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FCA fines soar by £200m amid greater crackdown on individuals

  • 11/12/2017
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FCA fines soar by £200m amid greater crackdown on individuals
The value of financial penalties issued by the Financial Conduct Authority (FCA) have increased by a massive £207m over the past year, analysis has revealed.

Fines issued by the regulator soared tenfold from just £22m in 2016 to £229.4m in 2017, according to law firm Clyde & Co.

Penalties against individuals were at £436,000, with £229m against companies, although fines to individuals made up a greater proportion of the overall total, the research showed.

It reflects the FCA placing a greater emphasis on punishing individuals than in previous years, John Whittaker, partner at Clyde & Co said.

The Senior Managers Regime (SMR) places the onus on managers to take responsibility for their own actions and those of their staff, key non-executive directors risking fines or bans from the industry if they can’t show they took all reasonable steps to prevent wrongdoing within their teams.

The new rules came into effect in March 2016 and there is also a parallel criminal offence of recklessly mismanaging a financial institution that fails.


Three firms hit with big fines

The jump in value of fines this year was in part down to a lower than normal year in 2016, with £1.5bn worth of penalties issued in 2014.

The biggest fine in 2017 was levied against Deutche Bank at £163m, which accounted for more than half of the overall total.

The second and third biggest fines were against Merrill Lynch International and Rio Tinto at £34.5m and £27.4m respectively.

Whittaker said: “A tenfold increase is significant but it’s worth remembering that this is the second lowest year of fines over the past five years.

“It’s certainly a far cry from the £1.5bn of 2014 but it will still be worrying senior executives. Especially because 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,” he added.

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