In a wide-ranging annual report, the Financial Conduct Authority (FCA) has revealed statistics on whistleblower allegations and regulatory fines collected, and admitted its handbook may be “too complex”.
The report and annual accounts, a 173-page document that encompasses all the regulator’s activity during the year to March 2020, includes statistics on whistleblower reports, cyber crime incidents among financial firms, fines and how the FCA may address the cost and complexity of complying with its handbook.
From April 2019 to March 2020, the FCA received 2,983 separate allegations from whistleblowers. By the end of June 2020, the allegations resulted in 210 cases where action was taken to mitigate harm, while a further eight required “significant” action.
The FCA has conducted research to understand how firms interpret and interact with the handbook, which found that it is “too complex in its language, structure and navigation”. The regulator explained that it will take the findings on board and work to improve the handbook.
The FCA also warned about the risks of working with third party service providers and explained that some firms do not manage providers effectively, which can cause harm. This includes deficiencies within systems, failures around business continuity arrangements and cyber defence.
The regulator also explained its concerns around some retail lending business models, including some in the subprime credit sector, which it said are largely designed to benefit from “consumers not repaying their debts in full and on time”.
The report then detailed how the FCA had received 824 incident reports over the year; of which 109 were related to cyber security, 681 were technology related and 34 non-technology related.
The FCA also said referenced its new rules for unarranged overdrafts. The regulator estimates that the 30% of personal current account consumers living in the most deprived neighbourhoods could see overdraft charges cut by £101m.
The regulator collected £259m in penalties, which had increased from £114m the year prior. The accounts show the FCA made a surplus of £120m, on an income of £640m which includes £540m of ongoing regulatory fees.