The
Financial Conduct Authority (FCA), the financial regulator in the UK, plans to
publicize more information about its investigations into companies earlier in
the process. According to one of the watchdog's representatives, more
information will be presented today (Tuesday) in an industry consultation
paper.
That may
bring a major change to the UK's market transparency, as historically, the FCA has
not commented on most investigations until penalties are announced. Furthermore,
the UK wants to follow the US's lead and introduce incentives for
whistleblowers.
The UK Financial Regulator
Plans More Transparency on Investigations
Under the
new approach that will be outlined in a consultation paper, the FCA aims to
name companies under investigation once it opens a formal probe. The goal is to
encourage witnesses and whistleblowers to come forward and deter misconduct in
the industry. Legal restrictions limit naming individuals.
Therese
Chambers, the Head of Enforcement at the FCA, told the Financial Times (FT)
that more transparency will "enable firms to start putting their houses in
order where they need to at an earlier date." Last year, the FCA issued
only eight fines, the lowest level in a decade. The agency blames the Covid-19
pandemic and court backlogs.
Two new
enforcement leaders: Chambers and Steve Smart plan to review whistleblower
Whistleblower
A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior
A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior
Read this Term
policies at the FCA. They may consider financial incentives for whistleblowers,
a common practice in the US, but not currently used in the UK. Especially since such actions are supported by the new Director of the Serious Fraud Office (SFO), Nick Ephgrave.
"I am
very happy that we look again at incentivization," Smart said to FT. "We'll
talk to the SFO as to what they're thinking is and where they're looking to go
on it, and then come to make a decision."
The
consultation paper is set to mark a shift for the FCA. Under past leadership,
probes were described as "open-minded explorations of an issue"
rather than focused on outcomes. Currently, about 65% of FCA investigations
close without penalties or charges.
The
increased transparency aims to bolster the FCA's reputation as an enforcement
agency and deter misconduct in the UK's large financial services industry. In 2023, the institution reached a new milestone by issuing 2,286 scam alerts on its public Warning List, marking an increase of 21% from the 1,882 alerts distributed in 2022.
Regulatory Hurdles in
Fintech, Crypto, and Equities Markets
In a recent
address, the Head of the UK's FCA, Ashley Alder, stressed the importance of
global coordination to regulate the fast-evolving financial technology sector.
During an event by the UK Mission to the European Union, Alder highlighted that
innovation in fintech presents both opportunities and challenges, necessitating
intelligent policy reactions from worldwide regulators.
Furthermore,
the UK government has announced its intention to expedite the introduction of
cryptocurrency regulations. Bim Afolami, the Economic Secretary to the
Treasury, revealed at a cryptocurrency event in London that the government
plans to implement regulations covering stablecoins and staking services by
August. This move is part of the government's efforts to manage the growing
digital currency space within a structured regulatory framework.
At the
beginning of 2024, the FCA issued a market watch report highlighting an
alarming trend of organized crime groups (OCGs) penetrating the equity markets
through suspicious trading activities. The report calls for firms' heightened
vigilance and proactive steps to counteract the risk of enabling such illegal
operations.
It was
noted that suspicious trading by OCG members, especially in products related to
UK and internationally listed equities, constitutes a significant share of the
suspicious trading volume in equity markets. The involvement of OCGs, defined
under the Serious Crime Act 2015 as collaborations of three or more people
engaging in criminal endeavors, underscores the complexity and breadth of
regulatory challenges facing the financial sector.
The
Financial Conduct Authority (FCA), the financial regulator in the UK, plans to
publicize more information about its investigations into companies earlier in
the process. According to one of the watchdog's representatives, more
information will be presented today (Tuesday) in an industry consultation
paper.
That may
bring a major change to the UK's market transparency, as historically, the FCA has
not commented on most investigations until penalties are announced. Furthermore,
the UK wants to follow the US's lead and introduce incentives for
whistleblowers.
The UK Financial Regulator
Plans More Transparency on Investigations
Under the
new approach that will be outlined in a consultation paper, the FCA aims to
name companies under investigation once it opens a formal probe. The goal is to
encourage witnesses and whistleblowers to come forward and deter misconduct in
the industry. Legal restrictions limit naming individuals.
Therese
Chambers, the Head of Enforcement at the FCA, told the Financial Times (FT)
that more transparency will "enable firms to start putting their houses in
order where they need to at an earlier date." Last year, the FCA issued
only eight fines, the lowest level in a decade. The agency blames the Covid-19
pandemic and court backlogs.
Two new
enforcement leaders: Chambers and Steve Smart plan to review whistleblower
Whistleblower
A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior
A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior
Read this Term
policies at the FCA. They may consider financial incentives for whistleblowers,
a common practice in the US, but not currently used in the UK. Especially since such actions are supported by the new Director of the Serious Fraud Office (SFO), Nick Ephgrave.
"I am
very happy that we look again at incentivization," Smart said to FT. "We'll
talk to the SFO as to what they're thinking is and where they're looking to go
on it, and then come to make a decision."
The
consultation paper is set to mark a shift for the FCA. Under past leadership,
probes were described as "open-minded explorations of an issue"
rather than focused on outcomes. Currently, about 65% of FCA investigations
close without penalties or charges.
The
increased transparency aims to bolster the FCA's reputation as an enforcement
agency and deter misconduct in the UK's large financial services industry. In 2023, the institution reached a new milestone by issuing 2,286 scam alerts on its public Warning List, marking an increase of 21% from the 1,882 alerts distributed in 2022.
Regulatory Hurdles in
Fintech, Crypto, and Equities Markets
In a recent
address, the Head of the UK's FCA, Ashley Alder, stressed the importance of
global coordination to regulate the fast-evolving financial technology sector.
During an event by the UK Mission to the European Union, Alder highlighted that
innovation in fintech presents both opportunities and challenges, necessitating
intelligent policy reactions from worldwide regulators.
Furthermore,
the UK government has announced its intention to expedite the introduction of
cryptocurrency regulations. Bim Afolami, the Economic Secretary to the
Treasury, revealed at a cryptocurrency event in London that the government
plans to implement regulations covering stablecoins and staking services by
August. This move is part of the government's efforts to manage the growing
digital currency space within a structured regulatory framework.
At the
beginning of 2024, the FCA issued a market watch report highlighting an
alarming trend of organized crime groups (OCGs) penetrating the equity markets
through suspicious trading activities. The report calls for firms' heightened
vigilance and proactive steps to counteract the risk of enabling such illegal
operations.
It was
noted that suspicious trading by OCG members, especially in products related to
UK and internationally listed equities, constitutes a significant share of the
suspicious trading volume in equity markets. The involvement of OCGs, defined
under the Serious Crime Act 2015 as collaborations of three or more people
engaging in criminal endeavors, underscores the complexity and breadth of
regulatory challenges facing the financial sector.
