Recent FCA Regulatory Fines and What You Can Learn from Them

regulatory fines

The Financial Conduct Authority (FCA) exists to protect consumers, promote fair competition and enhance market integrity. All’s fair with the FCA and their regulations. But if you get on the wrong side of the FCA, it’ll cost you. A lot.

Getting to grips with everything from new regulations to cloud compliance, data protection and compliance recording is key to ensure your business avoids some nasty fines in the future.

In 2019, £392 million worth of fines were dished out, followed by nearly £200 million in 2020. These weren’t just for big mortgage companies loaning out large sums of money either. Many came from consumer protection breaches, tax evasion and AML deficiencies.

Taking financial compliance seriously is a must for any business that is regulated by the FCA (and nearly 60,000 are). Here’s some prime examples that every business can learn from:

 

Risk management failures

What does it mean?
Failing to assess and manage risk factors with regards to transactions, bribery and misconduct.

Example:
Goldman Sachs International (GSI) were recently fined £97m due to their risk management failures connected to 1Malaysia Development Berhad (1MDB) and GSI’s role in three fundraising transactions for the development company.

The FCA said that GSI “failed to assess and manage risk to the standard of the high-risk profile of the 1MBD transactions on a sufficiently holistic basis”. As well as this, they failed to address allegations of bribery in 2013 and of misconduct in 2015.

 

Safeguarding and compliance issues

What does it mean?
Failing to protect client assets, including not maintaining effective safeguarding processes and documentation.

Example:
Charles Schwab UK Ltd (CSUK) were fined £8.98m for failing to adequately protect client assets. They didn’t have the right records to identify its customers’ client assets. They also made a false statement to the FCA in claiming that they did have adequate processes in place.

 

Unfair treatment of customers

What does it mean?
Giving customers a fair chance of understanding advice, paying back money and respect from employees.

Example:
Moneybarn were fined £2.8m for unfair treatment of customers during 2014 – 2017. Many of Moneybarn’s customers were vulnerable consumers who came to Moneybarn for its affordable motor finance loans. The FCA reported that Moneybarn did not give its customers a chance to pay loan arrears over a reasonable period. Many of the wronged customers were unemployed, suffering ill-health or experiencing other financial difficulties. Not taking these factors into account caused serious breaches in fair communication with customers.

 

Want to learn more about business compliance?

Compliance is a big old beast, but an important one to tame. The better you understand the risks, rules and regulations, the better you’ll be able to prepare for them. There are some simple steps your business can take to ensure your data is protected and your processes are compliant. Start with your IT.

 

Get in touch to discover what your next steps should be.

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