Insurance Regulatory eBulletin - Enforcement action

FCA fines round-up
FCA regulatory fines for 2018 now total  £3.8m. The following fines and related enforcement actions have been announced in the past month:
 

James Staley For breaches of Individual Conduct Rule 2 (COCON 2.1.2) related to conflicts of interest (whistleblowing, CEO accountability) in the retail bank sector. The FCA and PRA jointly imposed a combined fine of £642,430.

Mr Staley failed to act with due skill, care and diligence in the way he acted in response to an anonymous letter received by Barclays in June 2016.

Barclays is also now subject to special requirements by which it must report annually to the regulators detailing how it handles whistleblowing, with personal attestations required from those Senior Managers responsible for the relevant systems and controls.
Darren Newton The FCA has issued a Decision Notice, which sets out its decision to ban Darren Newton from working in any regulated activity in the financial services sector. Mr Newton is disputing the FCA’s decision and has referred the matter to the Upper Tribunal.

The FCA found Mr Newton used customers’ money for the purchase of the debt management firm, First Step Finance Limited. This showed a serious lack of honesty and integrity and, as a result, the FCA has decided that he is not a fit and proper person.

The FCA’s case is that Mr Newton purchased First Step, through his company, from Christine Whitehurst and, between 18 October 2013 and 28 May 2014, was the sole director of First Step and a director of another debt management company, Debt Help and Advice Limited. Mr Newton funded the purchase of First Step from the accounts of First Step, with client money, rather than his own funds. He directed or allowed £322,500 to be transferred from the First Step accounts to Mrs Whitehurst. Mrs Whitehurst and her husband, Adrian Whitehurst, were banned by the FCA in October 2017 for dishonestly misappropriating money from First Step.


Open FCA enforcement actions
The fining of James Staley was the first enforcement decision made under the Senior Managers Regime.  Separately the FCA has confirmed in a Freedom of Information request that there are currently five open enforcement investigations into Senior Managers and ten open enforcement investigations into individuals who are classified by their firms as falling within the Certification Regime. There are 128 open enforcement investigations into individuals who are neither Senior Managers nor Certified Persons but fall within the Approved Persons regime.

A separate Freedom of Information request confirmed that the number of enforcement investigations commenced in 2017 had nearly doubled on those of the prior year from 24 to 45. Nearly all of the investigations related to Culture / governance, Financial Crime or Retail conduct.

Information Commissioner’s Office (ICO) fines round-up
No fines affecting financial services firms have been announced in the past month by the ICO.