UK: FCA Caseload At Record Levels Despite Dropping More Cases Than Ever

Last Updated: 31 October 2018
Article by Chris Webber and Stephen Cole

The Financial Conduct Authority ("FCA") continues to see its caseload increase to record levels despite the fact that it is dropping more investigations than ever before. Recently published statistics reveal that in the year ending March 2018 a total of 208 investigations were ended compared to 115 in the previous year and 98 in 2015/16.

The FCA's Enforcement Annual Performance Report 2017/18 reveals that the total number of cases open rose from 410 on 1 April 2017 to 504 as at 31 March 2018 despite the case closures, meaning that an additional 302 cases were opened in that period.

In 2017/18 the FCA issued 269 Final Notices and secured 317 outcomes using its enforcement powers (303 regulatory/civil and 14 criminal). Total financial penalties imposed during the period 2017/18 fell to £69.9m (6 against firms and 10 against individuals) compared to £181m in 2016/17 (6 firms and 9 individuals) and £884.6m in 2015/16 (17 firms and 17 individuals) albeit the figures in that year were exceptional due to fines imposed for FX and LIBOR misconduct.

The increased number of cases is impacting the length of time which it takes to resolve them. In 2015/16 the average length of time to resolve civil and regulatory cases as a result of a settlement was 25.2 months rising to 32.3 months in 2017/18. Cases referred to the RDC took an average of 35.9 months to resolve in 2015/16 rising substantially to 59.4 months in 2017/18. Durations for cases referred to Tribunal fell slightly from 53.8 months in 2015/16 to 52.4 months in 2017/18. Conversely, cases which were closed with no further action were resolved much more quickly in 2017/18 (19.1 months) as opposed to 2015/16 (25.7 months) suggesting that efforts are being made to make earlier decisions as to whether or not to proceed with cases.

The average costs of resolving cases are noteworthy, with the costs of those settling falling by almost half from £565,800 in 2015/16 to £290,500 in 2017/18 compared to those referred to RDC which rose sharply from £181,600 to £469,000. Those referred to Tribunal also rose from £384,000 to £712,400. Cases where no further action was taken fell from £325,000 to £137,800 which perhaps reflects the increased speed with which such cases are being resolved. Average case lengths and costs also rose significantly for the same period in criminal cases as the FCA tackles more complex criminal cases.

The statistics tally with the FCA’s publicised shift of approach to enforcement to open investigations more readily but drop those where no wrongdoing is found, where possible at an early stage. However, it can be seen that at the moment opening cases is proving easier than closing them, leading to an increasing FCA caseload, and difficulties in resolving the more complex cases quickly and cost effectively. This is particularly so for cases referred to the RDC and the Tribunal, which are taking ever longer to resolve resulting in increased costs on all sides. Cases need to be carefully and proactively managed to avoid succumbing to this trend.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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