Despite initial promises to crack down on regulatory failings committed by individuals, the Financial Conduct Authority (FCA) has seen a significant fall in its numbers of cases actually being prosecuted.
A sharp fall was recorded in the number of individuals being referred to the FCA’s Regulatory Decisions Committee (RDC) in financial services in 2017, dropping 64 per cent compared to the previous year.
As an independent panel that hears disputes against FCA findings in cases against firms and individuals for regulatory failings, just 13 individuals were referred to the RDC on charges of regulatory failings last year. This is down from 36 referrals in 2016, in spite of the FCA’s intention to refocus on individual cases, particularly at senior management level.
There was also a recorded fall in the number of fines being issued by the FCA against individuals over the same period, dropping to eight in 2017 to a value of £435,000. However a significant increase was noted in the total number of businesses being referred to the RDC, with 476 being referred in 2017, up from 289 the previous year.
Despite these drops in referrals to the RDC, City executives believe that worries the FCA may be going soft on individual misconduct are unfounded. In fact, City-headquartered professional services firm RPC has reported “ever-increasing numbers” of FCA investigations into individuals.
“The FCA has recently publicly reaffirmed its commitment to pursuing individual responsibility vigorously and it won’t want to leave itself open for criticism for not pursuing cases against individuals,” said Parham Kouchikali, partner at RPC.
“We expect significant increases in referrals to the RDC in the coming years - not only due to the projected increase in the number of investigations into individuals, but also due to recent changes to the FCA enforcement process that mean discounts on penalties will no longer be forfeited by individuals and firms if they dispute the FCA's findings and refer their cases to the RDC.”
RPC has suggested that a lack of focus on individual misconduct could be the result of internal FCA organisational disruption, as it saw three different chief executive officers come and go in just over a year. As the current CEO Andrew Bailey has now been in his position since July 2016, Kouchikali expects that enforcement activity will soon be returning to normal levels.