In the last year there have been a number of fines aimed at individuals for failures to ensure compliance oversight and compliance with PRIN 3 in the trading firms sector, ultimately leading to further breaches of SUP 17, SUP 15 and Article 16 of MAR (including Matthew Kent, Stephen Tomlin and Simon Tyson).
In August, the FCA fined Citigroup Global Markets Limited £12.6 million in relation to market protection and wholesale conduct in the Investment Banking and Trading Firm sector, specifically for failure to properly implement the Market Abuse Regulation trade surveillance requirements relating to the detection of market abuse. Read more.
Commerz Bank was fined £37,805,400 for anti-money laundering control failings relating to customer due diligence and monitoring. Read more.
The FCA is rolling out PRIN 12 over the next year, which is a new consumer protection principle for all regulated entities who are involved in any way in the supply chain of services/products for retail customers.
The FCA strategy for 2022 to 2025 states their focus will be:
- Reducing and preventing serious harm – harnessing data to assess problems more quickly and so act sooner, aiming to prevent harm from happening in the first place. They have recruited 95 colleagues to make the process for authorising firms more robust and efficient, and re-targeting already-authorised firms by bringing on board dozens more staff dedicated to removing problem firms.
- Setting and testing higher standards – a new ‘Consumer Duty’ which will ensure every firm considers the actual impact of their products and services on consumers, giving greater certainty about how they should treat consumers and greater flexibility on how they deliver good outcomes.
- Promoting competition and positive change – introducing wide-ranging listing reforms and building on our pioneering and globally copied ‘sandbox’, by introducing a ‘scalebox’.
In developing the strategy, they have considered:
- The rising costs of living;
- How digital transformation is redefining markets;
- The importance of financial services in global economic activity.
Specifically regarding next year, they have released a business plan for the next 12 months to help deliver the commitments in their strategy and measure progress. In the business plan, they have highlighted four priorities for consumer-facing work –
- Enabling effective consumer investment decisions;
- Ensuring consumer credit markets work well;
- Making payments safe and accessible;
- Delivering fair value in a digital age.
In achieving these aims, they state they are going to transform how they operate by becoming a data-led regulator. They have many objectives for the next year, spanning from ESG priorities, tackling financial crime, shaping/strengthening the markets and improving the redress framework (amongst others).
The PRA has fined TSB £27 million in respect of failures in respect of implementation of new technology which had a serious and material impact on customers when it failed. It has also fined MS Amlin Underwriting Ltd £9.695 million for failures in respect of its regulatory obligations for good governance and oversight of underwriting, its controls over underwriting, MI and data quality, its risk management strategies and systems and its remediation of failings in relation to the same.
The SFO has had a difficult year. However, it did successfully prosecute a number of fraudulent investment managers including:
- David Ames for perpetrating a £226 million fraud affecting thousands of British victims who invested in the property development fund he set up. He was jailed for 12 years;
- Mr Schools, who set up Axiom Fund supposedly to fund no win no fee litigation and raised £100 million from investors. Although investments were made, the cases were not vetted or managed. He was jailed for 14 years.
- Two company directors behind fraudulent green investment schemes in Brazil, which took in approximately £37 million of investments. The SFO investigation, conducted with assistance from partner agencies across the globe, revealed that Andrew Nathaniel Skeene and Junie Conrad Omari Bowers had deceived around 2,000 investors. Global Forestry Investments was presented as a secure, well-managed, ethical investment scheme that would help protect the Amazon rainforest and support local communities. In reality, the pair were enriching themselves with the investors’ savings and pensions. This firm's Rachel Cropper-Mawer supervised a civil search order in respect of these individuals and the fraudulent scheme more than 4 years ago following the liquidation of the fund.
The CPS has had a number of high-profile successes including:
- The case of a former Premier League star who has been convicted (21 December 2022) of defrauding friends, family members and associates out of £15 million. Richard Rufus, 47, also has been found guilty at Southwark Crown Court of fraud, money laundering and carrying out a regulated activity without authorisation. The CPS prosecution and the City of London police investigation established that the ex-Charlton Athletic defendant claimed he was a successful foreign exchange trader and used this to convince victims to invest in his ‘low-risk’ scheme with promises of returns of 60% a year.
- Three fund managers who were convicted of a large-scale fraud which amounted to losses of $8.45 million which were meant for the people of Libya. Frederic Marino, 56, was found guilty of fraud by abuse of position of trust. Yoshika Ohmura, 47, was also found guilty of fraud by abuse of position of trust. Aurelien Bessot, 47, also guilty of fraud by abuse of position of trust.
- Six defendants including a senior manager and two drivers of a road haulage business were imprisoned on Friday 6 January 2023 for running a large-scale money laundering operation involving in excess of £30 million in cash.