Rise in people carrying out business without FCA authorisation
The City regulator has seen a huge year-on-year rise in cases of companies and individuals which appeared to be carrying out regulated business without its authorisation.
The Financial Conduct Authority’s (FCA) annual accounts and reports for 2020/2021 showed that it issued 1,292 consumer alerts during the year, up 80 per cent from 2019/20.
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The FCA also opened 1,293 enquiry cases and in total there were 184 individuals and firms under investigation for carrying out unauthorised business.
The regulator said it imposed 10 financial penalties totalling £189.8m in 2020/2021, down from 15 penalties paying out £224.4m during the previous year. The FCA commenced a number of prosecutions alleging insider dealing, investment fraud, and money laundering as well as making the first criminal prosecution under the Money Laundering Regulations.
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The regulator opened 1,715 supervision cases into high-risk investments or scams during its 2020/2021 year.
It said that during the 12 months from 1 April 2020, 17 investment scam cases were opened, four of which were closed. 13 retail lending cases were opened during that time and four closed, and 75 financial crime cases were opened and 21 of these were closed during the year.
The FCA’s ScamSmart high-risk investment campaign drove more than 150,000 visits to the ScamSmart site and its Supervision Hub answered 150,000 queries from consumers.
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The regulator said it has taken action to reduce the harm in failure on over 700 firms after monitoring the effects of the economic downturn on firms’ solvency by rapidly increasing the data it collects on companies.
The FCA said its guidance to firms during Covid ensured 4.5 million payment deferrals for mortgage and credit customers during the pandemic.
During 2020/2021, the regulator received 1,046 whistleblowing reports from firms – 54 fewer than the previous year.
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In 135 cases the FCA took action to mitigate harm, which may include writing to or visiting a firm, requesting information from a firm, or asking a firm to attest to compliance with its rules.
Meanwhile, in 15 cases, it took significant action to mitigate harm, which may include enforcement action, an s166, or variation of permissions.
145 cases helped to inform the FCA’s work and were relevant to the prevention of harm, but did not lead to any specific action. 97 cases were not considered relevant to the prevention of harm, and 654 cases are still being assessed to determine their outcome.
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“2020/21 was a challenging year for everyone – the people we serve, the industry we regulate, and all of us at the FCA,” said Charles Randell (pictured), chair of the FCA.
“We prioritised protecting vulnerable people. We helped millions of people and hundreds of thousands of businesses, large and small, through the Covid-19 pandemic.
“At the same time, we continued to transform the FCA to better support consumers and markets in a fast changing digital age. Our new leadership team – led by chief executive Nikhil Rathi – is driving forward our programme to become more efficient and effective.”