Enforcement Watch

Indications from the FCA Board's discussion of the Quarterly Performance Report

Indications from the FCA Board's discussion of the Quarterly Performance Report

On 8 April, the FCA published the minutes of the FCA Board meeting held on 25 and 26 February 2015. Whilst this is a very high level document, there are nevertheless some interesting aspects to note for those looking at what may happen in enforcement in the future. (You can review the minutes of the meeting here.)

  • Supervision: It was reported that there were elements of resource stretch in the division. Tracy McDermott was reviewing the supervision model, including considering whether it was possible to build in more flexibility, particularly around the regular firm evaluation cycles.
  • Enforcement: As FX cases were nearing completion, it was reported that Enforcement teams would now turn their attention to other investigations. It has been a feature of enforcement for some time now that teams have been taken up with very large systemic type investigations, first relating to Libor and then to forex. It is not surprising that Enforcement will now be able to refocus its efforts, although it will no doubt be some time before we see the outcome of this change in focus. Given the increasing emphasis on accountability, it will be interesting to see how much focus there is on individuals.
  • Markets: The FCA continues to take enforcement action in relation to CASS failures (see elsewhere in this edition "15 April 2015: Substantial CASS Fine for Bank of New York Mellon"). It is interesting in this context to see reported in the minutes that there had been a significant increase in CASS visits and that this was expected to continue. We shall have to see what results.
  • Accountability: We write elsewhere in this edition about the new senior manager regime ("Further steps towards the new senior management regime"). One aspect of this that has caused concern is the presumption of responsibility and how senior managers can prove that they discharged their responsibility. Whilst there is some guidance around this (currently in draft), we see that the Board discussed the expectations of people and the definitions in relation to what could be construed as reasonable steps. We note that the Board stressed to the executive that decisions on which enforcement cases to pursue would be very important to set out the FCA's view on how the responsibility applied. That is no doubt correct, but it may be cold comfort to those facing action before the FCA has properly articulated its view. Enforcement cases under the regime will be some way down the line, and will be awaited with keen interest.

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