Enforcement
In the first 24 hours of the UK’s new crypto marketing regime, the regulator issued 146 alerts about cryptoasset promotion. It advised consumers to check a warning list it had published, which will be “continually updated as we identify firms which may be illegally communicating cryptoasset promotions and are failing to engage with us constructively”. Restrictions were also imposed on Rebuildingsociety.com Ltd which blocked Binance’s ability to market to UK consumers.
Financial Services and Markets Act s55L
London Capital and Finance plc was censured for unfair and misleading financial promotions of minibonds. The FCA found that LCF used bondholders’ money to fund seemingly independent comparison websites to showcase its minibonds next to safer investments, which had a lower rate of return. No financial penalty was imposed as the firm is insolvent.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, said: “LCF’s use of financial promotion led to bondholders, many of whom were vulnerable, investing in unsuitable, high-risk products.
“We recognize our censure will not provide solace to those investors who lost out. But it is important we set out what went wrong at LCF and how their promotions misled people into parting with their money.”
Former Barclays CEO James Staley was fined £1.8m ($2.19m) and banned from holding a senior management or significant influence function in the financial services industry.
Staley was found to have “recklessly approved” a letter sent by the bank to the FCA which contained misleading statements about the nature of its relationship with disgraced financier Jeffery Epstein.
Equifax Ltd has been fined £11m ( $13.36m) for its role in one of the largest cyber-security breaches in history. It failed to manage and monitor the security of data it had outsourced to its US-based parent company. Hackers subsequently managed to access the data of approximately 13.8 million UK consumers, including names, dates of birth, phone numbers, Equifax membership login details, partially exposed credit card details, and residential addresses.
Because Equifax didn’t treat the data move to its parent company as outsourcing, it failed to provide sufficient oversight. And it didn’t discover the breach for six weeks.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, said: ‘Financial firms hold data on customers that is highly attractive to criminals. They have a duty to keep it safe and Equifax failed to do so. They compounded this failure by the ways they mishandled their response to the data breach. Regulated firms are on the hook, regardless of whether they outsource or not.”
Wholesale broker IBP Markets Limited has been restricted from carrying out regulated business due to concerns about issues including client money protection. Following the imposition of restrictions, the firm has been placed into special administration.
Wealth management firm and London Stock Exchange member Blankstone Sington Limited has entered special administration.
Rules and consultations
The FCA has responded to the CMA’s Environmental Sustainability Guidance on the application of Chapter I of the Competition Act 1998 to environmental sustainability agreements. It says stakehlders have raised issues around “uncertainty in relation to specific potential ESG-related initiatives that may raise novel and significant concerns”, and that it will “consider whether and how we can either provide clarification, take other regulatory actions and/or direct enquiries to and work with the CMA”.
Publications
To coincide with Black History Month, Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, blogged on the work being done at the FCA to promote diversity in financial services, with a focus on the achievements of Black Sisters.
Emily Shepperd, Chief Operating Officer and Executive Director, Authorisations blogged about work being done to make applying for authorisation easier.
Speeches and media
FCA chair Ashley Alder gave a speech to the Annual Dinner of the Investment Association in which he talked about updating and improving the UK regime for asset management.
He said the FCA “will be pursuing three main priorities for reform: making the regime for alternative fund managers more proportionate; updating the regime for retail funds; and supporting technological innovation”.
