated firms should ensure they fully understand the FCA’s current priorities and the enforcement agenda.  Firms and individuals should beware of the watchdog.  ”

Date

Investigations launched

Monthly average

April 2012-March 2013

49

4.1

April 2013 – 14 Feb 2014

70

6.6

Source FCA

*More Prosecutions Expected in 2014 Following Rise in Whistleblowing

 

 

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