The U.K. Financial Conduct Authority pursued less than half as many investigations to the disciplinary phase last year as the agency focused on larger cases, a regulatory study found.
The FCA sent 21 cases to the Regulatory Decisions Committee, which has to approve whether an FCA investigation can proceed to a disciplinary action, through November, down from 56 in 2013, Bovill Ltd. said.
- “The FCA is focusing the majority of its resources on high profile, but very time-consuming and labor-intensive cases, such as forex and Libor manipulation,” said Rebecca Thorpe, head of projects at Bovill.
- This “takes away resources from other essential FCA work.”
The FCA fined five banks 1.1 billion pounds ($1.7 billion) in November for trying to manipulate the foreign-exchange market, part of a global investigation that has been the focus of authorities worldwide for the past 18 months. The regulator is also still probing the rigging of the London interbank offered rate. It’s fined seven firms 532 million pounds since 2012 as part of the Libor case.
Bovill obtained the data through a freedom-of-information request.
The regulator also saw a decrease in insider-trading arrests in 2014. In the nine months through September, no arrests had been made in connection with insider dealing, according to information from a FOIA request by Bloomberg last year. That’s down from 15 in the same period in 2013.
‘Bigger Fish’
- “We don’t set ourselves targets,” the FCA said in an e-mailed statement on the Bovill study. “When we take action against firms or individuals it is because we have found evidence of a significant failure of conduct, and will decide on a proportionate response.”
The number of final notices — issued when all appeal avenues have been exhausted — has also fallen in the last three years, according to Bovill. There were 161 in 2012, and 113 in 2014, the firm said.
- “It’s important that the FCA doesn’t fail to pursue serious misconduct because it has bigger fish to fry,” said Barney Reynolds, a regulatory lawyer at Shearman & Sterling LLP in London.
- Still, it is better to pursue “large cases that will act as a market-wide deterrent, than hundreds of smaller cases many of which are hardly noticed.”
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