Clifford Chance

Evidence is starting to emerge of the change in approach to enforcement promised by Therese Chambers and Steve Smart. Data released by the FCA on 5 September 2024 (covering the 2023/24 financial year ending 31 March 2024) shows a continued increase in the use of early intervention powers, a reduction in enforcement cases and penalties, and priority being given to reducing and preventing financial crime.

1. The FCA is opening fewer investigations each year and its total number of investigations has returned to 2018 levels

In 2023/24, the FCA opened 24 "operations" (a new umbrella term it is using to cover matters in which an individual, a firm, or a group of individuals and/or firms may be put under investigation), compared with 34 operations in 2022/23.

As at 31 March 2024, it had a total of 188 open operations, comprising 503 open investigations into individuals or firms. This is approximately the same number of investigations it had open at 31 March 2018 (the number having peaked at approximately 650 in 2019/2020 and declined thereafter).

2. The total amount in fines imposed has decreased

The total amount in fines it has imposed has significantly reduced, to £42.5 million in 2023/24, from £331 million in 2021/22, and £199.3 million in 2022/23.

3. The number of voluntary requirements secured has increased

The FCA secured 102 "voluntary" outcomes in 2023/24 (outcomes in which the firm agrees with the FCA as to the steps it shall take to meet its requirements) compared with 82 in 2022/23.

By comparison there has been less frequent use in the FCA's own initiative powers (where it exercises formal powers to impose requirements on a firm’s permissions, to vary a firm’s permissions, to vary a Senior Management Function holder’s approval, or to give directions pursuant to various powers). The FCA indicates that this reflects its usual strategy of seeking to agree voluntary requirements with firms.

4. The FCA's use of its s166 Skilled Person power has significantly increased

The FCA's Annual Report indicates it used its s166 power in 83 cases in 2023/24, nearly double the number in 2022/23.

5. The FCA focus on reducing and preventing financial crime is reflected in the cases it is opening

Eighty-three of the 188 operations open as at 31 March 2024 address the FCA's strategic commitment of reducing and preventing financial crime (e.g. cases involving fraud and investment scams, money laundering, sanctions evasion and terrorist financing, and associated systems and controls). By comparison, 55 open cases address strengthening wholesale markets, 35 open cases address putting consumer needs first, and 15 open cases address other issues. Similarly, over half the 24 new operations opened during the 2023/24 address reducing and preventing financial crime.