Only 34 FCA investigations made in four and a half years of SMCR

There have been just 34 investigations and one successful enforcement action since the FCA’s Senior Managers and Certification Regime (SMCR) was introduced four and a half years ago, new research from Bovill has revealed.

The financial regulation consultancy noted that this is despite the fact almost 50,000 firms are now under the regulation, and suggested the effectiveness of the regime “remains under question”.
A recent FOI from Bovill showed that from the introduction of SMCR in March 2016 to September this year, the FCA had opened 34 investigations, closed 11 without action and only successfully enforced a fine on one occasion. The regulation was extended to approximately 48,000 solo-regulated firms in December 2019.
Bovill research from February last year also showed that one individual had been censured from 19 investigations under SMCR. At the time, the regime applied to 811 banks, building societies, and credit unions as well as 546 insurers.

“SMCR was introduced to hold senior individuals in the financial sector to account,” commented Bovill CEO, Ben Blackett-Ord. “But four and a half years after it first came into effect, these numbers suggest that the regime might not have the right tools for the job. Questions should be asked as to why there are so few investigations and punishments, and whether SMCR is fit for purpose.
“It might have been assumed that the extension of SMCR to smaller firms would result in more investigations and enforcement actions, since it could be easier to identify the decisions made in a smaller firm, than a larger one. However, this does not seem to have been the case, with only 15 further cases opened and still only one fine enforced.
“We also don’t believe that the low number of enforcements is a sign that SMCR has been an effective deterrent for senior managers, since the case closed without action to enforcement ratio is high.”

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