Number of People Banned From Financial Services Rises

By The Enforcd Team

The number of people being banned by the FCA has risen over the past year, but the chances are this is only the beginning.

It’s arguably the ultimate sanction the regulator can impose. Banning someone from working in the financial services will be life changing and will kick a hard-earned and lucrative career into the long grass. It is seen as a last resort, but it’s an option the FCA is increasingly turning to according to new figures.

Data from RPC found a 28% increase in the number of people banned in 2017 and 2018. The total number of bans for the year leading up to September rose from 18 to 23. It could be a one-off or it could, as RPC seems to believe, be a sign that the FCA is turning its sights on individuals as it aims to combat financial misconduct.

Personal responsibility

The rise comes about after the arrival of the Senior Managers Regime which attempts to ramp up individual accountability. Under these rules, senior individuals can be held personally responsible for wrongdoing which occurs under their watch. Businesses must also ensure that senior managers are fit and proper individuals.

With the regime set to be extended to all financial firms, a further 47,000 firms could come under its remit – something which RPC believes means the number of people being banned is likely to increase further over the next 12 months.

Perhaps the most eye-catching news, though, is the revelation of the extent to which the FCA is willing to go in order to manage a prosecution. It recently disclosed that it spent a total of £300,000 in legal fees on just a single case to ban one director. Between August 2015 and October 2018 it spent a total of 4,777 man-hours on just this single case.

A weak approach

It marks a more robust approach from the city regulator and a sign that it is willing to invest heavily in pursuing cases of misconduct. Compare that to the criticisms which surrounded a somewhat less severe approach against the Barclays Chief Jes Staley who was fined, but not banned, after being found guilty of trying to uncover the identity of a whistle-blower.

The decision stands in stark contrast to the significant sums invested in banning this one individual and does lay the FCA open to criticisms of inconsistency. Even so, it is part of a wider trend in which regulators are increasingly willing to take a significant financial hit on a case rather than let misconduct go unpunished.

It comes at the same time as Australia’s financial regulator invested considerable sums chasing Westpac for the rigging of interest rate. The eventual penalty of A$3.3 million will have been less than the regulator spent chasing the case – and possibly less than the bank might have originally agreed to settle – but even so it serves as a statement of intent.

This increase in bans, therefore, serves much the same purpose. It shows that the FCA believes shining the light on individual rather than corporate responsibility is their best way to improving culture in the financial sector and that will shape their approach in the future.