A breakdown of 2021 FCA enforcement actions

Enforcement actions. Two words that bring a shudder to financial institutions and their compliance programs, insinuating a failure of regulatory protocols. However, when applying an educational lens, more often than not, enforcement actions can help broker dealers, investment advisers and other firms learn from their peers…and hopefully avoid those same mistakes.

A recap of FCA enforcement actions

The Financial Conduct Authority’s (FCA) focus for the past 12 months can be categorized into three main areas of concern: protecting consumers, enhancing integrity and promoting competition. The resulting outcomes have shown that despite any continued COVID-19 or Brexit-related ramifications, the FCA continues to place market and consumer integrity above all else.

Enforcements actions to protect consumers

The FCA has adapted their protocols to better protect consumers and provide them with the information they need to make good financial decisions. The enforcement actions the FCA has implemented include:

  • “Use it or lose it” approach to financial firms’ regulatory permissions.
  • Regulations regarding crypto assets.
  • Regulations regarding digital marketing, social media and paid ads.
  • Payment holidays for those consumers impacted by COVID-19.
  • Issuance of 1,300 scam warnings.

Enforcements actions to enhance the integrity of the UK’s financial system

The FCA is committed to improving consumers’ confidence in the UK financial system. To meet that commitment, the FCA has allowed senior managers to determine whether a firm is authorized or not, and whether to impose requirements or begin criminal or civil proceedings. In the FCA’s efforts to enhance the integrity of the UK financial system, it has implemented the following enforcement actions:

  • Issuing NatWest £264 million in fines.
  • Issuing Credit Suisse £147 million in fines.
  • Issuing HSBC £63.9 million in fines.

Beyond enforcement action

The FCA recognizes that a dynamic market can drive healthy, economic growth and an increase in investment choices. For that reason, the FCA is committed to promoting competition in the UK market. The FCA has gone beyond enforcement actions and has implemented other tactics, such as new rulings, to encourage a culture of compliance among firms. These actions include:

  • Enhancements to regulatory sandbox.
  • New rulings in home and motor insurance to protect consumers and promote competition.

In 2021, the FCA undertook groundbreaking initiatives which included the successful launch of the £11 million InvestSmart campaign. Additional initiatives have resulted in:

  • £568 million in rule breach fines issued.
  • 176 firm permissions cancelled.
  • £1.2 billion business interruption insurance payout.
  • First criminal prosecution for money laundering.
  • £5 million in consumer redress.

What this means for your compliance program in 2022

With hefty ramifications for failing to adhere to the FCA regulations, firms must ensure that they remain compliant or risk the financial and reputational consequences. In other words, now is the time to take the steps necessary to protect your firm. How?

  1. Familiarize yourself with the FCA’s commitments and expectations.
  2. Determine the role of technology and automation in your firm’s compliance program.
  3. Solidify your firm’s tactical compliance strategies.

With a holistic view of your firm and its compliance program, you can better track whether your firm is adhering to the FCA regulations and ongoing priorities, catch any red flags ahead of time and avoid being the subject of the FCA’s enforcement actions in 2022.

Download the 2022 CCO playbook for guidance on how chief compliance officers (CCOs) and compliance professionals can address the evolving regulatory landscape.