The FCA has published its Enforcement annual performance report 2017/18, which provides an overview of the FCA’s enforcement activities over the last year. In summary, the FCA is opening more cases, but the average financial penalty has fallen significantly by around 65% and, although the average cost of civil and regulatory cases is down, the average length of these cases has increased by around 6 weeks. Conversely, criminal cases are costing more but concluding more quickly.

Types of cases

• As at March 2018, the FCA had 504 open cases (excluding threshold conditions cases), up around 25% from 410 cases in April 2017. The majority of these cases concerned financial crime issues (86 cases), followed by retail conduct (78 cases), unauthorised business (77 cases) and insider dealing (75 cases).
• There has been a significant increase in the number of cases opened into culture / governance issues over the last year, with only 15 open cases as at 1 April 2017, but with 61 open cases as at 31 March 2018. This is clearly an important area of focus for the FCA who published a discussion paper on transforming culture in financial services in March 2018. The FCA sees the Senior Managers and Certification Regime (SM&CR) and the accountability that it brings as key to its culture and governance programme and, in the months to come, we are likely to see more enforcement cases under the SM&CR following the first case this May.

Financial penalties

• The total level of financial penalties for individuals has remained consistent with the previous year at £0.9m (across 9 cases for 2016/17 and 10 cases for 2017/18), but the total value of penalties for firms and individuals together is down significantly from £181m in 2016/17 (across 15 cases) to £69.9m in 2017/18 (across 16 cases). This means the average penalty per case has fallen from approximately £12.1m to £4.4m.
• This continuing decrease in overall penalties chimes with statements from the FCA in its “Our Approach to Enforcement” document published for consultation in March 2018, which highlights that, in addition to financial penalties, prohibitions and suspensions, the FCA will use redress, or remedial and restorative measures wherever appropriate. The FCA plans to publish the final version of its approach before the end of the year.

Case length and cost

• The average length of all civil and regulatory cases, including cases closed with no further action, has gone up from 17.6 months in 2016/17 to 19.1 months in 2017/18, with the average cost of these cases being £137,800, down from £182,900 in 2016/17.
• Whilst the average length of criminal cases is down from 75.6 months to 58.2 months, the average cost is up from £886,000 to £1.16m in 2017/18. The report itself notes that criminal cases can take significantly longer to resolve than regulatory cases and that although fewer criminal cases are pursued, the costs of these cases can be significantly higher.