FCA caseload at record levels despite dropping more cases than ever

The Financial Conduct Authority (“FCA”) continues to see its caseload increase to record levels despite the fact that it is dropping more investigations than ever before. Recently published statistics reveal that in the year ending March 2018 a total of 208 investigations were ended compared to 115 in the previous year and 98 in 2015/16.

The FCA’s Enforcement Annual Performance Report 2017/18 reveals that the total number of cases open rose from 410 on 1 April 2017 to 504 as at 31 March 2018 despite the case closures, meaning that an additional 302 cases were opened in that period. Continue Reading

FCA to crack down on conduct in the payment services and e-money sectors

The FCA published a consultation paper on 1 August 2018 to revamp its rules and guidance for payment service providers (“PSPs”) and e-money institutions, alongside proposing a crack down on the marketing and promotion of currency conversion services.

The proposals are designed to tackle recent concerns over confusing and misleading marketing material and exchange rates shown by some e-money and non-bank payment service providers, and to bring the wider money lending industry under consistent FCA rules, ultimately regulating the standards customers can expect. Continue Reading

Litigation privilege: sense prevails in the Court of Appeal

Last week the Court of Appeal (The Director of the SFO v Eurasian Natural Resources Corporation Limited [2018] EWCA Civ 2006) reversed the High Court’s controversial and troubling decision from 2017 that concerned the extent to which litigation privilege could apply to documents generated in the context of internal investigations.

ENRC successfully argued that legal professional privilege protected from disclosure to the SFO certain documents that had been prepared by ENRC’s lawyers and forensic accountants as part of an internal investigation into allegations of financial irregularities at ENRC.

The Court of Appeal’s decision will be welcomed by clients who can once again instruct lawyers to undertake internal investigations into allegations of wrongdoing without fear of possibly having to reveal the legal work product to prosecutors, governmental authorities or regulators at a later stage.

Continue Reading

Crypto-fraud: digital currency scams on the rise

It seems it’s difficult to look anywhere right now without an advert staring back at you for cryptocurrency investments or investment products including a crypto-asset feature: they are on the side of taxis, tube platforms, and the pages of the daily papers. After the semi-meteoric rise (and fall) that was Bitcoin at the end of 2017 it seems some consumers have been jumping on the Bitcoin-bandwagon hoping to gain a quick buck.

And where investors go, scammers follow. So much so that the FCA has recently re-published its warning on cryptocurrency investment scams to highlight this concerning trend.

Both the FCA and Action Fraud report increasing volumes of fraud involving cryptocurrency and cryptocurrency products, or “crypto-fraud”. The scams tend to have the same key features to entice potential victims:

  1. Many will advertise on social media.
  2. They fake recommendations from prominent business people or celebrities to promote the investment, or make it appear as though those individuals endorse the offering.
  3. Following their links will lead to a legitimate-appearing website.
  4. They will give their address as a prominent UK location, usually in the City of London, though most of these scams are reported to be operating from overseas.
  5. The promise will be of high returns achieved quickly.

As the FCA makes clear, cryptocurrencies by themselves are not regulated in the UK and so, whilst some crypto-products do relate to regulated investments within the FCA’s remit, in many cases there is limited protection when things go wrong. In order to avoid being left out of pocket, the FCA and Action Fraud suggest:

  • Researching the offering, and the firm making it.
  • Not being rushed into making an investment decision.
  • Reporting scams to either the FCA or Action Fraud.
  • If it looks too good to be true, it probably is.

With the hope of reaping big rewards from a well-timed cryptocurrency investment still lingering, we can expect to see the unscrupulous to continue to target consumers with crypto-scams.

But for those looking to legitimately trade in or offer regulated crypto-assets, the FCA and PRA have recently written to firms setting out their expectations. You can see our previous blog post on that topic here.

Financial Action Task Force publishes report on professional money launderers

The Financial Task Force (FATF) has recently published a report that looks at the techniques and tools used by professional money launders (PMLs). This is the first time the FATF has undertaken a project which concentrates on PMLs that specialise in enabling criminals to evade anti-money laundering and counter terrorist financing safeguards and sanctions in order to enjoy the profits from illegal activities.

The report aims to assist authorities to target PMLs as well as the structures that they utilise to launder funds and to disrupt and dismantle the groups involved in this illegal activity so that crime does not pay. Continue Reading

No Contractual Duty Owed to Customers by Banks when Conducting FCA Review into IRHPs

The Court of Appeal in Elite Property Holdings Limited, Decolace Properties Limited v Barclays Bank Plc [2018] EWCA Civ 1688 considered the appellants’ Application for permission to appeal against the Mercantile Court Judge’s decision to strike out part of the Appellants claims against the Respondent Bank. Whilst the application concerned permission to appeal, this was the first occassion on which the Court had considered whether or not a bank owed a contractual duty to customers in relation to its conduct of the review of the sale of interest rate hedging products (“IRHPs“) pursuant to an agreement with the Financial Conduct Authority (“FCA“). Therefore, the Court of Appeal gave permission for the judgment to be cited.

Continue Reading

FCA’s Anti-Money Laundering Report highlights focus on firms’ financial crime controls

The Financial Conduct Authority (FCA) published its annual Anti-Money Laundering Report on 19 July 2018, for the year ended 31 March 2018.

In the report, the FCA reminded firms that due to the size and global nature of the UK financial industry, financial crime and AML remains a significant risk and is therefore one of the FCA’s key priorities. Continue Reading

Commercial Court upholds ISDA English jurisdiction clause over Italian jurisdiction clause in finance agreement

Background

A recent interim hearing in the Commercial Court in BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA [2018] EWHC 1670 (Comm) concerned the determination of jurisdiction where one party asserts that a dispute falls under the jurisdiction of the English Court under a standard form International Swaps and Derivatives Association (“ISDA“) documentation, and the other party asserts that it is in fact a foreign Court which should deal with the dispute pursuant to a different agreement entered into by the parties.

Continue Reading

LexBlog