Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.


Record-Breaking Financial Penalties Exposes Need for Conduct Risk Framework and Clearer Understanding of FCA Expectations within Businesses

In its first year of existence, the Financial Conduct Authority has shown to have a far more proactive and hard-line approach to regulatory enforcement in comparison to its predecessor the Financial Services Authority, a stance reinforced byWolters Kluwer Financial Services’ research described in its Compliance Resource Network. The FCA has issued financial penalties amounting to a record breaking £409million*, the majority for breaches of Principles 3 (management and control), 6 (customers’ interests) and 7 (communications with clients) with 13 financial penalties issued for mis-selling and or misleading provision of information and eight for market abuse. Wolters Kluwer Financial Services’ experts have evaluated the effect the regulator has had on compliance culture in the U.K. market over the past 12 months by highlighting six key lessons learned: 

  • The FCA appears most concerned with enforcement actions against larger institutions through its substantial penalties rather than the masses, such as hedge funds, asset managers and IFAs.
  • “Tick box” compliance culture has been removed as the regulator now expects full transparency on transactions, internal processes and governance on demand.
  • The FCA’s expectations have evolved over the past 12 months, moving away from regular routine compliance visits to more focused thematic reviews of which it has published 15.
  • The FCA is paying less attention to discussion papers, having only issued one so far and more on taking decisive and definitive action at an earlier stage.
  • The regulator has come good on its word to intervene earlier in institutions’ product development, addressing root causes of problems for consumers, scrutinizing an institution’s governance and how it designs, operates and sells products.
  • Despite the hard-line stance demonstrated by the FCA, institutions are still allowing breaches of its Principles of Business.

The FCA and Prudential Regulation Authority became active on April 1, 2013 following royal assent of the Financial Services Act 2012. Today’s CRN research also shows the following key findings over the 12-month period:

  • 45 financial penalties handed out in total by the FCA, less than the FSA in 2012.
  • 135 enforcement actions of note issued by the FCA.
  • 7,620 combined FCA/PRA Handbook pages updated.
  • £310 million in fines handed to banks alone.
  • 13 financial penalties issued for mis-selling, the most of any reason.

“The £409 million of fines issued by the FCA is a truly staggering figure in such a short space of time and the fact the same principles are continuously breached suggests that firms are not adapting to the change in initiative exemplified by the workings of the new regulator”, said Mary Stevens, manager Regulatory Analysis Europe at Wolters Kluwer Financial Services. “If the industry is to avoid making the same mistakes, firms must place the highest priority on developing a clearer understanding of what the FCA requires of them and monitor existing and new products and services on an ongoing basis.”

Read extended commentary from Mary Stevens here.

“There is a strong need for many financial institutions to explore what conduct risk involves and how to apply it to the infrastructure of their organizations,” said Richard Pike, market manager for Non-Financial Risk at Wolters Kluwer Financial Services. “Unless firms put in place a process to systemically identify potential conduct risks and risks of unfair treatments of customers across all products and business units, we can certainly expect the FCA to continue to make example of those firms who step out of line.”

*Fines accurate as of 24 March 2014

 About Wolters Kluwer Financial Services

Wolters Kluwer Financial Services provides more than 15,000 customers worldwide with risk management, compliance, finance and audit solutions that help them successfully navigate regulatory complexity, optimize risk and financial performance, and manage data to support critical decisions. With more than 30 offices in 20 countries, our prominent brands include: AppOne®, ARC Logics®, AuthenticWeb™, Bankers Systems, Capital Changes, CASH Suite™, FRSGlobal, FinArch, GainsKeeper®, NILS®, TeamMate®, Uniform Forms™, VMP® Mortgage Solutions and Wiz®. Wolters Kluwer Financial Services is part of Wolters Kluwer, a leading global information services and solutions provider with annual revenues of (2013) €3.6 billion ($4.7 billion) and approximately 19,000 employees worldwide.