As it stands, the time taken to do an investigation is considered to be appalling. In figures published in the same letter, the FCA says the average time taken to conduct an investigation where there was enforcement action was 41 months, and where it was contested it was 56 months, in the year 2023-24.
The process involved in some investigations has also been heavily criticised, with decisions being overturned by the Upper Tribunal — a part of the legal system that looks at cases afresh — when someone objects to a decision from the regulator.
In the case of Julius Baer last year, the Upper Tribunal overturned a decision against three individuals who had been censured by the FCA in a case involving commissions for an introducer to set up a relationship between Yukos and the Swiss bank.
In his decision, Judge Timothy Herrington said of the regulator: “It appears there has not been a single member of staff which has been with the case from the outset and … no continuity in the case team at all. Likewise, there has been no continuity with regard to the senior management responsible for the matter.”
He was also critical of the handling of legal documents: “There has been a serious failure on the part of the authority with regard to its disclosure obligations.
“It is clear that the constant changes in the case team and failures in the management of that team has been a major contributor to that failure. One result of that was the failure of the new team fully to appreciate what material was available for disclosure.”
Enforcement developments
So what has been happening with enforcement at the FCA?
Stephen says: “Over the years they have opened up more and more [investigations] and possibly haven’t had the resources to progress them.
"It looks that way because 500 investigations under way [notified last week] is an awful lot when only 15 were opened last financial year, and on average it is taking over three and a half years to close them."
Last year the regulator says it opened 15 cases in regulated and listed companies, down from 33 in 2021-22. Last year that figure was 37 for individuals, down from 110 in 2021-22.
In the letter, signed by co-heads of enforcement Therese Chambers and Steve Smart, the FCA says of the number of investigations: "It is falling as we do more on prevention, to stop bad actors at the outset, strengthen our supervisory work and better prioritise the enforcement cases we pursue."
