Thursday, July 12, 2012

UK Financial Conduct Authority Will Make Increased Use of Enforcement Actions

The new regulator of Britain’s financial markets intends to make increasing use of enforcement actions as part of its credible deterrence approach to financial regulation. In recent remarks, Martin Wheatley, the first chief executive of the Financial Conduct Authority, said that enforcement will play an important role in achieving his vision of creating a regulator that will ensure financial markets, wholesale and retail, work well so that consumers get a fair deal. Mr. Wheatley was formerly the Chief Executive Officer of the Hong Kong Securities and Futures Commission.

Credible deterrence is at the center of  enforcement strategy, the senior official explained, and credible deterrence is about taking tough, targeted, effective, public action against the misconduct of firms and individuals as a way of changing behaviors.  The FCA has the resources and the commitment to follow through with meaningful sanctions.

The FSA will use the full range of its existing enforcement tools, he said, which will include pursuing criminal prosecutions where appropriate. When the FCA sees examples of bad practices, it will look across a range of firms and sectors to identify and deal with problems. Enforcement actions will support the FCA’s emphasis on intervening earlier to stop problems from occurring. Members of the Enforcement Division will get involved in supervisory decisions at an earlier stage, he noted, and provide specialist support and expertise to agency supervisors.  The FSA will take action earlier to tackle root causes rather than waiting for the risks to crystallize