FCA Imposes Just Four Fines as Covid Disrupts Investigations

(Bloomberg) -- The U.K.’s financial regulator imposed just four fines so far this year -- a record low -- as the Covid-19 pandemic interrupted investigations.

While the Financial Conduct Authority has levied more than 100 million pounds ($129 million) in financial penalties, the number of fines was down from 17 in the same period a year earlier, London law firm RPC said in a statement. The FCA’s investigations were likely hindered by difficulties conducting interviews with witnesses or suspects during the lockdown, the firm said.

“While the FCA has issued relatively few fines in the last few months, it will want to make up for time lost during lockdown when it will, understandably, have experienced disruption and delay,” said Jonathan Cary, an attorney at RPC.

An FCA executive this month acknowledged that the coronavirus pandemic had taken up executives’ time throughout the year. The agency is also going through a leadership change, with Nikhil Rathi taking the top spot at the start of October.

The FCA said it was continuing to pursue cases, and that figures rise and fall naturally as investigations proceed.

“Enforcement has continued as normal during the pandemic,” a spokesman said. “The FCA will open cases where it suspects serious misconduct, with the number of new cases fluctuating month on month and year on year.”

Meanwhile separate data published by law firm Reed Smith showed that the number of new investigations opened during the first three months of lockdown slumped 76% to 36. Nearly two-thirds of the cases targeted individuals, Reed Smith said, citing a freedom of information request.

The FCA has amped up its warnings about the way financial firms control sensitive information amid the pandemic, with Julia Hoggett, the head of market oversight, saying Monday that one firm recently failed to keep an investigation secret, with the result that a suspect quit their job and fled the U.K.

It comes after the regulator braces for criticism over its monitoring and surveillance. The FCA faces “some painful lessons” over the next few months as investigators prepare to publish several reviews of its potential failures, the former head of the FCA Christopher Woolard said last month.

London Capital & Finance Plc collapsed in 2019, trapping millions of pounds in so-called mini-bonds that had attracted thousands of retail investors. The FCA is examining the circumstances of the scandal that saw three failed companies -- London Capital, Basset & Gold and Blackmore Bond -- lose about 300 million pounds of consumers’ money.

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