Enforcement

An eye-catching announcement got the week off to a pacey start as the FCA outlined a new enforcement strategy, and consultation on how that would be implemented. The regulator said it would “will focus on a streamlined portfolio of cases, aligned to its strategic priorities where it can deliver the greatest impact”. The aim is to “increase the deterrent impact of its enforcement actions”.

In a nutshell, this means the FCA will try to say more in public about cases. And it will base those decisions on whether or not it considers greater transparency to be in the public interest.

Therese Chambers, Co-Executive Director, Enforcement and Market Oversight, said the move was part of an effort to “work smarter” and about “communicating what the FCA’s plan is and deterring bad behavior”. The full text of her speech is on the FCA website.

The regulator is seeking feedback on the proposals by April 16, 2024. Industry reaction has centred on how that public interest definition will be applied, and whether the FCA’s internal processes are prepared for the new approach.

Sam Tyfield of Shoosmiths was particularly blunt, saying that “unless there are any actual facts contained in the PR, then “insinuation”, “nods-and-winks” and “nudges” carry with them their own problems”. We gathered reaction and considered the implications of a significant announcement.

Speeches and media

Competition is not working well across the credit ratings data, benchmarking and data vendor markets, according to a new wholesale data market study published by the FCA. But it has found no case for “significant interventions”.

Instead, the regulator will “examine ways to help support wholesale data being provided on fair, reasonable and transparent terms”.

The study found that “users may be paying higher prices for the data they buy than if competition was working more effectively”. Key issues identified were:

There were usually no more than three key providers in each market, each with significant market share.

• Key providers are highly profitable, with operating profit margins of between 30% and 60%.
• Because users see sources of data from key providers as essential, there are limited alternatives.
• Barriers prevent challenger firms from providing competition.

The three-month synthetic sterling LIBOR setting ceases permanently on March 28, 2024. The FCA issued what it said would be its final message before the deadline, along with a reminder that US dollar synthetic LIBOR is expected to cease in seven months’ time.

It also published a report under Article 23E of the Benchmarks Regulation (BMR), reviewing whether the use of the regulator’s power under Article 23D(2) of the BMR with respect to three-month synthetic sterling LIBOR has advanced its consumer protection and integrity objectives.