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12 Jul 2017

Claire Cross comments on FCA enforcement investigations in Law360

FCA Ramp-Up Risks Cooling City Investment by Financial Firms

The UK Financial Conduct Authority’s (FCA) aggressive pursuit of enforcement investigations amid Brexit negotiations has unsettled City talent and may even deter investment, top white collar attorneys warn, risking further damage to London’s future as a financial centre.

The FCA’s head of enforcement, Mark Steward, told Law360 in an interview last week that the regulator is trying to break with its previously conservative approach and has become bolder in identifying and chasing misconduct.

Attorneys question whether quantity of investigations is really what the FCA should be focusing on.

“There is arguably very little benefit in the FCA continuing to focus on the low-hanging fruit,” said Claire Cross, of counsel at Corker Binning. “In order for them to remain as credible enforcers, they must clearly aim higher up the tree.”

She said this will undoubtedly result in less surefire wins, but good enforcement agencies must be prepared to lose sometimes.

“To do otherwise results in a weak and ultimately toothless watchdog,” Cross said.

She said Steward’s suggestion that the FCA would be willing to cull cases at an earlier stage would be welcomed, but the regulator must demonstrate it is mindful in choosing which cases to open, and that a “lackadaisical or slap dash approach” knowing it could cut and run would be unhelpful.

Steward’s aim may be that the stepped-up enforcement is seen merely as “fact-finding,” Cross said, but “ultimately, being investigated for any form of alleged misconduct carries a large stigma for the person, or firm, under investigation.”

Read the full article in Law360 here, behind a paywall.