In the first half of this year, the Financial Conduct Authority (FCA) has made some significant findings against firms, in particular the Tesco market abuse case. The FCA’s case against Christopher Niehaus also brought to the fore the difficulties posed by the informal nature of communications, in that case on WhatsApp.
The Niehaus case demonstrates that the FCA’s focus on individual accountability continues and the expectation is that the investigation of individuals will potentially add a layer of complexity and potential delay for actions also brought against firms at the same time. Mark Steward’s January 2017 and April 2017 speeches highlighted the importance of this focus on individual accountability for the enforcement process.
From a process perspective, the changes that the FCA has made to its enforcement decision making process are now in force and it will be interesting to see how both the FCA and, indeed, the subjects of its investigations, approach the newly introduced Focused Resolution Agreements, particularly in the context of the removal of stage 2 and 3 settlement discounts. From where we stand, it appears possible, even likely, that the RDC will see more cases as firms take points that would previously have been conceded on financial, if not legal, grounds.
The FCA also intends that investigations will be opened more frequently than has been the case but anticipates that proportionately fewer will progress to disciplinary action. Instead, a wide range of responses will be utilised, including taking no further action. The FCA’s stated aim in recent speeches is to move away from the actual or perceived position that investigations are commenced to gather evidence only in support of enforcement action (see Jamie Symington’s May 2017 speech).
Looking ahead, we await, in particular, the FCA’s expected decision on the application of the Senior Managers Regime to General Counsel and the outcome of the Asset Management Market Study (expected by the end of this month), following the consultation on the FCA’s interim report in February 2017.
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