The FCA is showing its teeth with a record rise in criminal charges

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The UK financial watchdog has stepped up its attempts to clean up the system, bringing a record number of criminal charges against individuals and doubling the number of institutions that lacked regulatory approval.

The increase in the enforcement activity of the Financial Conduct Authority has been accompanied by an increase in both staff numbers and operational costs. But the amount collected in fines fell sharply to £35.3m in the year to April, down from £212.6m the previous year and the lowest in a decade.

Nikhil Rathi, the regulator’s chief executive, said it aims to balance cracking down on financial misconduct with encouraging innovation and growth.

“If we want the UK to maintain its international competitive advantage, then we must be bold and accept that we will not stop, nor must we try to stop, any failure,” he said in the FCA’s annual report, published on Thursday.

His comments came a year after the government gave the FCA a new secondary objective of facilitating UK economic growth and international competitiveness, in a move feared to risk undermining its independence and pushing for a lighter approach to regulation .

The regulator has taken a tough approach to approving the registration of crypto-asset companies, rejecting 87% of applications received from such firms seeking authorization for anti-money laundering. It also issued 450 consumer alerts against crypto asset promoters just three months after tightening rules against deceptive marketing.

Its chair, Ashley Alder, said it was “aware of the need to strike a balance between the compliance burden for different types and sizes of firm and an FCA that is properly informed, assertive and agile to address potential and actual harm situations” .

The FCA charged 21 people with financial crimes in the past year, the highest number on record. It also increased the number of successful prosecutions to 11, up from just one the previous year.

Overall, the regulator said it had increased the number of financial crime cases opened in the year to April to 837, up from 613 a year earlier. However, the number of open fraud cases almost halved, from 2,013 to 1,039.

Natalie Sherborn, white-collar crime partner at law firm Withers, said that while some of the FCA’s statistics showed an increase in activity, “to many, these numbers will still look woefully low”. She added that “clearly there is a lot more to do.”

The regulator stripped 1,261 firms of their licenses in the 12 months to April, double the previous year’s level. “We want consumers and market participants to have confidence that firms that do not meet our minimum conditions are identified and removed quickly,” the statement said.

The FCA embarked on a recruitment drive last year in response to increasing demands on its resources and expanding its mandate. It hired nearly 1,000 more people, increasing its total workforce by 17.5% to nearly 5,000.

In an encouraging sign for an institution long plagued by low morale, the FCA said staff turnover was 9.9% last year, down from 17.5%.

Its hiring growth, as well as increased investment in technology and a 6.8% average pay rise for staff, increased total costs by £92m to £761.7m. This helped produce a total deficit of £44.8m, which was slightly down on £52.1m a year earlier.

Rathi, who had a 4.1% pay rise to £530,000 last year, said he was “continuing to make great strides to transform FCA”.