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FCA’s dawn raids fall 60% in a year 20 July 2015

The number of dawn raids undertaken by the Financial Conduct Authority has fallen 60 per cent to its lowest level since the start of the financial crisis, according to a new study.

City law firm RPC has published research showing that the regulator’s dawn raids fell from 20 in 2013 to eight in 2014.

RPC raised a concern that while the FCA has been forced to invest heavily into major investigations such as Libor and Forex, many smaller scale, less systemic, financial crimes are “slipping through the net”.

The law firm’s study stated that many smaller scale financial crimes like boiler rooms target “the man and woman in the street”.

RPC said it is crucial that the FCA maintains pressure on these smaller scale crimes, because of the subsequent impact of scandals on the broader retail financial services sector.

Richard Burger, partner at RPC, said: “Whilst the FCA has its hands full with Libor and Forex, it cannot lose sight of unregulated activities, such as boiler rooms, which aggressively target small retails investors, especially those frustrated by low investment returns from mainstream savings accounts.”

He added: “The FCA needs to ensure that the financial services retail market is getting the attention it needs to help to protect innocent investors from investing their savings in fraudulent investment schemes.”

Cold calls from Wolf of Wall Street style boiler rooms remain a problem for smaller investors, he explained.

Operating as high pressure sales organisations, boiler rooms will typically have a sales force to make unsolicited calls to potential investors, in order to pressure them into buying high risk shares and investments.

Burger added: “The FCA is doing a great job with the headline grabbing scandals but it needs to focus on the smaller issues too, or it will face a huge task of cracking down on a backlog of smaller illegitimate investment schemes in the future.

“The FCA says it has the budget, resources and talent (teams of lawyers, forensic accountants, intelligence analysts and investigators, usually former police officers) to deal with the issues it faces, it just needs to continue to allocate its resources in order to protect the retail investor.”

 

 

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