FCA imposes record low number of fines – down 75% since last year

The FCA has imposed just four fines so far this year, a record low, down 75% from 16 issued in the same period last year*, says RPC, the City-headquartered law firm.

RPC says disruptions to enforcement activities as a result of COVID-19 and lockdown may have hindered the FCA’s ability to impose fines.  For example, the regulatory body 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. 
 
RPC says that 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 have also contributed to the slowdown in enforcement activity.  
 
However, with lockdown restrictions beginning to ease and the FCA determined to crackdown on any wrongdoings by firms, the number of fines issued is expected to pick up pace. 

This year, 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 £66.9m. The other fine was related to poor AML controls in a major bank which amounted to £37.8m.
 
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. According to its 2019/20 Business Plan, the FCA will be placing more emphasis on ensuring consumers receive fair treatment for products in areas such as insurance, cash savings and mortgages, and that vulnerable customers are not targeted with poor value products and services.
 
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.”
 
“Businesses shouldn’t become complacent by this apparent lull in enforcement action – temporary disruptions encountered by the FCA and its ability to proceed to impose fines are unlikely to last much longer.” 
 
“The FCA will be looking closely at how businesses have behaved during lockdown, whether they have exercised the necessary understanding and forbearance towards their customers, many of whom will have been placed in extremely difficult financial circumstances because of COVID-19.” 
 
During the pandemic, the regulatory body has recognised that consumers need greater support. In response to COVID-19, it has implemented measures such as reviewing work plans to allow firms to focus on supporting their customers through times of economic uncertainty and highlighting the increased risk of scammers to consumers.

*FCA, January 1 2020 – September 15 2020