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Key takeaways from the FCA’s Annual Report and Accounts and Enforcement Data for 2023/24

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By Sonya Zywko

12 Sep 2024 | 1 minute read

The FCA has published its Annual Report and Accounts for 2023/24, highlighting key milestones, trends and outcomes during the financial year such as the introduction of the Consumer Duty regime, the ongoing impact of higher inflation and borrowing costs on consumers; and steps taken in pursuit of the FCA's secondary competition objective such as reform of the UK listing regime. Whilst growth in APP fraud has slowed (cases grew by 12% in 2023 compared to the baseline year of 2021, which saw 27% growth), threats to firms' operational resilience continue to augment (for example, the number of operational disruptions reported to the FCA rose to 1,018 in 2023 from 785 disruptions in 2022). The FCA has also published a report on enforcement data for 2023/24.

We have tracked below selected highlights from the annual report and enforcement data by reference to certain areas of focus in the previous year's business plan for 2023/23:  

  • 21 individuals were charged with financial crime offences and 9 individuals were prosecuted for fraud since April 2023; 9 freezing orders were obtained in 2023 and 2 individuals were convicted for fraud and money laundering offences.
  • The FCA has undertaken 5 reviews of a firm’s financial crime controls including a review of cash-based money laundering controls and an APP fraud focused review of anti-fraud controls and complaints handling.
  • Over 87% of crypto registrations were withdrawn, rejected or refused for weak controls to prevent money laundering
  • 2,158 people who used the FCA’s Scamsmart tool were warned about a potential scam.
  • 63% of firms who called the FCA in 2023 in 2023 about a potential scam did so before investing (compared to 58% in 2022).
  • As at 31 March 2024, the FCA have 83 ongoing enforcement operations in respect of reducing and preventing financial crime (the term “enforcement operation” is used by the FCA to refer to an investigation and any subsequent enforcement action and its worth noting that a single operation may concern several firm and/or individual subjects).

  • In 2023 the FCA has assessed around 140,000 websites and issued 2,285 warnings (which is an increase of 21% from 2022). Over 10,000 potentially misleading adverts have been withdrawn or amended (an increase of 16.6% from 2022) and charges have been brought in respect of 9 social media influencers (referred to as “finfluencers”).
  • Examples of good practice and areas for improvement were published in February 2024 .
  • 37% of advice firms have reportedly changed their fee structure to ensure they are offering fair value.
  • As of 31 March 2024, the FCA have 35 ongoing enforcement operations in respect of putting consumers’ needs first.

  • 2 individuals have been found guilty of insider dealing and a listed issuer has been publicly censured regarding the accuracy of its announcements .
  • New technology has been adopted and a dedicated team set up to increase monitoring of fixed income, currencies and commodities markets.
  • 9 supervisory visits were conducted in 2023/24 in response to suspicious transaction and order reports and there were 120 interventions in respect of market abuse controls.
  • 3 skilled person reviews took place for transaction reporting or market surveillance failures and one case has been referred to enforcement for transaction reporting failures.
  • 740 allegations of delayed or incomplete disclosure were assessed and feedback letters were sent to 16 issuers about their conduct.
  • As at 31 March 2024, the FCA have 55 ongoing enforcement operations in respect of strengthening Wholesale Markets.

  • The FCA has conducted ongoing assessment of firms’ ability to maintain important business services within impact tolerances.
  • With a view to addressing potential risks posed to the stability of the UK financial system due to the failure or disruption to services provided by critical third parties (“CTPs“) to authorised firms, finalised rules on requirements and expectations to manage CTPs are due to be published by the end of 2024 following joint consultation with Bank of England (“BoE“) and PRA which closed in March 2024.
  • A new assessment tool has been jointly launched with the BoE and PRA which mimics a cyber attack and the same regulators jointly published the CBEST thematic report following live testing of cyber resilience of systemic financial institutions.
  • It is unclear whether any of the 15 enforcement operations falling within the FCA’s “other” category include operational resilience matters.

Whilst the FCA has changed the way it reports the length of its investigations and enforcement action, which makes comparison to previous years difficult, statistics in the annual report and the FCA's enforcement data show a downward trend in enforcement action. For example, 24 new enforcement operations were opened in the financial year ending 2023/24 compared to 34 in 2022/23 and there were 188 ongoing enforcement operations as at 31 March 2024 (investigating 341 individuals and 162 firms), which is down from 224 investigations as at 1 April 2023 (where the investigations relate to 591 firms and individuals). 

Conversely, early intervention steps such as skilled person reviews, use of the FCA's various own initiative powers and voluntary outcomes have all increased, for example there were: (i) 83 skilled person cases in 2023/24, compared to 47 in 2022/23 and 38 in 2020/21; (ii) 25 interventions using the FCA's own initiative powers, compared to 22 in 2022/23; (iii) 102 voluntary outcomes such as the imposition of requirements or variation of a firm's permissions, compared to 82 in 2022/23. This reflects what we are seeing in the market, given that supervisory intervention at an early stage can result in a swifter and effective outcome, thereby avoiding resource intensive and time-consuming enforcement investigations. 

If you have any queries or would like to discuss matters further, do not hesitate to contact Sonya Zywko or Alan Hughes.

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