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Explore our FSR Outlook 2022

Approaches to regulatory enforcement differ as Covid-19 forbearance nears an end

In a nutshell:

  • Emerging from the COVID-19 pandemic, it’s not surprising that governments and regulatory agencies have an eye to economic recovery.
  • However, the tide of economic support is at different points across the globe, with some regulators looking to test their powers to the limit and others dialling back enforcement measures.
  • While regulators are treading the fine line between both supporting, and regulating, economic activity, in different ways, there is unity in the focus on vulnerable consumers and market misconduct. Looking ahead, we expect these priorities will expand to meet the challenges emerging post-pandemic.


In Australia, we are seeing an acute regulatory shift coming out of the pandemic. The Australian Securities and Investments Commission (ASIC) has abandoned the ‘why not litigate’ stance it adopted in the wake of the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The appointment of ASIC’s new chair in June 2021 was coupled with a Government mandate to ‘support Australia’s economic recovery’. In response, ASIC has been mindful of the burden of a raft of reforms in October, and reminded industry that the full suite of ASIC’s regulatory tools (including ‘express investigations’ and enforceable undertakings – a flexible resolution mechanism) are now back on the table.

Against this backdrop, ASIC has indicated its enforcement action will prioritise areas of greatest harm, including the protection of vulnerable consumers facing hardship or who may be vulnerable to scams and sharp practices.


In the UK, we are seeing a shift of approach in the opposite direction. The CEO of the Financial Conduct Authority (FCA) recently announced the FCA’s intention to ‘test’ its powers 'to the limit’ and apply a ‘bolder risk appetite in dealing with serious misconduct’ including the use of criminal powers. The FCA has been criticised over the past few years for acting slowly or with too much risk aversion.  

The bolder risk appetite has manifested in the FCA raising the possibility of home visits in its new guidance for firms regarding remote or hybrid working. Although we would expect it to be relatively rare for the FCA to make visits to residential properties, it highlights the regulator's concern about the challenges firms face in the new remote working environment.


Similarly, in Europe we are seeing the European Commission step up its enforcement activities once again, particularly in the context of anti-trust.  Indicating a shift back to a more aggressive enforcement approach, the Executive VP of the European Commission stated the Commission’s intention to launch a series of dawn raids and investigations against suspected cartels in the coming months.

In Germany, in the wake of criticism of the Federal Financial Supervisory Authority (BaFin) and an increase in fraudulent abuse of online banking services in connection with the pandemic, we are seeing a significant extension of enforcement measures by BaFin. BaFin is pursuing priorities of consumer protection and money laundering.

In Spain, the National Securities Market Commission (CNMV) has emphasised the importance of maintaining investors' trust in the markets and economy in the wake of pandemic. To meet this objective, CNMV stated it will reinforce its sanctioning activity if necessary while also encouraging entities to increase their level of self-responsibility.

In France, we are continuing to see the French Financial Market Authority (AMF) and the French Banking Authority (ACPR) take actions to help ensure the orderly functioning of financial markets and to assist regulated entities adapt to the pandemic while ensuring investor protection. Like other regulators across the globe, the AMF and ACPR are particularly focused on the prevention of financial scams online that increased during the pandemic.


In the United States, we have seen a renewed focus on enforcement and regulation, particularly in the wake of last year’s presidential change. The Securities and Exchange Commission’s new Director of Enforcement announced an intention to pursue “aggressive” use of remedies in enforcement actions, including significantly, requiring admissions of wrongdoing in certain cases. This carries with it potentially significant collateral consequences to the entity, including the increased risk of private securities class actions. 

The Deputy Attorney General has also announced that the Department of Justice will consider a corporation’s full criminal, civil, and regulatory record —whether or not that misconduct is similar to the conduct at issue in a particular investigation. We anticipate that this shift may make it more difficult for entities seeking to pursue settlements with regulators, and reduce incentives for corporate entities to cooperate with regulatory investigations.


In Hong Kong, we are seeing the Securities & Futures Commission (SFC) continue to prioritise key risks and cases which pose the greatest threats to investors and the markets, and to use all available sanctions and remedies. We expect the SFC will continue prioritising market misconduct and seeking to strengthen its cooperation with other local and overseas regulatory and enforcement authorities.

Finally, the Monetary Authority of Singapore's (MAS) enforcement focus continues to be wide ranging and includes taking action in respect of market misconduct and senior management accountability. MAS is increasingly leveraging technology to heighten its effectiveness and efficiency and to address operational and market challenges posed by the pandemic. MAS has also proposed strengthening its investigative powers to enhance its ability to gather evidence.


The focus in most of the countries surveyed is trending towards more aggressive enforcement approaches.

We expect to see regulators expand their priorities in light of issues emerging in the post-pandemic environment. And we expect to see the global shift towards remote working spark new regulatory challenges for organisations.

Where there has been a level of post‑pandemic regulatory forbearance, we expect these challenges will cause the pendulum to swing back towards more aggressive methods of enforcement.

Key contacts

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Luke Hastings

Partner, Sydney

Luke Hastings
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Andrew Eastwood

Partner, Sydney

Andrew Eastwood
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Karen Anderson

Consultant, London

Karen Anderson
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John O'Donnell

Partner, New York

John O'Donnell