Heavier penalties on financial services operators have caused a 30 percent increase in the number of executives’ ban orders meted out in 2018 by the UK’s financial watchdog.
The Financial Conduct Authority’s total enforcement actions against individuals working in the financial services industry stand at 23 during Sep 2017-Sep 2018 period. This is compared with 18 bans levied in the previous year, according to London-based law firm RPC.
The figure includes those who have been banned, fully or partially, from performing any influence or senior management function, on the basis of a “fundamental lack of competence and capability.”
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The report also reveals that the FCA has spent a total of £320,000 in legal fees pursuing a case to ban former TailorMade Independent chief executive Alistair Burns. “In addition, it spent a total of 4,777 man hours on that case between August 2015 and October 2018, demonstrating the resources they are willing to devote to removing “bad apples” from the industry,” the report added.
Despite the increase in prohibition orders, total fines issued to individuals in the UK were lower in 2018, having reached just £175 million in the Jan-Jun period. However, this was accompanied by a growing emphasis on the personal accountability of senior staff at financial service firms by the regulator.
RPC expects that the number of enforcement cases and penalties against individuals to rise further with the December 2019 rollout of the Senior Managers and Certification Regime (SMCR) to all financial services firms.
SMCR, which came into force for banks in 2016, aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.