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.”