Look out! FCA Enforcement "green shoots" incoming

Here's the tl;dr of Therese Chambers' speech to an AFME conference on 24 September plus the answers to questions she fielded afterwards. 

It's time to pay attention, because FCA Enforcement now intends to show they're moving quickly, so some latent enforcement risks may crystallise imminently.

Triage and pace

FCA Enforcement will improve on current investigations durations - and Chambers is already seeing "green shoots" here.  Going forward, Enforcement will triage potential cases before investigations are opened (under the previous Enforcement head triage occurred during the initial stages of an investigation). 

Chambers says this is about identifying cases with the "greatest risk of harm" and/or with greatest potential for deterrence.  It's not about just going for the "low hanging fruit".  

Our thoughts?  Much of this is welcome.  But this new way of working might cause FCA investigators to adhere more strongly to their pre-determined case theory in the face of evidence later received.  FCA Enforcement seniors will want to avoid this, lest some of their much-desired efficiency gains be whittled away.

Speaking of resourcing, FCA criminal prosecutions are currently consuming a substantial amount of FCA resource (there are over 45 of them at last count).  The FCA is vowing to ramp up its prosecutorial activity, but will need to manage this resourcing impact carefully.  Want some insight into how they're doing this?  Check out our data visualisations and commentary on the FCA's latest enforcement operational data.

Transparency

Chambers continued to strike a conciliatory and consultative tone on the FCA's controversial investigations transparency proposals.  There are a couple of new messages here:

• There's an acceptance that the publicity criteria in the consultation "were too high-level and lacked specificity".  The FCA will address this by consulting further, but importantly also publishing case studies on how the criteria might apply.
• The FCA will allow the relevant firm time to give their views on "whether, what and when we announce" in each case.
• The FCA is very unlikely to disclose investigations into individuals - a high bar will be set i.e. that disclosure is "necessary".

Things Therese is thinking about

Chambers took the chance to deliver the following specific messaging:

• Your systems and controls, from a user experience / user interface (UX/UI) perspective, should be "designed with real people in mind" and recognise and reflect "human behaviour patterns".  Here Chambers cites the recent PRA Citigroup fat finger fine (read our analysis).  Avoid the risk that your people "blindly click 'Accept' on a pop-up", so to speak.  Perhaps it's time to bring in your usual UX designers to look at your internal controls?
• On AML, there are firms with controls that are generating red flags in over disparate complex systems but "no-one is joining the dots".  Chambers called on firms to invest in remediating this, and generally to address what she sees as a consistent under-investment in AML controls broadly.
• FCA Enforcement is ready to formally act against any breaches that come to light of rules prohibiting "off-channel" communications e.g. over messaging apps like WhatsApp.