Trends in Regulatory Enforcement in UK Financial Markets: 2019/2020 Year-End Update

12 May 2020
Erin B. McHugh

NERA Economic Consulting maintains a proprietary database (the NERA FCA database) of fines and nonpecuniary enforcement by the Financial Conduct Authority (FCA). In this report, we present a detailed analysis of these data, supplemented with data on redress schemes agreed with the FCA and fines associated with deferred prosecution agreements (DPAs) agreed with the Serious Fraud Office (SFO), to reveal trends that may not be apparent from a review of individual cases. 

In our 2019/20 year-end update, NERA Associate Director Erin B. McHugh provides a number of insights into the FCA’s recent enforcement activity. The aim of this report is to provide lawyers and in-house counsel with useful information and relevant analysis on the levels and focus areas of FCA enforcement activity and how these are changing over time. 

Key Takeaways 

  • In the 2019/20 financial year, the number and aggregate amount (total monetary value) of fines imposed on firms and individuals by the FCA remained low, even within the context of the post-LIBOR/FX investigation era.

  • The number and amount of fines imposed on individuals in 2019/20 was lower than in any of the previous six financial years.

  • While the number of fines imposed on firms in 2019/20 was the same as in 2018/19 and higher than in the prior two financial years, the amount of fines imposed on firms remained within the range observed during that same period.

  • Most of the fines imposed on both firms and individuals in 2019/20 were in relation to compliance failures or customer protection failures.

  • The FCA imposed its first fine against an asset manager in connection with its ongoing investigation into “closet tracking”.

  • The number of open FCA investigations has reached an all-time high, and disruptions caused by COVID-19 will likely delay closure of investigations. The FCA has announced that it will delay or postpone regulatory work that is not critical to protecting consumers and market integrity. 

Additional data on the number and amount of fines by period (including by category of alleged misconduct) are outlined in the table below.