Value of FCA fines down 88% in a year
The value of fines handed down by the Financial Conduct Authority (FCA) has decreased by 88% in a year, but fines for individuals have almost trebled on average, according to research from global law firm Clyde & Co
10 Dec 2018
An analysis of the FCA's enforcement database shows that fines handed down by the regulator so far this year fell to £27.6m, down from £229.5m in 2017. The total is in line with the 2016 figure (£22.2m) but considerably lower than the 2014 total of £1.47bn.
According to the research, fines levied against individuals this year made up £1.3m, while those against companies totalled £26.3m.
Charles Kuhn, partner at Clyde & Co, said: ‘The sharp drop in the value of fines over the last year does not paint the full picture. Last year there were a number of record-breaking fines against companies that somewhat skewed the figures.’
These included Deutsche Bank's £163m penalty in January 2017, which was an FCA record for money-laundering failures. Similarly, Rio Tinto was given a £27m fine in October 2017 for listing-rules breaches, another record.
This year seven companies were fined, with the average payment £3.8m. Seven individuals were fined, and the research shows the average fine for an individual this year has almost trebled to £186,000, up from £63,000 in 2017.
Kuhn said: ‘The FCA has made a conscious effort to put the onus of responsibility on individuals. The introduction of the senior managers and certification regime (SMCR) is testament to this and the statistics demonstrate that this approach might be starting to bear fruit.’
The research also found that the number of cases the FCA had open at 1 April 2018 was a record high of 504, up from 410 in the previous 12-month period.
Kuhn said: ‘The FCA has its foot firmly on the gas. However, it has come under some criticism over taking too long to prosecute and with a record number of cases in the pipeline some are questioning the regulator's capacity to handle so many investigations.
‘Eventually, these cases will be concluded and we could see a continual uptick in the level of fines levied against individuals. Especially, as a number of the cases in the pipeline involve examination of the conduct of senior managers, which will of course test whether the SMCR might result in heavier punishments for individuals.’
Report by Pat Sweet