UK financial watchdog vows to crack down on scams

London — Britain’s financial watchdog said on Thursday it will become more assertive to get onto the front foot in weeding out bad firms and tackling “an epidemic” of online scams.

The Financial Conduct Authority (FCA) has come under heavy criticism for its botched handling of London Capital & Finance, the investment fund whose collapse is forcing the government to use taxpayer money to compensate thousands of investors.

Former finance ministry official Nikhil Rathi, who became CEO last year, has already revamped his top team.

The watchdog will spend £120m over three years to improve its data strategy to tackle fraud better, Rathi said at the launch of his first annual business plan.

“We are going to test our powers to the limit,” Rathi said.

An £11m digital marketing campaign will target the younger “have a go” consumers snapping up cryptoassets, he said.

A focus on protecting vulnerable consumers could mean wealthy investors finding it harder to get compensation, and there will be a review of compensation criteria used by the Financial Services Compensation Scheme, Rathi said.

It dovetails with a consultation on a new “duty of care” to “call out fairly quickly” firms that are not taking account of consumer needs.

Simon Morris, partner at CMS law firm, said talk about testing the limits of power points to a revival of the watchdog’s discredited “shoot first, think second” approach of a decade ago.

The FCA is facing calls to do what it can to help the City of London compete globally after being largely severed from Europe since Brexit.

Rathi said there would be “no scenario in which we will return to a light touch, don’t-ask-don’t-tell philosophy”. Foreign firms wanting to operate in Britain should expect a “demanding review” rather than an automatic licence, he said.

The FCA, along with the Bank of England, is exploring opening an office in the northern English city of Leeds with at least 100 staff based there at the end of 2022, and doubling headcount to over 200 in its Edinburgh office, Rathi said.

Reuters