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Lawyers slam FCA’s ‘backward-looking’ investigation plans

Regulator has proposed doubling time limit to bring an enforcement case.

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.”



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Though this obviously relates to possibly complex investigations into large and complex organisations, one wonders on just what basis any regulator should need more than three years to gather firm evidence confirming whether or not its investigation is justified and worth pursuing any further. And even if, after three years, it thinks it needs more time to gather yet more evidence, permission to continue should be subject to special dispensation from an outside body. The FCA shouldn’t be allowed to grant itself a carte blanche licence to pursue investigations almost ad infinitum just because a few of its investigators have some unconfirmed hunch that they may be onto something big.

    This is something else that should be put in the hands of an Independent Regulatory Oversight Committee with the unassailable authority, in situations such as this, to say to the FSA You’ve been pissing about with this for three years, you’ve spent a fortuune but come up with nothing concrete so drop it. End of.

  2. At this rate the FCA will be seeking powers to tap the phones of any business it suspects of malfeasance, without the irksome inconvenience of having to obtain permission from a judge.

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