On April 1 2013, the Financial Conduct Authority (FCA) took over as the regulator of the conduct of financial firms in the UK, replacing the Financial Services Authority (FSA). The FCA came into being promising to be more proactive – to take action in anticipation of issues occurring – and to be tougher on those who broke its rules.
Now the FCA has marked its first anniversary by issuing a short video. Chief executive Martin Wheatley begins by saying that he believes his organisation has “made a significant difference to how financial services are delivered in this country.” He goes on to mention areas such as remuneration structures and travel and mobile phone insurance where he asserts that the FCA has taken action.
Next, chairman John Griffith-Jones spoke of the aims of the FCA by saying: “We have a bigger objective than just stopping the bad stuff, it is encouraging the market to actually treat the customers fairly.”
Three unnamed consumers then give their verdict on the FCA. “I think it’s had a very positive year, the FSA had a tarnished reputation after the banking crisis and I think they’ve moved on now,” is one such comment.
Industry chiefs are next to give their verdict. Mark Wilson, CEO of insurance giant Aviva, commented: “The thing I’ve been really impressed with is the renewed focus on
Away from the video, this sentiment has been echoed by some financial advisers. “From our perspective the FCA seems more open and willing to engage with the advisory community than its predecessor,” said Peter Chadborn, director of Essex-based Plan Money.
Mr Wheatley concludes by looking forward to the next 12 months. The first anniversary coincides with 50,000 consumer credit firms coming under the FCA’s jurisdiction for the first time. His last words are: “The challenge will be the same going ahead as it has been which is to deliver better financial services for every person in this country.”
One of the most noteworthy aspects of the FCA’s first 12 months in charge has been the size of some of its fines. The largest penalties have been a £137.6 million fine for JP Morgan due to its trading irregularities; and £105 million for LIBOR manipulation at Rabobank. In the last year we have seen the two largest fines for conduct failings, larger than any under the FSA regime. These were a £30.6 million penalty against HomeServe Membership Limited, covering mis-selling, remuneration, complaints handling and senior management controls; and a £28 million sanction against Lloyds Banking Group as a result of its poor remuneration structures. We have also seen the largest ever fine for a sole trader, when Gurpreet Singh Chadda was penalised £945,277 for his actions in selling sale and rent back schemes. Total FCA fines to date are £543 million.
After only two months, in June, the FCA confirmed the expected ban on promotion of Unregulated Collective Investment Schemes to mainstream investors. New guidelines on advisers accepting hospitality from providers will also stand out for many people when they look back on its first year. However, in recent days its anniversary was tarnished by a leaked story concerning an investigation into old insurance policies, which had the effect of slashing insurance company share prices.