Only 2 per cent of FCA-ordered reviews into financial services firms led to any enforcement action in the year to September 2014, according to figures from law firm Reynolds Porter Chamberlain.
Just one of the 44 skilled persons reviews ordered in 2013/14 resulted in regulatory enforcement, RPC says. By contrast, the regulator took further action in 4 per cent of cases in 2012/13.
Firms are almost always required to cover the cost of recruiting an independent third party to probe their practices and reviews can cost hundreds of thousands.
RPC partner Richard Burger says the figures raise concerns over whether the costs are justified.
He says: “Many are beginning to question how fair it is to burden a well-run firm with the costs of a skilled persons review. Many firms which are not, and have never been, in breach of FCA Principles and/or Regulations are currently being forced to undergo what is a disruptive review process- and then cover the costs.
“Perhaps if the costs of these reviews were shared by the FCA then that might lead to more selective usage of this tool.”
Of the 44 reviews in 2013/14, 17 looked into banks, while five investigated insurance companies.
Burger adds: “The direct and indirect costs of compliance and regulation needs to be kept under constant review to ensure that it does not put the financial services sector under any unnecessary burden.