FCA fines plummet in 2016: Epidemic problems in wind down, say experts

 
Oliver Gill
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Lawyers suggest the regulators are refocusing on individuals rather than simply financial institutions

Fines levied by the UK's financial watchdog have fallen to their lowest level in nine years.

The amount imposed by the Financial Conduct Authority (FCA) has fell by 97 per cent during 2016 – just £22m of penalties have been dished out, compared with £905m in the previous year.

And according to City law firm RPC, the drop isn't due to the FCA being less trigger happy in imposing fines on the financial sector.

Read more: FCA pushes PPI guidance back into 2017

Instead, the lawyers believe the fine decline is due to the winding down of investigations into "epidemic problems" such as Libor rigging and PPI mis-selling.


(Source: RPC analysis of FCA data)

Analysis of the data also indicates the FCA are paying more attention to how staff are behaving at regulated firms, rather than the overall actions of the institutions themselves.

The proportion of fines levied on individuals as increased from 53 per cent to 63 per cent according to RPC.

Soft touch?

Lawyers emphasised the decrease should not be a sign that the FCA is becoming a soft touch though.

“The political appetite for eye watering fines might have waned slightly but the determination of the FCA to closely police the financial services industry is as strong as ever," said RPC partner Richard Burger. He added:

The fall in fines is by no means a sign that businesses can sit back and relax. The FCA will want to ensure its presence is still felt.

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Furthermore, Burger added any new "epidemic problems" would likely lead to a spike in fine activity from financial regulators.

“If a new financial scandal hits the headlines then the pressure will be back on the FCA to impose deterrent style penalties," he said.

A spokesperson for the FCA said:

There has been no change in the FCA’s approach to misconduct or financial penalties. The FCA remains committed to investigating and holding firms and individuals accountable for misconduct and to ensure wrongdoers pay for the costs of remediation.

The level of fines reflects the degree of misconduct in our market, and so, a reduction in fines should be viewed as a positive. The quoted figures reflect a snapshot in time of cases that are completed and do not take into account cases that are in train and incomplete.

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