THE NUMBER of Financial Conduct Authority (FCA) cases opened into misconduct in retail financial services has increased by 29 per cent in the past year.
The number of cases has increased to 101 for the 12 months ended 31 March, up from 78 the previous year, the FCA said in its annual report on Tuesday.
The regulator also said that the overall number of enforcement cases it is undertaking is up by 31 per cent over the past year – rising to 650 from 496 at the beginning of the year.
“The FCA is sharply increasing its targeting of illegal, unregulated products and unauthorised firms that target unsophisticated retail investors,” Matt Hopkins, head of fintech in the financial services team at accountancy firm BDO said.
“Retail investors are being increasingly targeted through social media, often with unauthorised firms masquerading as authorised. The FCA is determined to stamp that out. We would expect them to be increasingly proactive in the year ahead.”
The FCA’s focus on misconduct follows the collapse of mini-bond provider London Capital & Finance. An independent probe has been launched into the regulators’ supervision of the firm and the circumstances surrounding its collapse.
Reports to the FCA’s unauthorised business department about potential unauthorised activity also increased by 25 per cent to 16,600 – a record number of reports. The regulator issued 521 warnings about unauthorised firms, up from 328 in the previous year.
“There remains a positive emphasis at the FCA on supporting innovation and the challenger market, but this does not mean compromise on customer outcomes,” Hopkins said. “Challengers will need to focus and invest heavily in operational infrastructure and resilience – particularly those businesses with rapid growth and customer acquisition strategies. Continued action in the high-cost short-term credit market and reducing potential for customer harm across the retail landscape including peer-to-peer is testament to that.”
The FCA is closely monitoring the amount of consumers holding potentially high risk and/or unregulated products, it said in the report. Between December 2016 and December 2018, the number of adults in Great Britain with holdings in retail bonds or minibonds increased to 1.2 per cent from 0.8 per cent previously.
Overall, nine per cent of adults in the country are invested in alternative assets including P2P lending, equity and debt crowdfunding, buy-to-let property, crypto-currencies, and collectable assets.