We probably haven’t seen the end of strong recordkeeping enforcement actions.

Although they will be almost certainly be scaled back under the new administration, I’d echo the opinion of a compliance specialist I heard speak at the 2024 NSCP conference: “There’s no way this is going away.”

The only prediction that can be made with any certainty is that enforcement is going to be a fascinating area to watch.

We’ll be following developments closely on GRIP, of course, so stay with us.

In the US, we’ll see the reach and shape of the new administration’s deregulatory approach.

In the UK, we’ll see how regulators deal with apparently mixed messages from the government over how interventionist to be.  

It’s going to be quite a ride.

In the UK, the FCA will continue to push its enforcement transparency proposals to the industry, Parliament and interested stakeholders; expect “name and shame” to become an enforcement tool in 2025.

The FCA will increase its use of early intervention powers to reduce enforcement cases and penalties with more use of skilled person reports under section 166 of FSMA. Priority will be given to reducing and preventing financial crime.

We also predict that cases will start to emerge around non-financial misconduct. The FCA  will take a tougher approach to policing conduct, ensuring firms reduce remuneration or apply clawback where non-financial misconduct is identified.

Less enforcement for sure as countries jostle to ensure that their economies and financial markets are attractive to investors and capital.

However, there is a caveat here.

At an excellent FCA International Capital Markets conference that I was privileged to attend earlier this year, one of the high caliber speakers, when asked what would make China a more attractive place to shift capital to, responded by saying that it would be an amazing place to do business if one could be assured of getting a fair trial in case of a problem.

This made me ponder because I have felt for quite some time that one of the unsung heroes of the United States being a pre-eminent place for doing business is its robust legal system – including activist regulatory agencies who are not intimidated by anyone and are willing to fight hard for justice.

A regulatory race to the bottom is therefore, in my view, not the panacea that governments hold it out to be. And is unlikely to fix the problems primarily created by their own policy choices.

Paradoxically less regulation and laxer regulatory approaches may actually make markets less rather than more attractive to capital because both risk and cost of doing business is higher and the chance for redress lower than in those that are policed effectively.

Think of an investor as a shopper – of course it would be preferrable to spend money in a neighbourhood that is safe and well policed, where your phone is unlikely to be snatched and where you can depend on the quality of the goods and you may travel far to reach such an ideal emporium.

We have seen multiple regulators stepping up their enforcement actions this year, with higher fines and penalties, and it looks like the trend is continuing.

Especially if the authorities are able to make a ‘statement of it’, like the ASIC, the Australian Securities & Investments Commission, which has promoted a lot of ‘first wins’ this past year – such as a first win in a greenwashing case, one in the new design and distribution obligations regime, and more.

It is challenging to predict with new administrations only recently in post as well as an SEC Chair with a very different view from previous.

Over 2024, the dollar value of fines issued seems to have gone up to another level. This prevents even big banks and brokers from paying this as a cost to doing business but somewhat ignoring requirements.

It feels likely that this will continue and the punishment will fit the crime to deliver real credible deterrence particularly where behaviour is egregious.

This is the $330m question (which is generally the size of fine that the regulators have handed out to the first offender in the last few years)!

Enforcement is probably not going to be as aggressive as it has been so no new records next year.

But ground rules have been established in certain areas where a zero-tolerance approach will mean that significant abuse is only going to have one outcome.

I fear that the regulators’ olive branch in the form of self-reporting will not be grasped by the industry.