FSA sharpens teeth against fraud
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Margaret Cole, director of enforcement at the Financial Services Authority says the regulator will continue to show its teeth when it comes to enforcement action.
Speaking at the FSA’s Enforcement Conference yesterday, Cole says: “We are showing that the FSA has teeth – and we know that those teeth have to stay sharp.”
She says it has identified areas where consumers were being mistreated, taken action to stop misconduct and made firms compensate people who were unfairly disadvantaged.
She says: “This is not the end of our work in this area. We’ve observed that individuals and groups of individuals tend to move around between firms and we intend to keep a close watch on standards using the intelligence we have gained.”
In the last two years it has banned over 50 people for mortgage fraud and secured redress of over £40m for mis-selling payment protection insurance.
Last October it also fined GMAC-RFC £2.8m for failing to treat customers fairly in relation to mortgage arrears and repossessions.
She says: “In the last year we published 56 prohibitions and 46 fines, with a record value of £33.6m. We’ve already exceeded this total only two months into the current year, with fines totalling £50m since April including record fines for a firm and an individual.
“And in March this year we introduced a new penalty-setting policy, which we expect to drive substantially increased fines by relating penalties closely to the advantage gained from the misconduct.”
She says even though it is facing changes to the regulatory structure as outlined by the chancellor in last week’s Mansion House speech what it is not facing is any reduction in the demand for strong enforcement activity.
She says: “There are still many details to be worked through and we will be working with the government to accomplish the transition to the new structure as smoothly as possible.”
Cole says since 2007 it has transformed the culture, skills and expertise of the enforcement division.
She says: “Top class lawyers, investigators, accountants and forensic specialists don’t come cheaply, but we must have them and get the most from them if we are to confront major banks, or hedge funds, or organised insider dealers and come out on top.”
Since the last enforcement conference it has seen a surge in reports of unauthorised business activity in high-risk areas, such as large-scale collective investment and deposit taking schemes, including ponzi schemes. To meet this higher risk, it has created and hired staff for a new Unauthorised Business Department.
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