Is less more? The FCA's evolving approach to enforcement

Therese Chambers, joint executive director of enforcement and market oversight, spoke at the AFME Annual Compliance and Legal Conference on the FCA’s changing approach to enforcement. 

The speech emphasised that the FCA will be intervening earlier and acting faster. The FCA will intentionally streamline caseloads and focus on investigations aligned with its strategic priorities. A key aspect of this will be identifying cases where they believe conduct is creating the greatest risk of harm and where an investigation is most likely to drive the greatest deterrent. Ms Chambers explained that “whilst we may be opening fewer investigations, we expect to see a greater number of outcomes and a greater impact from our enforcement activity”. 

Ms Chambers also sought to address the industry backlash to the FCA’s recent proposals for greater transparency whilst investigations are ongoing. She said that the FCA has heard loud and clear that the criteria consulted on were too high level and lacked specificity. She also reiterated that there would be a case-by-case approach and that they are not proposing moving from publicity in zero cases now, to 100% of cases in the future. See our blog for further information regarding the FCA’s proposals and next steps.

The speech also covered some of the FCA’s recent enforcement actions and, in particular, the fine of £61,600,000 to Citigroup for failings in systems and controls. The following takeaways were highlighted: 

• systems and controls need to be robust and designed with real people in mind. To illustrate her point, she referred to the common practice by many of us in blindly clicking “Accept” on pop-ups without fully reading them. She reminded firms that controls must recognise and reflect human behaviour patterns and be constantly reviewed to keep pace with changing market conditions; and
• the need for better risk management to address what she described as “predictable volatility” in a fragile macro-economic environment. Ms Chambers emphasised the need for firms to use all the tools available both data and operational and to their full extent.