Financial crime and the protection of consumers

The FSA's Director of Enforcement has outlined the Authority's determination to tackle difficult and complex criminal cases as a method of achieving its statutory objectives which include the reduction of financial crime and the protection of consumers.

In her speech to the Fraud Advisory Panel’s AGM, Margaret Cole outlined its remit both as a regulator and as a prosecutor. According to Cole, the Authority acts as a "policymaker, a gatekeeper, a supervisor, an educator and a law enforcer" and it is this complex role of the FSA that sets it apart from other law enforcement agencies such as the Fraud Prosecution Unit of the CPS and the Serious Fraud Office.

The Authority, Cole asserts, is the "lead agency for prosecuting insider dealing and we are the lead agency for prosecuting those who carry on regulated activities without authorisation". Prosecutions form a key part of the Authority’s credible deterrence strategy and according to Cole these prosecutions reflect the Authority’s determination to be a feared and respected criminal prosecutor’.

Cole told the AGM that there are no "quick wins" in pursuing complex criminal prosecutions and that in particular insider dealing cases historically have been "notoriously hard to prosecute". Yet Cole remains convinced that even the few successful prosecutions that the FSA have had so far have acted as a strong deterrent. Cole detailed in particular the insider dealing conviction of a solicitor in March 2009 which resulted in a custodial sentence and of  his father in law who was handed a suspended sentence.

According to Cole the Authority's test for pursuing a criminal investigation is simple: "Where a crime is committed, the evidence supports a prosecution and the public interest test is engaged, we will prosecute".  She refers to an important change of culture:" We start on the basis that we will prosecute criminal conduct unless there is a reason not to do so. We are determined to make full use of our criminal prosecution tool in the interests of gaining maximum deterrent effect. This said, sometimes the regulatory route will be the right one – balancing all the various considerations we have to take into account."

Source: http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/0910_mc.shtml
Speech entitled: Setting out the FSA's strategy and approach to fighting fraud – delivered to the Fraud Advisory Panel’s Annual General Meeting on 10 September 2009.

Sarah Wallace from Regulatory & Criminal Group says "Over the next 1-2 years we will see an increase in the volume of criminal prosecutions brought by the FSA, for a wider range of Financial Services & Market Act offences, insider dealing and misleading statements.  Individuals and businesses within the regulated sector will need to be scrupulous to ensure that the less well known criminal offences under FSMA are not committed."