FCA Fined U.K. Financial Organisations £568m in 2021

The Financial Conduct Authority (FCA) has fined financial organisations in the UK for a total of £568m in 2021.

This total is made up by fines against major banks and action against individuals for insider dealing, non-financial misconduct and carrying-out activities without authorisation.

Experts believe the emergence of new forms of financial crime during the pandemic explain the high quantity of financial penalties.

Encompass Corporation leading regulation expert Dr Henry Balani says: “The pandemic has provided criminals with the opportunity to defraud, launder and perpetrate other forms of financial crime with more efficiency than ever before.

“Lockdown, and the resulting dependence on digital services, has made it easier for criminals to impersonate legitimate services and scam consumers.

“On the other hand, it has caused difficulties for the financial institutions themselves to detect malicious activity, as digital identities are harder to verify than the physical or in-person alternatives that existed before the pandemic.”

Yet, experts consider that the FCA has demonstrated success when it came to protecting consumers.

The FCA’s contact centre prevented £4m being lost to scams.

The regulator also secured £5m to be paid back to people who invested in unauthorised businesses in 2021.

Also, a record 1,300 warnings about scams were issued over the past year.

Furthermore, over £1.2bn has been paid out to settle claims made by small businesses. This was done after the FCA won its Supreme Court case to clarify business interruption insurance cover.

Balani adds: “Unfortunately, the number of scams prevented, and fraudsters fined in 2021 is just a fraction of the total amount of financial crime successfully perpetrated.

“Therefore, combatting it requires a concerted effort from not just the regulator, but the financial institutions, industry leaders, and banks themselves.

“Equipping said financial institutions with sophisticated RegTech which is able to deal with, and adapt to, modern trends in financial crime is imperative to helping to combat it.

“This is particularly the case when it comes to Anti-Money Laundering, the detection of fraud, and identity due diligence.”

Experts consider that he FCA has improved its decision-making process in 2021. They also think that standards were applied more efficiently and robustly when authorising firms.

In the year to 2 December 2021, one in five firms, which applied for authorisation were refused, rejected or withdrew their application after discussions.

That is up from one in six when last reported.

FCA chief executive Nikhil Rathi says: “The FCA has protected customers, enhanced the integrity of the UK’s financial system and promoted competition this year, despite the additional challenges of the pandemic.

“We have reformed the general insurance market, saving consumers £4.2bn over 10 years, led the transition from Libor and helped small businesses claim £1.2bn against business interruption insurance cover.

“We are looking forward to using our innovative, adaptive and assertive approach to achieve “

The FCA has spent between £50,000 and £200,000 each year since 2017 for the maintenance of its speech to text service.

This was revealed through a Freedom of Information request submitted by Mortgage Strategy sister magazine Money Marketing in December 2021.

Article credit: https://www.mortgagestrategy.co.uk/news/fca-fined-uk-financial-organisations-568m-in-2021/