In its June 2015 regulatory round-up, which is relevant to all authorised firms, the Financial Conduct Authority (FCA) urged firms to co-operate with them at all times.
FCA Principle 11 says that: “A firm must deal with its regulators in an open and co-operative way, and must disclose to the appropriate regulator anything relating to the firm of which the regulator would reasonably expect notice.”
If the FCA asks a firm to supply certain information, then it expects a prompt and accurate reply.
Many firms of all types and sizes have lost their authorisation after failing to submit regulatory returns, or failing to pay fees.
Firms are also expected to notify the FCA when any significant rule breaches occur. Firms might be wary of alerting the regulator to instances of wrongdoing, but the rules require firms to do this. The FCA is also likely to view the matter in a more favourable light if the firm admitted to the mistake rather than waited for the FCA to uncover the issue at a monitoring visit.
When a firm notifies the FCA of a significant issue of this type, it should also supply information regarding: steps taken to investigate the cause of the problem, any compensation that will be paid top customers disadvantaged by the issue, lessons learned from the issue and steps taken to stop the issue recurring.
Examples of occasions on which a firm might need to notify the FCA include:
• It becomes aware that information on a data return was inaccurate
• It sells a product that it does not have permission to advise on/arrange
• Evidence of possible fraud, market abuse or other improper conduct
When the FCA fines a firm, it will usually reduce its fine by 30% if the firm co-operated fully with its investigation and agreed to settle the fine at an early stage.
The bulletin refers to the FCA’s fine of £2.1 million imposed on Bank of Beirut for providing misleading information about the systems it had in place to combat financial crime, and for falsely informing the FCA that it had completed certain remedial actions. The huge fine of £227 million for Deutsche Bank’s manipulation of the LIBOR and EURIBOR interest rates was partly due to the way the bank misled the FCA during its investigation, and the fact that it did not put systems and controls in place to monitor this area even when it was informed by the FCA of the risks of misconduct.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.