A recent FOI has revealed a “suspiciously” low number of FCA complaints about senior leaders, writes Lucy McNulty, editor of Following the Rules podcast, in today’s Notebook

Snitches get stitches? ‘Suspiciously few’ FCA complaints concern senior leaders

More than 15,000 incidents of misconduct amongst finance workers were reported to the City regulator in the three years up to late 2024, according to a Freedom of Information (FOI) request. But just 96, or 0.6 per cent, of those reports related to City bosses’ poor behaviour.  

That is “suspiciously few” and “concerning”, City veterans say.

Certainly, the UK’s senior managers’ and certification regime (SMCR) was designed to hold senior City workers more accountable for their conduct and competence.

It requires companies to tell the regulator if employees subject to the rules have faced disciplinary action for a breach of the regime’s standards of good behaviour. Those reported could then be banned from serving at regulated firms. 

While most agree the SMCR has raised standards of behaviour within the City, only a handful of the City’s roughly 80,000 senior managers have faced enforcement action under the rules since their inception. 

This reflects a regime which has improved standards and not required “a huge amount of very aggressive enforcement”, the FCA chief told the Following the Rules podcast. “We would only get involved if there is… very serious or persistent behaviour,” Nikhil Rathi said. 

Moreover, the regime covers far fewer City bosses than City workers so fewer reports of misconduct relating to senior managers is expected. 

Still, City veterans question the low numbers of senior level reports this FOI reveals.

As Britt Johnston, the EMEA head of conduct and culture at bank Natixis, told Following the Rules, if those subject to the rules don’t believe they are “genuinely at risk” of enforcement for poor behaviour the regime risks becoming ineffective.

Compliance chiefs tell me they’re concerned that companies’ disciplinary processes can encourage both deliberate and inadvertent underreporting of senior-level misconduct to the regulator, resulting in fewer enforcement actions. These FOI figures will fuel those concerns. 

Chancellor Rachel Reeves has asked regulators to rethink the SMCR with a view to reducing its administrative burden. This has been welcomed, amidst a broader push towards more hands-off oversight.