Regulatory enforcement saw a sharp decline in the first quarter of 2025, with both the volume and monetary value of fines significantly lower than in previous quarters.
However, this quieter period did not mark a retreat from scrutiny, particularly around how financial firms treat their customers and manage governance.
According to a recent enforcement report for Q1 by Corlytics, customer treatment was a recurring theme in enforcement actions across major financial markets. In the US, the Consumer Financial Protection Bureau (CFPB) took action against Sutherland Global for misleading borrowers by sending letters suggesting their loans were in default. The bureau also penalised Chime Financial for delays in refunding customers, reinforcing its stance on fair treatment.
In the UK, the Financial Conduct Authority (FCA) issued a fine to HSBC, citing systemic failings in its handling of customers experiencing financial hardship. These actions highlight a transatlantic alignment in regulators’ focus on customer outcomes.
Governance issues also remained high on the agenda. Citigroup Global Markets came under fire from multiple regulators, including the FCA, the Prudential Regulation Authority (PRA), and Germany’s BaFin. The fines related to deficiencies in the firm’s trading systems and internal controls, reflecting the continued emphasis on robust oversight and operational resilience.
A key development this quarter was the FCA’s decision following its long-running investigation into Link Fund Solutions, the authorised corporate director of the Woodford Equity Income Fund (WEIF).
The FCA concluded that WEIF had an unsuitable liquidity profile and that Link had failed to oversee the investment manager appropriately. While a £50m fine was deemed appropriate for breaches of Principles 2 and 6, the FCA chose not to enforce the penalty in favour of directing funds towards a separate investor compensation scheme. Due to the importance of the case, the fine was still included in the enforcement figures.
Despite the reduced enforcement activity, Q1 2025 underscored regulators’ ongoing vigilance, particularly around customer protection and firm governance.
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