Lawyers have hit out at FCA plans to double the length of time it takes to investigate possible misconduct from three to six years as “backward looking”.
In its response to the parliamentary commission on banking standards report, published this week, the regulator proposed to extend the length of time it has from first learning about possible misconduct to bringing enforcement action from three to six years.
The commission had stated the current time limit could act as a constraint on the regulator’s ability to build credible cases and that the Government should allow for an extension in certain circumstances.
But Reynolds Porter Chamberlain partner Richard Burger says: “This position from the FCA seems backward-looking, particularly given the messaging we have received around early intervention.
He says: “The regulator should be on top of problems before they start. If enforcement action needs to be taken it should be taken swiftly. It is difficult to learn lessons from historic actions, while evidence could also become increasingly unreliable the further back investigations go.”
SJ Berwin partner Tim Dolan says: “There is no doubt that FCA enforcement cases can be very complex, resource intensive and time consuming, but having a relatively short time frame is a good thing because it allows the regulator to relatively quickly focus on and resolve a case.
”The concern is that if the FCA has six years for each case, it will use up more resources. It is also inconsistent with what the regulator has said about wanting to take prompt action – the two things do not gel together.”
Plan Money director Peter Chadborn says the timescale must be appropriate to the size of the firm being investigated.
He says: “If we are talking about a firm as big as a bank, then if having a longer time period means cases can be put together more thoroughly. But for smaller organisations like advisers, it could be disadvantageous. As a small firm it is hard to comprehend being part of an investigation for three years, let alone six.”