The FCA has said that earlier this year it “held a series of roundtables to gather views that can help shape how we approach regulating specific areas of crypto.”
It went on: “We brought together over 100 organisations involved in the industry, like crypto exchanges, banks, trading firms, blockchain analytics companies, law firms, industry associations and universities, Government officials, academics and other regulatory authorities including the Treasury and Bank of England.”
“Together, we discussed the challenges and opportunities certain aspects of the future crypto regime posed.”
Consultation
The FCA said last week it has “published the second phase of its consultation on proposals for a measured increase in transparency about its enforcement investigations.”
In a press release the UK regulator also said it has “set out plans for further engagement after significant concerns were raised in relation to the original consultation. The further consultation also aims to assist ongoing parliamentary scrutiny, including by the Commons’ Treasury and Lords’ Financial Services Regulation Committees.”
Four significant changes have been made to the FCA’s proposals in response to feedback:
- The potential negative impact on a firm would be explicitly considered as part of a public interest test – previously it wasn’t included as one of the factors.
- Firms would be given 10 days’ notice ahead of any announcement being made, rather than the 1 day originally consulted on. During this period, firms could make representations. If the FCA decides to announce, firms would then have an additional 48 hours’ notice before it is published.
- The potential for an announcement to seriously disrupt public confidence in the financial system or the market has also been included as a new factor in the public interest test.
- The FCA has clarified it won’t announce investigations which began before any changes to the policy come into effect. (Although it may reactively confirm investigations which are already in the public domain, where this is in the public interest).
We took a deeper look at the changes and gathered industry reaction.
The FCA has once again proposed to extend the time firms have to handle complaints relating to motor finance commission.
The regulator has said: “The proposed extension would allow firms more time to handle complaints efficiently and effectively and help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms.”
The regulator previously extended the time firms have to respond to motor finance complaints involving a discretionary commission arrangement (DCA), according to a press release.
The FCA’s consultation follows the Court of Appeal’s 25 October judgment in Hopcraft v Close Brothers Ltd, Johnson v FirstRand Bank Ltd, and Wrench v FirstRand Bank Ltd.
In a separate consultation process the FCA has called for firms to improve bereavement handling times and share best practice.
The regulator says it “has found that while life insurers provide good service to bereaved customers, they need to settle claims quicker and improve how they measure customer experience.”
The regulator says its multi-firm review has found evidence of some good practices in the sector, however “many firms still have further to go to meet its expectations, particularly in the measurement, monitoring, and delivery of good service outcomes for customers.”
Also last week, the FCA announced it has launched a consultation process in order to streamline its rulebook.
According to the regulator: “The MiFID Organisational Regulation (MiFID Org Reg) is EU law we have adopted which contains key conduct, systems and controls obligations for firms, in particular investment firms.
“Following the Treasury’s announcement to lift requirements from legislation into the FCA’s rulebook, this consultation sets out our proposals for transferring the rules without policy changes.”
Enforcement
In a latest enforcement action, the FCA has announced that “Vacation Finance Limited, trading as VFL Finance Solutions, was placed into administration on 20 November 2024.”
The regulator has also said Dina Devalia and Frank Wessely of Quantuma Advisory Limited were appointed as joint administrators.
It explained: “The joint administrators will write to customers with live loans explaining how you will be affected.” Contact details for the joint administrators can be found via the link above.
Separately, the FCA has started criminal proceedings against four individuals for conspiracy to commit false accounting, with three of them facing further charges for fraud.
According to a press release, “Terry Dodd, John Riley and Brian Flanagan have been charged for fraudulently abusing their positions as directors of the Dial-A-Cab Credit Union for their own personal gain.”
A fourth individual, Terry MacPherson, has been charged for conspiring with the individuals, using his position as an auditor to submit false returns to the FCA and PRA.
The regulator has alleged the four individuals transferred funds out of the credit union for the benefit of themselves and their families.
The alleged offending took place over a six-year period between September 1, 2012, and September 4, 2018, according to the press release.
The defendants were granted conditional bail at Westminster Magistrates Court on November 20, 2024, and the case has been sent to Southwark Crown Court, with the next hearing on December 18, 2024.
And in its biggest enforcement action last week, The FCA “fined Barclays £40m in total for its failure to disclose certain arrangements with Qatari entities in 2008.”
The UK regulator has said the action “follows Barclays’ decision to withdraw its referral of the FCA’s planned action to the Upper Tribunal. The action was based on findings which included that Barclays’ conduct in its October 2008 capital raising was reckless and lacked integrity.”
We covered the story fully on GRIP.
Also last week, the FCA announced it had “fined Macquarie Bank Limited – London Branch (MBL) £13m for serious failings that allowed one of its employees to record over 400 fictitious trades.”
The regulator said: “From June 2020 to February 2022, Travis Klein, a trader based on MBL’s London Metals and Bulks Trading Desk was able to record and take steps to conceal over 400 fictitious trades in MBL’s internal systems in a bid to hide his trading losses.
“The fictitious trades were not detected earlier because of significant weaknesses in MBL’s systems and controls, some of which the firm had been previously made aware of. Despite knowing of the weaknesses, MBL failed to put effective and timely plans in place to fix them.”
Also last week, the FCA “fined András Sebők, former chief supply chain officer at Wizz Air Holdings plc (Wizz Air), £123,500 ($158,739) for trading company shares when he wasn’t permitted to, and failing to disclose his trades.”
A press release from the regulator says: “Mr Sebők carried out the trades in his capacity as a person discharging managerial responsibility (PDMR) at Wizz Air. It was found that Mr Sebők traded Wizz Air shares in the restricted 30-day period leading up to the firm’s financial results announcements.
“Mr Sebők also failed to notify the FCA and Wizz Air of his personal trades in the company’s shares within the required three business days.”
Media and speeches
Emily Shepperd, FCA chief operating officer, delivered a speech at the TheCityUK National Conference in Birmingham on Tuesday, November 26. Highlights included:
- The FCA’s new five-year strategy will focus on four key themes of economic growth and innovation, financial crime, consumer resilience, and how to become a more efficient and effective regulator.
- The strategy has been built in partnership with a wide range of stakeholders, consistent with how the FCA intends to deliver it.
- Trust in both the FCA and the financial services sector underpins these themes and will be crucial as the regulator looks to pursue growth, alongside ensuring proportionality in regulation and encouraging innovation.
- To support this, there needs to be a debate about the appropriate risk appetite in the sector.
Sarah Pritchard, the FCA’s executive director of supervision, policy and competition – markets, and executive director, international, delivered a speech at The Investment and Saving Annual Alliance (TISA) Annual Conference on Thursday, 28 November. Highlights included:
- The FCA welcomes the Government’s focus on financial inclusion and will continue to play its part through a new five-year strategy.
- Improved financial inclusion and resilience can accelerate growth.
- Technological innovation, when well-managed, will play a key role.
Also last week, the FCA said its latest research on consumer attitudes and behaviors towards crypto showed that 12% of UK adults now own crypto, up from 10% in previous findings.
The regulator says: “Awareness of crypto also rose from 91% to 93%. The average value of crypto held by people increased from £1,595 ($2.025) to £1,842 ($2339).
“Respondents told the FCA that information from family and friends was the most common source of information for those who had never bought crypto. Only one in 10 people say they did not do any research before buying crypto,” it adds.
Also last week, the FCA announced it was “improving the accuracy of the market cleanliness statistic (MCS), used in its annual report to measure insider trading.”
“The MCS is based on abnormal stock price movements before takeover offer announcements,” according to the regulator.
In future, the FCA will:
- detect abnormal price movements that happen on the same day as an announcement because the price information used is more frequent;
- introduce a market comparison test to ensure the statistic is less affected by market volatility, for example that caused by the COVID pandemic or Russia’s invasion of Ukraine; and
- include more announcements from firms with multiple takeover offers.
And lastly, the FCA has announced it has launched its “first research competition to help drive UK economic growth”.
A press release says: “The competition will award funding for several research projects focused on growth, competitiveness and regulation in the UK financial services sector.”
Applicants should submit research proposals that focus on areas the FCA can influence, such as:
- growth and productivity of the UK financial services sector;
- international competitiveness of the UK financial services sector;
- supporting the UK’s economy and considering regulatory impacts.
