National Audit Office finds 'significant delay' in FCA regulatory action

investmentweek.co.uk:

The NAO highlighted that, although the FCA had required crypto firms to comply with anti-money laundering regulations in January 2020, the regulator did not take any enforcement action against illegal crypto operators until February 2023.

In its Financial services regulation: Adapting to change report published today (8 December), the NAO said there has historically been a considerable lag between problems arising in the industry or impacting consumers, and the FCA taking action to tackle them.

For instance, it highlighted that although the FCA had required crypto firms to comply with anti-money laundering regulations in January 2020, the regulator did not take any enforcement action against illegal crypto operators until February 2023.

The NAO report, however, acknowledged that, at times, the FCA requires additional powers to act, including legislation approved by parliament, before it can impose standards or take enforcement action.

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It also commended the regulator for tackling internal issues such as high turnover, and increasing staffing levels by 16% over the three years to August 2023.

The report noted the FCA itself had recognised resourcing as a «risk to achieving priority commitments such as reducing financial crime and preparing financial services for the future».

The NAO said there is a need for the regulator to change and adapt in tandem with the industry it supervises, highlighting the transformation programme it has undertaken since 2020-21, although recognising such efforts «will take a number of years to realise».

Recently, the Financial Services and Markets Act 2023 (FSMA 2023) has given the FCA more direct