FCA Swings to Loss, Penalties Plunge 79%

UK regulator reports £8.6 million loss, penalties drop to £181 million from £879.5 million.

The UK’s Financial Conduct Authority (FCA) reported a loss of £8.6 million ($11.1 million) in its 2016-2017 annual report, compared to profits of £3.8 million for the previous year.

It also reported £181 million in penalties collected, a drop of more than 79% from the £879.5 million collected last year, and £163 million of that was in one penalty levied against Deutsche Bank in January over alleged money laundering in Russia. Meanwhile, net actuarial losses for the year surged to £65.3 million from the £6.5 million reported during the previous year.

“Measuring our regulatory effectiveness is not straightforward,” said John Griffith-Jones, chairman of the FCA in a statement. “While we set out our inputs and our outputs, the all-important outcome of harm prevented or improvements achieved through deterrence cannot be readily quantified on an annual basis.”

In the report, the FCA highlighted its role in helping the UK government’s transition as it negotiates its separation from the European Union.

“The UK’s decision to leave the EU will have important implications for the financial services sector, the regulatory framework, and hence our work,” said the FCA, which is providing technical advice to the government to support the EU withdrawal negotiations “We are working with firms to understand their plans to continue to service their cross-border operations. We have begun work with the Treasury to provide technical input to work involving the Great Repeal Bill.”

The FCA said this is a “significant task” that involves a line-by-line analysis of each piece of EU legislation for which the FCA is the lead regulator. “Our fundamental objective in this work is to give all interested parties certainty,” said the report, “so that there is a clear and functioning regulatory regime on the day that the UK ceases to be a member of the EU.”

The FCA also reported that its Financial Ombudsman Service received 1,394,379 enquiries for 2016-17, down from 1,631,955 in 2015-16, and 1,786,973 in 2014-15. For 2016-17, the Financial Ombudsman Service resolved 336,381 cases, with an overall uphold rate of a complaint of 43%, compared to 438,802 cases and 51% uphold rate for 2015-16.

“While complaint numbers have decreased, we recognize that complaints data are just one indicator of how financial markets are working,” said the FCA. “Other factors can positively or negatively affect complaint numbers, such as growing consumer awareness of their rights.”


Tags: , ,