Criminal proceedings against Konstantinos Papadimitrakopoulos, former CEO of Globo plc, and Dimitris Gryparis, the company’s former CFO, have been discontinued. It had been alleged the pair were involved in market abuse in contravention of sections 383 and 382 of the Financial Services and Markets Act 2000.
Rules and consultations
A letter to CEOs of Annex 1 firms about common failings in financial crime controls has been sent by the regulator. Annex 1 businesses include lenders, safe custody providers, money brokers and financial leasing companies, and about 1,000 of them are not covered by FCA regulation.
A recent assessment of how these firms are complying with money laundering regulations found a number of common issues including;
- Discrepancies between firms’ registered and actual activities.
- Financial crime controls which had not kept pace with business growth.
- A failure to risk assess their own or their customers’ activities properly.
- Inadequate resourcing and oversight of financial crime issues and requirements.
The FCA wants firms to act promptly to resolve these issues within the next six months. GRIP analysis of this most recent Dear CEO Letter can be found here.
The use of personal guarantees by lenders to support loans to certain small businesses is to be investigated by the FCA. The move comes after a ‘super complaint’ was made by the UK Federation of Small Businesses.
The concern is that growing demand for personal guarantees by lenders is constricting small business. While the FCA’s remit does not include lending to limited companies, it has pledged to “do what it can” to help.
A statement outlined a number of measures the regulator intends to take in order to give the Treasury information that could help it reform the Consumer Credit Act.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: “Small businesses are vital to the UK economy … We will play our part to better understand whether lenders’ practices are causing unnecessary barriers to growth and, if necessary, act to remove any within our remit.”
“If we identify issues outside our remit, we will make these public so that Parliament and policymakers can consider whether greater protection should be available to small businesses.”
Changes to the high net worth exemption of the Financial Promotions Order have been implemented. They follow recommendations made by the Treasury Select Committee.
The changes were made after the FCA suggested the criteria for investors to be classified as ‘sophisticated’ should be tightened, thus reducing the risk of them purchasing investments that do not match either their appetite or capacity for loss.
Speeches and media
Emily Shepperd, Chief Operating Officer and Executive Director of Authorisations, delivered a speech at the TheCityUK and Financial Services Skills Commission Future Skills Conference on ‘The hallmarks of a future-fit workforce’.
In it, she emphasized the importance of gathering skills from markets outside London – something which would also help firms better reflect consumer demographics. And she said strong and healthy workplace cultures were essential for attracting and retaining talent.
Building a highly-skilled workforce was, she said, even more important if the financial sector is to come to terms with the new ways of working that are now needed, ways that are and will be increasingly shaped by artificial intelligence.
There has been progress on improving diversity in financial services, but change is not happening quickly enough. That’s the conclusion of the Treasury Select Committee’s Sexism in the City report.
Commenting on publication, the FCA said: “we share the Committee’s view that there is an important role for regulators to play, given the link to our statutory objectives and the relevance for financial services’ competitiveness. The Committee itself noted that there is clear evidence that diverse firms achieve better results.”
In its statement, the regulator referenced its own consultation on proposals to improve diversity, and said “our starting point was that what gets measured gets done”.
The FCA also indicated that: “[t]his year, we will prioritise proposals that tighten expectations on firms to tackle misconduct such as bullying and sexual harassment. We will also consider the Committee’s recommendations on whistleblowing and the use of non-disclosure agreements, building on our existing work.”