FCA and CFPB Focus on Fair Treatment as Enforcement Actions Decline

In the first quarter of 2025, regulatory enforcement in the financial sector witnessed a notable decline, with both the number and monetary value of fines dropping significantly compared to previous quarters. Despite this quieter phase, scrutiny on how financial firms manage customer treatment and governance remains a critical focus for regulators.

Key Findings from the Q1 Regulatory Enforcement Report

According to the Corlytics enforcement report for Q1 2025, the treatment of customers emerged as a recurring theme in enforcement actions across prominent financial markets. Here are some critical points from the report:

• US Actions: The Consumer Financial Protection Bureau (CFPB) took significant measures against Sutherland Global for misleading borrowers about their loan statuses. Additionally, Chime Financial faced penalties for delays in processing customer refunds, emphasizing the importance of fair treatment.
• UK Developments: The Financial Conduct Authority (FCA) fined HSBC due to systemic failings in supporting customers experiencing financial difficulties, showcasing a transatlantic alignment in regulatory focus on consumer outcomes.

Governance and Compliance Issues

Governance issues also remained a top priority for regulators. Citigroup Global Markets faced scrutiny from various regulators including the FCA, the Prudential Regulation Authority (PRA), and Germany’s BaFin. The fines imposed were linked to deficiencies in the firm’s trading systems and internal controls, highlighting an ongoing emphasis on operational resilience and oversight.

Significant Developments in Financial Governance

A noteworthy event this quarter was the FCA’s conclusion of its investigation into Link Fund Solutions, the authorized corporate director of the Woodford Equity Income Fund (WEIF). The FCA determined that WEIF had an unsuitable liquidity profile, and Link failed to adequately oversee the investment manager. Although a £50 million fine was considered appropriate for breaches of Principles 2 and 6, the FCA opted to redirect funds towards an investor compensation scheme instead of enforcing the penalty directly, though the fine was still counted in overall enforcement figures.

Regulatory Vigilance Continues Despite Reduced Activity

While enforcement activity diminished in Q1 2025, the data underscores regulators’ unwavering vigilance, particularly concerning customer protection and governance within financial firms. As the landscape evolves, ongoing scrutiny in these areas remains vital for maintaining trust and accountability in financial markets.

For a more comprehensive overview of the regulatory environment and enforcement trends, visit the full story on RegTech Analyst.