The FCA imposed 46 fines during the 2013/14 fiscal year, down from 51 issued by the FCA’s predecessor, the Financial Services Authority (FSA), in 2012/13 and 83 in 2010/11.
The average value of the fines in 2014 was two and a half times higher than in 2013, at £36.79m compared to £9.88m in 2013, which Kinetic Partners said was indicative of the trend in recent years, where the average monetary sanction has increased by more than 1,800% since 2009.
“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,” Monique Melis, managing director and global head of regulatory consulting at Kinetic Partners, a division of Duff & Phelps.
However, Melis noted the average value of the fines had been pushed up by a relatively small number of historic high fines, mainly relating to the Libor and Forex manipulation scandals.
“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,” she said.
Indvidual fines down
For individuals generally total fines had dropped to £2.9m last year, down from £4.99m in 2013, though research done by the Kinetic Partners suggested that the focus on individual bad actors is still a priority among regulators globally.
It noted that January 2015 saw the first individuals fined by the FCA in relation to Libor rate-rigging offences, while the US Securities and Exchange Commission (SEC) fined 449 individuals in its latest in 2013/14 fiscal year compared to 306 financial institutions.
Julian Korek, head of compliance and regulatory consulting at Kinetic Partners said: “Actions against individuals are likely to play an increasingly integral role in regulators’ efforts to deter bad behaviour.”
“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.”
