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Value of FCA fines down 38% to £905m

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  • 17/12/2015
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Value of FCA fines down 38% to £905m
The total value of fines imposed by the Financial Conduct Authority fell 38% to £905m in the past year, dropping from a record high of £1.47bn.

This is a result of a lower number of blockbuster fines rather than a more lax regulatory regime, according to City law firm RPC.

The FCA imposed a record high fine on Barclays for financial crime at £72m over a £1.88bn transaction completed for politically exposed clients.

The regulatory body found that the bank had not followed standard procedure to minimise the risk that it may be used for financial crime, but instead took the clients on quickly to generate a £52.3m profit.

“Arguably the FCA’s penalty regime is getting harsher rather than more lax. No one expected the level of fines resulting from PPI mis-selling or Forex and LIBOR rigging to go on year after year,” said Marcus Bonnell, regulatory counsel at RPC.

The FCA also fined hedge funder Alberto Micalizzi £2.7m for attempting to cover up losses, which was a record fine for an individual.

The proportion of fines the FCA levied against individuals rose to 51%, up from 33% in 2014.

Bonnell pointed out that the regulator is keen to point out that it does not make empty threats.

“By imposing more than half of all fines against individuals the FCA is demonstrating that financial services workers will be directly accountable for their actions.”

The regulator has now started restricting or suspending financial services companies from undertaking certain business to deter improper behaviour in the sector.

It believes that this method causes firms more financial and organisational disruption and thus represents as a more significant penalty.

In some cases, the FCA limited the permitted activities of a business in addition to imposing a fine. For example, The Bank of Beirut was suspended from taking on any new customers as a result of concerns over its financial crime monitoring and controls.

“Until now, imposing headline grabbing fines has been the regulator’s primary means of drawing attention to its penalty regime; alternative and additional penalties are likely to become more common,” said Bonnell.

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