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FCA and PRA enforcement trends: retail conduct

Over the last couple of years, the treatment of retail customers has attracted the most FCA enforcement action, amounting to 34% of the total action for the period 1 April 2021 to 30 Sep 2022, with financial advisers, rather than retail banks, having been the target in most cases.

Retail conduct cases have always dominated the FCA’s portfolio of enforcement investigations, most likely because of the breadth of issues that get included in that category, including mis-selling, customer scams, pension transfer advice and financial promotions. The enforcement numbers in this area have been bolstered in recent years by a number of cases brought against firms and individuals in connection with pensions transfer advice. 

Although retail conduct cases still dominate the FCA’s portfolio of open enforcement investigations, there has been a slowdown in the number of retail conduct enforcement actions against larger firms. 


The FCA has imposed GBP268 million in financial penalties on firms for retail misconduct since 1 January 2019. However, the largest costs associated with retail conduct cases are almost always attributable to mandatory or voluntary redress schemes. The landscape in this area has been steadily changing for several years, with increasing pressure being put on firms to pay redress to impacted customers in an increasingly broad range of situations.  

In one example, the FCA essentially required a bank to voluntarily act in a role akin to the insurer of a rogue financial adviser who was one of the bank’s corporate banking clients and was found to have committed fraud against his own customers, as the FCA considered that the bank should have identified and taken steps to prevent the fraud. Other developments include: the Payment Services Regulator's consultation on compensating victims of push-payment fraud; the FCA launching its second ever scheme of redress under section 404 of FSMA, in relation to advice relating to the British Steel Pension Scheme; and the FCA accepting or encouraging debt forgiveness as a form of redress. 

The way that redress schemes are administered is also changing. The FCA is requiring firms to appoint skilled persons to conduct and administer redress programmes on a more frequent basis, rather than allowing firms to do this themselves or with the help of professional advisers that are appointed outside of the skilled person review framework. 

It is not always the case that a firm providing redress will receive mitigation credit from the FCA. The FCA is scrutinising in a lot more detail how proactive, effective and generous a redress scheme is, and this tends to dictate whether and how generous any mitigation credit will be. For example, the FCA recently gave credit to a firm that had provided “generous” redress by providing compensation up to GBP150 without requiring proof of loss and compensation for intangible harm. 

FCA consumer duty

The new FCA consumer duty will require firms to act to deliver good outcomes for retail customers. While the FCA has confirmed that it will not be introducing a private right of action for breaches of the consumer duty, at least not for now, its introduction still gives rise to a number of enforcement risks. 

It is clear from the final policy statement and from the FCA’s recent messaging that the consumer duty remains a strong strategic priority and is still the centrepiece of the FCA’s retail agenda. The consumer duty is being used to shape FCA messaging in most sectors and across a broad range of issues. 

Regulatory emphasis is being placed on firm governance, particularly during the implementation period, and it is clear that significant FCA supervision resource will be put behind the consumer duty. Historically, the FCA has enforced most vigorously in those areas where it supervises most intensively. The FCA has already published findings from its initial review of larger firms’ implementation plans and expressed concern that some firms may be lagging behind in their thinking and planning.  

Enforcement action could be taken in relation to a breach of the consumer duty's requirements or, more likely in the next year or so, a failure to implement the new rules properly or in time. Lessons learned from other significant regulatory change projects suggest that the FCA will look particularly unfavourably on firms that fail to commit sufficient resources to either implementation or undertaking adequate planning. 

This post is based on an article “FCA and PRA Enforcement Action: Trends and Predictions” which first appeared in the January/February edition of PLC Magazine. A copy of the full article is available here and on the PLC Magazine website.

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