Experimental feature

Listen to this article

00:00

00:00

Experimental feature

or

Fewer but heavier penalties on companies have caused a tenfold increase in the level of fines meted out in 2017 by the UK’s financial watchdog.

The Financial Conduct Authority’s total fines for the year stand at £229.4m compared with the £22.2m levied in 2016. Last year was the lowest on record since the era of “light-touch” regulation before the financial crisis.

Over the past 12 months, the FCA has fined just four companies: Deutsche Bank, Rio Tinto, Merrill Lynch and Bluefin. It also fined eight individuals an aggregate £436,000.

Some of the corporate fines have broken new ground: Deutsche’s £163m penalty in January, in tandem with US authorities, was an FCA record for money-laundering failures, while Rio Tinto was hit with a £27m fine in October, again in a co-ordinated announcement with US authorities, for listing-rules breaches — another record.

Still, 2017’s total is far off the levels seen in 2014 and 2015, when the multimillion-pound fines meted out over the Libor and forex-rigging scandals skewed the figures.

“A tenfold increase is significant but it’s worth remembering that this is the second-lowest year of fines over the past five years,” said John Whittaker, a partner at Clyde & Co.

“It appears that the regulator is continuing to place greater attention on individuals than in previous years. Recent regulatory changes, which are aimed at holding individuals to account for any behaviour that strays outside of the regulator’s rule book certainly supports this trend.”

The FCA’s first big test of this accountability regime is its investigation into Jes Staley, the chief executive of Barclays, over trying to identify a whistleblower. While that probe was originally due to come to a conclusion in 2017, it is now likely to be delayed.

Not included in the figures is the £85m compensation scheme that the FCA made Tesco set up in March following its accounting scandal. The supermarket giant paid £129m as part of a deferred prosecution agreement with the Serious Fraud Office.

For the FCA, it was the first time it had used its compensation powers over market abuse. The watchdog has pledged to prioritise victim compensation rather than just fining companies that breach its rules.

It is also aiming to cast its net wider than in the past, and has focused on the accuracy and timeliness of market disclosures made by listed companies not in the financial sector.

The FCA declined to comment on the level of fines.

Leave a Reply

Time limit is exhausted. Please reload the CAPTCHA.