The FCA has said it has decided to fine Crispin Odey of Odey Asset Management LLP (OAM) £1.8m ($2.33m) and ban him from the UK financial services industry for a lack of integrity.
In a press release, the watchdog said Odey has referred his Decision Notice to the Upper Tribunal, where he and the FCA will present their cases.
According to the press release: “Any findings in the Decision Notice are therefore provisional and reflect the FCA’s belief as to what occurred and how it considers his behaviour should be characterised.”
Odey has been accused by the regulator of deliberately seeking “to frustrate OAM’s disciplinary processes into his conduct to protect his own interests.”
The FCA said Odey showed total disregard for the firm’s governance and caused OAM to breach certain regulatory requirements, and that his behavior towards OAM and the FCA “lacked candour.”
In a separate enforcement action, the FCA said it has “fined the London Metal Exchange (LME) £9.2m ($11.92m) for failing to ensure its systems and controls were adequate to deal with severe market stress.”
It went on: “Between 4 and 8 March 2022, the price of LME’s 3-month nickel futures contract encountered extreme volatility. This culminated in the early hours of 8 March 2022 when its price rose to over $100,000, more than double the closing price on 7 March 2022, with most of the rise occurring in little over an hour. These events undermined the orderliness of and confidence in LME’s market.”
The firm has been accused of not having adequate systems and controls for ensuring normal trading under severe market stress, especially in relation “to the operation of its automatic volatility controls, its ‘price bands,” the FCA has said.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said “the LME should have been better prepared to address the serious risks posed by extreme volatility.”
We have covered the story in greater depth.
Regulation
The FCA has “refused Zeux Limited’s application for registration as a cryptoasset exchange provider under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).”
“The application, submitted in June 2022, showed that the firm had failed to implement anti-money-laundering controls and carry out effective risk management,” the regulator said in a press release. It said anti-money-laundering measures are essential as it wants people and the financial system’s integrity in a competitive crypto sector to be protected .
According to the watchdog, Zeux Limited’s application showed:
“Failure to understand, identify and document risks.- “Failure to consider the National Risk Assessment, which sets out key money laundering and terrorist financing risks in the UK.
- “Customer risk assessment enhanced due diligence and suspicious activity reporting (SAR) failures.”
The FCA has advised firms seeking crypto registration in the uK to “engage with us early and to seek guidance through pre-application meetings with our team.”
Also last week, the FCA announced that Basildon Credit Union Limited (BCU) entered administration on 17 March and had stopped trading.
In a press release, the FCA said: “Dina Devalia and Michael Kiely, both of Quantuma Advisory Limited, have been appointed as administrators.”
The regulator said: “BCU is a financial co-operative owned by its members. It is regulated by the Prudential Regulation Authority (PRA) and the FCA under Firm Reference Number (FRN) 213229 as a deposit-taker.”
It added that the Financial Services Compensation Scheme was “stepping in to protect members and will return members’ money within 7 working days from when BCU was declared in default (17 March 2025).”
Consultation
The FCA has said it is looking at whether removing or increasing the contactless limit could benefit consumers, merchants and economic growth in the UK.
In a press release, the regulator said people “across the country could benefit from greater choice, flexibility and smoother purchases, under proposals being considered by the FCA. Making regulation less prescriptive would also give firms greater control and could promote innovative payment methods or fraud prevention solutions.”
The consultation is part of the regulator’s efforts to prioritize economic growth, in alignment with the government’s growth agenda, the FCA said.
Part of the proposal is to allow firms to determine their own limit on how much people can pay via contactless payment methods, something that already happens in the US.
David Geale, executive director of payments and digital assets at the FCA, said: “Currently 85% of people in the UK make contactless card payments each month. This is the perfect opportunity to explore whether we can improve and increase trust in the UK’s payments system.”
And finally, the FCA announced the launch of “a market study into how well the distribution of pure protection insurance products – which support families with financial commitments if someone becomes critically ill or dies – is working for consumers.”
It continued: “In 2023, around £4.85bn was paid out in claims on individual policies to support people suffering from bereavement, illness, and injury.”
According to the FCA, the overall market seems to be working fine but “there are concerns that commissions used to sell these products may affect the outcomes consumers receive and the products’ value or design.”
The study will examine whether:
- the structure of commission encourages advisers to suggest switching that may not be beneficial for consumers;
- premiums are being raised by insurers to pay a higher commission to an intermediary;
- the products provide fair value;
- the market supports innovation and growth.”
