The number of people banned from the financial services sector rose 28 per cent last year
The number of individuals banned from working in the financial services sector by regulator the Financial Conduct Authority (FCA) rose 28 per cent last year, research published today shows.
There were 23 people banned from working in the industry by the FCA in 2017-18, up from 18 the previous year, according to City law firm RPC.
The FCA targets individuals as well as firms as it believes that punishment of individuals may have a greater impact on compliance culture than simply fining businesses, RPC said.
Recently the FCA said it spent £300,000 on legal fees in a case aimed at banning one director. It also spent 4,777 man hours on the same case between August 2015 and October 2018, showing it is willing to dedicate resources to pursuing individuals.
The number of prohibition orders could rise further in the coming years following the extension of the Senior Managers and Certification Regime (SMCR) to all financial services companies, which imposes a stricter regime of personal accountability on senior managers than the current system.
The SMCR, which was introduced in 2016, will be expanded to cover senior managers at 47,000 financial services firms by the end of 2019.
Previously it predominantly applied to the banking sector, making senior managers personally accountable for wrongdoing that takes place in the areas of the business they are responsible for.
It will expand to all insurance firms by the end of December 2018 and all financial services firms by December 2019.
Jonathan Cary, a disputes partner at RPC, said: “Being banned from the financial services industry is a life changing event – the FCA knows this. In many ways, this is the ultimate sanction.”
“The FCA will be looking to send a message out that it is not turning a blind eye to poor conduct.”
“While the FCA is optimistic that the SMCR will bring about real change in the compliance culture across the financial services industry, we could be set for more rises in prohibition orders once the SMCR stretches to cover all firms.”