Probes Don't Have to Mean Firings, Fines, U.K. FCA Top Cop Says

  • Investigations should be an "open-minded exploration" of facts
  • Comments from Mark Steward on panel at London conference

Investigations into the financial services industry should be "fact-finding" exercises that don’t always have to end in hefty sanctions, according to the U.K. Financial Conduct Authority’s head of enforcement.

It shouldn’t be inevitable that a firm or person under investigation will face civil or criminal penalties, instead they should be seen as an "open-minded exploration" of an issue, Mark Steward said Friday at a regulation conference in London run by the Practising Law Institute.

Steward’s comments are some of the first he’s made about his approach to enforcement at the FCA since he took up the post in October. He is steering the FCA’s enforcement division at a time of uncertainty amid comments from Chancellor of the Exchequer George Osborne to end an era of ever larger fines that followed the financial crisis.

His remarks were part of a panel discussion about enforcement priorities, with chief of the U.S. Justice Department’s fraud section Andrew Weissmann, Deutsche Bank AG co-General Counsel Simon Dodds, and Standard Chartered Plc General Counsel David Fein.

Better decisions would be made if there was a different attitude toward investigations, which was a lesson the FCA learned from the HBOS Plc debacle, Steward said. Two recent reports on the 2008 collapse of HBOS said the regulatory response was "materially flawed" and the FCA should have conducted a wider probe.

His comments were welcomed by Dodds and Fein who also discussed the difficulties faced by their employers when global investigations required the coordination of multiple authorities. Dodds listed about 15 agencies from Japan to Poland that Deutsche Bank had to work with on the Libor-rigging scandal.

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