FCA fines firms a record £1.47 billion in 2014

The research by Kinetic Partners, a division of Duff & Phelps, show that the FCA imposed less fines during the 2013/14 fiscal year, but the average values of fines issued were two and a half times higher than in 2013, at £36.79m compared to £9.88m.

This is indicative of a trend in recent years, as the average monetary sanction has increased by more than 1,800% since 2009, when the average FSA fine was £20.7m.

However individuals were fined a total of £2.9m by the regulator in 2014, down from £4.99m in 2013.

Monique Melis, Managing Director and Global Head of Regulatory Consulting at Kinetic Partners, commented:

“2014 saw a significant spike in the severity of financial penalties virtually across the board, as regulators have been getting tougher on both firms and individuals. However, the averages only tell part of the story as they have been pushed up by a relatively small number of historic fines, mainly relating to Libor and Forex manipulation. We are now entering an era of regulatory enforcement in which the ‘new normal’ consists of exceptionally severe penalties and a growing focus on individual bad actors, the aim of which is to impact and change the culture of firms.”

Julian Korek, Head of Compliance and Regulatory Consulting at Kinetic Partners, added:

“Actions against individuals are likely to play an increasingly integral role in regulators’ efforts to deter bad behaviour. Such sanctions are an undeniably powerful deterrent as, unlike financial penalties imposed on firms, they cannot be written off as a business cost. Regulatory leadership in the UK recognises that an organisation’s senior management is not necessarily able to police staff at all levels, so holding the bad actors themselves accountable is a step towards influencing institutional culture in the right direction. However, there is also a real risk that the targeting of individuals could reduce the attractiveness of financial services as a career. As always, it is a balance that regulators need to strike.”