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FCA dawn raids down to pre-crisis levels

City solicitor warns that regulator may come under political pressure if it is not seen as ‘proactive’

5 June 2017

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The Financial Conduct Authority has executed just seven dawn raids in the last year, according to official figures, suggesting that the regulator’s crackdown against financial crisis-era crime is slowly winding down, lawyers have said.

City law firm RPC says the latest figures represent an 81 per cent fall from the 37 raids that took place in 2009 at the height of the financial crisis. Searches of business and individuals’ premises by the FCA under warrant are now at their lowest point since 2007.

Although raids by the FCA are in a lull, Richard Burger, an RPC partner and former enforcement lawyer with the Financial Services Authority, said that this should not be misinterpreted as a sign that the regulator is going soft on financial crime.

‘Some commentators are reading too much into the 97 per cent drop in FCA fines last year, but the FCA has not gone soft on proactive enforcement action,’ he said.

‘Undertaking raids sends a clear deterrent message to the City of London and to the boiler room operators. If the FCA can make a good case for a raid then the FCA will do it.’

Earlier research by RPC found that FCA fines dropped from £905m in 2015 to just £22m in 2016.

‘The FCA knows that if it is seen as not being proactive enough in the area of financial crime then it will come under tremendous pressure from politicians,’ Burger added

The corporate crime lawyer continued that while there has been a winding down of major investigations, for example into Libor or Forex rigging, there are still a large number of criminal investigations being carried out into areas such as insider dealing.

Despite the fall in dawn raids the FCA has been keeping busy. In February, the FCA launched its first criminal action under the Consumer Credit Act 1974 against an individual – Mr Dharam Prakash Gopee – who allegedly operated as a consumer credit lender without the requisite licence or authority from the regulator.

And, in March, Tesco became the first listed company to be ordered by the FCA to pay compensation to investors as a result of market abuse.

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Financial services & Tax White collar crime

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Financial Conduct Authority RPC