FCA ups focus on directors of financial services companies
The number of investigations opened by the Financial Conduct Authority (FCA) into directors of financial services companies jumped 29 per cent to 58 in 2018.
The increase in investigations is being partly driven by the FCA’s crackdown on financial services directors who run companies that target vulnerable or low-income individuals, said law firm RPC.
According to the firm, the FCA has been paying particular attention to unregulated products that are being mis-sold as regulated products. This includes products such as mini-bonds, which may have a high risk/return profile.
RPC predicted that pressure is likely to increase on this area of the market following the collapse of London Capital & Finance (LCF), which promised rates of up to 8 per cent on high-risk mini-bond schemes.
Price comparison websites are also being scrutinised by the FCA. An example of this is a high-profile case relating to Secure My Money, which ran an online consumer credit broker business.
"The FCA has ramped up investigations into directors it believes have used underhand tactics for personal gain. Whilst much of the recent activity has been focused on directors of smaller firms, the FCA is clear that no directors are immune," Jonathan Cary, partner at RPC, said.
“Investigating and fining directors has a much greater deterrent effect on individuals than just fining a large corporate.”
Last May, the FCA and the Prudential Regulation Authority fined the CEO of a FTSE 100 bank.