FCA under pressure to close cases into senior management amid name and shame row
The City watchdog is under pressure to punish more bosses for flouting its rules after new figures revealed it had closed only half the investigations opened over the past seven years.
Under the watchdog’s senior manager’s regime, introduced in 2016 in response to the financial crisis, staff in positions of power at financial services firms must prove they are “fit and proper” to perform their roles and pass a test annually.
Managers found to be breaching those rules can be barred from performing serving at regulated firms.
However, despite opening 68 investigations since 2017, just two people have been issued ‘final notices’ and only 35 of the investigations have been closed, according to data obtained via a Freedom of Information request.
The delays have triggered warnings from across the City that the regulator is failing to properly clampdown on misconduct while inflicting harm on those subject to lengthy investigations.
“Drawn-out investigations not only place undue stress on individuals, but they also hold the potential to jeopardise careers without evidence of wrongdoing, and can incur significant legal costs that may exceed any eventual fines,” said
Mark Turner, managing director of the financial services compliance at Kroll.
“It’s crucial that the FCA reassesses its investigative processes to ensure that investigations are not just thorough, but also efficient and fair.”
Some 33 investigations are currently active under the regime, according to the figures.
One of the two senior managers to be hit with a final notice was Jes Staley, the former chief of Barclays, who was fined £1.8m and banned from holding a senior management role last year.
In its statement on the move, the watchdog said Staley had “recklessly approved a letter sent by Barclays to the FCA” which contained two misleading statements about the nature of his relationship with Jeffrey Epstein, the convicted paedophile.
Former financial adviser Paul Steel was also fined £850,000 and banned by the FCA for his role in the British Steel Pension Scheme scandal.
Dr Susan Hawley, executive director of the campaign group, Spotlight on Corruption, said the lack of punishment dished out by the regulator showed that the FCA is “still dropping the ball on its enforcement”.
“Until the FCA starts to robustly hold senior executives to account for blatant corporate failure, the UK will struggle to get the corporate world to clean up its act,” she told CityAM
The gap between investigations opened and closed is likely to fuel concerns over the speed of the regulator’s enforcement action.
Similar fears came to head this year when the FCA announced it would be naming the companies it is investigating. Figures across Westminster and the City warned that the plans could lead to firms facing huge reputational damage despite the investigations being closed with no action or left open for years.
However, the watchdog is looking to tighten the focus of its investigations and open fewer probes in future.
Commenting on the timelines of its senior managers investigations, a spokesperson said “there aren’t any shortcuts to a thorough investigation”.
“We have set out plans to complete enforcement investigations more quickly to deter wrongdoing,” they added.