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SMCR investigations halve, despite extension to almost 50,000 firms

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Research from financial regulation consultancy Bovill finds that the Financial Conduct Authority (FCA) launched fewer than half as many investigations into senior manager misconduct in 2021 than in 2020.

A Freedom of Information (FOI) request reveals that by 15 November, only six enforcement investigations had been opened under the Senior Managers and Certification Regime (SMCR) in 2021, less than half the number in each of the three previous years. This is despite the fact SMCR was extended to 48,000 solo-regulated firms at the start of the year. Bovill believes this raises questions about the effectiveness of the regime, as well as the current capacity of the regulator to enforce the SMCR. 
While the number of enforcement investigations opened between 2018 and 2020 was consistent – never dropping below 13 – 2021 sees a fall to the same level as 2017. The FOI request from Bovill also reveals that nearly two-thirds (65%) of the 54 SMCR investigations opened by the FCA since 2016 have not yet been resolved. This may indicate that the FCA is not in a position to open new investigations, because open investigations are taking such a long time to resolve.
Moreover, the FOI revealed that, since 2016, only two investigations have resulted in a penalty being imposed.

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