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FCA set to increase enforcement action


The Financial Conduct Authority is set to increase the number of enforcement cases against the firms it will regulate when it replaces the FSA at the end of 2012.

In a document outlining the FCA’s approach to financial regulation, the FSA says that the FCA’s more interventionist stance and lower tolerance for consumer detriment is likely to require an enhancement of activity in the enforcement area.

It says: “Based on FSA experience of thematic work, a greater use of cross-firm supervision is likely to result in more enforcement cases, and thus a need for greater enforcement resource.”

The FSA has issued fines in excess of £150m as well as banning more than 200 individuals from the industry since 2007.

The FCA may also intervene on individual products where it says the risks are likely to outweigh the benefits that product may bring. It says it will look to build on the FSA’s intrusive approach to the way firms bring financial services products to the retail market.

It says: “The FCA will also intervene where the product may be well known and of utility to consumers but the sales and distribution process of a firm does not meet regulatory standards and consumer detriment is occurring. Where the FSA has typically allowed firms to continue to market and sell products alongside programmes to remedy poor practices, the FCA may not.”

The FCA will also have the power to intervene in product pricing if it feels consumers are not being fairly treated.

It says: “There are currently rules on excessive charges for mortgage arrears; and the FCA could, for example, re-introduce rules on excessive charges for a wider range of investments.

“For charges that are unfair or clearly out of line, there is an immediate value to intervention which would not require the FCA to be an economic regulator. The FCA could also considerrequiring product providers to show that charges are not at a level that undermines the possibility of consumers achieving a return.”


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Steven Farrall (Adviser Alliance) 27th June 2011 at 12:17 pm

    Well, well, why am I not surprised. Stabdrad response to internal failure from the authoritarian bureaucracy playbook. If you cock up blame everyone else and seek to justify more of the same actions and rules that precipitated the failure in the first place.

    This really is utterly disgraceful. And epically ignorant. Our basic freedoms – everyones, not just the FS industry – are being usurped by an out of control and unaccountable bunch of ignorant bureaucrats.

  2. Forward planning for fines collection,eh! I bet they are just itching to show their new teeth!
    Firm’s beware!

  3. I’m happy to see the FSA/FCA finally wake up to unfair and excessive charging.

    They, might however, wish to reflect on how and why charging has increased thus far and may be expected to explode post RDR.

    Charges that are unfair or clearly out of line are to a large degree a result of all the consumer protection that the FSA have introduced.

    The financial world was not perfect in 1987. Today it is still far from perfect but it can not be denied that it is far more expensive for all investors.

    I do not believe that ANY Cost benefit analysis would find an overall improvement since 1987

  4. “Consumers aren’t getting a fair deal”. Right. So increase administration costs, fines, rules, regulations and…

    Ah. Is anyone better off now? Oh yes. The regulators.

  5. 2 words “Constructive Dismissal”

    “RDR worth the loss of 1/3rd of advisers”

    Hector and the goose steppers are actioning the plan.

  6. Why is it that every time we have an article on regulation, we had the same people who moan and groan and state that it’s all wrong and the bureaucrats are only lining their own pockets.

    The fact is that financial services has not always acted in the best interests of customers and many organisations have acted in a totally disgusting manner. Bank assurance has been at the heart of this problem and we are now getting the type of regulation that will probably force many of us out of the industry due to increased costs. But instead of screaming about the injustice of the new system, maybe we should start to work with it and realise that there are some benefits to this new system as hopefully large organisations like banks will find it impossible to offer advice on the mass production scale that they had done in the past.

    The future for many of us is uncertain, but realise that many of the new structures that are being put in place are down to the fact that we as a group of individuals did not shout foul loud enough when so many wrong were been done to consumers.

    Maybe instead of shouting about the regulator. it’s about time we started acting as consumer champions, as surely that’s what good IFA’s should be doing!!

  7. I would accept a statement saying that they will increase investigations.

    What scares me is how they know there will be an increase in enforcement action. How can they know in advance that people are going to do wrong BEFORE they have done it.

    And if the FCA is still going to be faced with such monumental problems doesn’t that really accept that the RDR will be a total failure?

  8. Julian Stevens 28th June 2011 at 9:52 am

    Heil Hector!

  9. I read over the weekend of the young man who’s bank account went overdrawn by some 58p. and that he was charged more than £100 by his bank for the privilege.
    While nothing to do with charges for investments the FCA could do more good by clamping down on such usury but I would be extremely surprised if this type of overcharging will be considered to be within its remit by this revamped regulator.

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