Financial watchdog to crack down harder, faster in more public probes

Several key shifts in the UK financial watchdog’s enforcement strategy could see motor retail finance providers subject to far more rapid investigations, allowing less time to respond in a fast-moving enforcement environment.

Speaking at the AFME annual conference, Therese Chambers, the Financial Conduct Authority’s joint executive director of enforcement and market oversight, said the agency would focus in future on speeding up highest-profile investigations in order to achieve the maximum deterrent effect and send important signals to the markets.

A central theme of Chambers’ speech was the FCA’s fight against financial crime which was focussing on robust anti-money laundering (AML) and fraud detection mechanisms.

Chambers said the FCA supervises approximately 18,000 firms under money laundering regulations and that a significant portion of its enforcement caseload relates to AML violations.

The speech also highlighted the FCA’s increased use of data and technology to detect misconduct in real time.

Chambers said: “We have more than doubled our trading data coverage from 500 million to around 1 billion records per day, and our systems can interrogate data across multiple asset classes quickly.”

Chambers encouraged firms to collaborate with the FCA’s efforts to identify digital crime patterns in this area, stating: “The quicker we can gather accurate information, the quicker we can respond to challenges as they arise.”

“Our data tells us that investigations closed in 2023/24 took an average of 42 months to complete. There are good reasons for these timelines: cases are often highly complex and we, like all enforcement agencies around the world, are adapting to the ever-growing amount of digital evidence that must be analysed,” she said.

“Each case is about 60-70,000 documents but we believe we can improve on those timelines. We have made significant advances already: 24 outcomes under our belt so far for 2024, compared to 26 for the whole of 2023.”

Chambers touched on the FCA’s move toward greater public disclosure in its investigations, despite finance firms’ concerns about reputational damage.

“We are not proposing moving from publicity in zero cases now, to 100% of cases in the future,” she said. “Rather, a case-by-case approach following assessment of clearly defined criteria - including consideration of the potential impact on the firm and market.”

She acknowledged industry concerns, however, saying: “We heard loud and clear that the criteria we consulted on were too high level and lacked specificity.”

“We do think the case for a degree more transparency remains strong. But it needs to be seen within the vital context of a focused number of cases likely to deliver the greatest deterrent and delivered much faster.”

Chambers said the FCA believed that its latest approach is “change for the better,” aimed at building trust and maintaining “the UK’s strong reputation for integrity.”