The Financial Conduct Authority (FCA) more than doubled the amount of firms it stripped of regulatory approval last year as it looks to beef up its enforcement action and clampdown on companies flouting its rules.
In its annual report today, the regulator said it ‘cancelled’ the authorisation of 1,261 firms in the 12 months to the end of March, more than double that of the same period the previous year.
A total of 21 individuals were also charged with financial crime offences in that time, marking the highest number brought by the watchdog in a single year.
The figures underscore a push from the regulator to strengthen and speed up its enforcement action and more closely target its probes amid fears too many firms were breaking its rules or being dragged into lengthy investigations with no result.
Writing in City A.M. earlier this year, the FCA’s co-heads of enforcement, Steve Smart and Therese Chambers, said the regulator was looking to adopt a “more transparent, better prioritised, pacier” approach to policing the sector that was “more robust about who we allow to operate here”.
However, the enforcement push has also plunged the watchdog into a battle with the sector and the previous government. Plans to publicly name the firms it is investigating, first announced in February, triggered a coordinated backlash from City groups and led to an unprecedented intervention from the then-Chancellor Jeremy Hunt, who urged the FCA to “re-look” at the plans.
Both Westminster and the Square Mile have claimed that the proposals run counter to a secondary objective introduced by parliament last year, which forces the watchdog to consider the growth of the UK economy and the competitiveness of the City.
In its report today, the FCA pointed to the fact it had accelerated its authorisation processes and had made a decision to either deny or approve 98 per cent of companies before a regulatory deadline.
“As we have shown this year, we are fully committed to both supporting and balancing the different needs of consumers, businesses, and the wider economy, enabling all to flourish,” Nikhil Rathi, chief executive of the FCA, said in a statement.
The report also marks the first since the FCA introduced its sweeping consumer duty rules last summer, which have piled more onus on companies to deliver good outcomes for their customers.
The plans have similarly been criticised from some quarters for tangling up City firms in red tape and triggering huge compliance efforts.
“The FCA will pursue implementation of the Duty in a manner which is consistent and proportionate, promoting healthy competition among firms in the interests of consumers,” FCA chair Ashley Alder said.
According to its annual report, costs at the watchdog swelled by more than £90m last year on the back of an £80m increase in staff costs. The regulator hired around 700 additional staff in that time and hiked the average pay by about three per cent.