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FSA takes no action in 10% of probes

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FSA figures reveal over 10 per cent of enforcement cases in 2010/11 did not result in disciplinary action despite the regulator pushing for stronger powers to publicise warning notices against firms.

Under new powers, the Financial Conduct Authority will be able to publish the details of firms and individuals that are subject to ongoing enforcement investigations.

Currently, details about enforcement cases can be published only after the investigation has finished.

The industry has warned that considerable reputational damage could be caused by publishing notices at an earlier stage. Figures for 2009/10 show that nearly a third of the 114 enforcement cases concluded during the year did not result in disciplinary action.

Last week, the FSA rejected a freedom of information request submitted by Money Marketing asking for the figures for 2010/11, claiming it was too expensive to comply.

However, the FSA’s enforcement annual performance accounts for 2010/11 shows that out of 297 enforcement cases closed during the year, around 30 did not result in disciplinary action.

Reynolds Porter Chamberlain regulatory partner Steven Francis expects the number of cases that are dropped without a disciplinary outcome to increase.

He says: “As the FSA increases the number of enforcement investigations it undertakes, one will expect it to take on more speculative cases which may not, ultimately, have legs.”

An FSA spokesman says: “If the FSA is at the point of issu- ing a warning notice, we do not do this lightly, we are at the stage where we are pretty convinced we have a case.”

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Readers' comments (2)

  • Even one public warning notice that is withdrawn is unacceptable, particularly if the firm is ruined in the process.

    The problems I have seen may stem from the quality of 'intelligence' the regulators have received from third parties.

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  • At the present time the FOS reject around 50% of complaints that they receive. The FSA only reject 10% of probes? That is an astonishingly low rate and should raise some serious questions.
    Do they only start a probe when a problem is so blatant even they can detect it?
    When they start a probe is a guilty verdict inevitable, unless the evidence to clear the probe is so overwhelming they know it will be appealed?
    Do those probed role over and play dead because they believe there is no change of a fair hearing when the judge is also the investigator?
    10% is so low that it suggests that the FSA have very little understanding of the business or how to monitor it, which also explains why they so blatantly missed that ever so tiny problem with the banks.
    Someone should be asking questions about this figure.

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