City hit by record fines as watchdog vows to keep up pressure
Penalties hit £136m in first quarter as City fears era of 'fine inflation'
Financial firms, City workers and other miscreants were hit with £136m in fines during the first three months of 2013, the most in the first quarter of a year since the Financial Services Authority was created 15 years ago.
And the chief executive of the watchdog's successor, the Financial Conduct Authority, told The Independent that there will be no let-up as the new regulator launches with the aim of cleaning up London's financial centre.
The tally for the last three months of the FSA's existence is in fact more than the total amount in fines levied in any one year since the regulator was created 15 years ago with the exception of last year, when the total came to £312m. That was chiefly down to the Libor interest rate fixing scandal, which saw the Swiss bank UBS paying £160m over its traders' activities. It paid a further £29m for failing to prevent unauthorised – or rogue – trading. Barclays paid £59.5m over its role in the Libor affair.
The rapid escalation in the size of fines is illustrated by the total for 2002 – the first year for which the FSA kept yearly data – when the total stood at just £7.4m. As recently as 2007 the yearly tally stood at just £5.34m.
In fact, between 2002 and 2009 the watchdog levied fines totalling £136.5m – just £500,000 more than in the last three months.
But the City is unlikely to enjoy such "light touch" treatment in future. Martin Wheatley, chief executive of the Financial Conduct Authority, said: "The FCA will continue take tough and meaningful action against firms and individuals who break our rules. We will continue to use the full range of our powers to ensure that we get better results for consumers and ensure that markets function well."
The figure for the first quarter of this year was boosted by the £87.5m penalty paid by Royal Bank of Scotland over the role played by its traders in the Libor affair. A further £16m was paid by Prudential, the insurer, over its failure to deal with the watchdog in "an open and co-operative manner" over the botched attempt to merge with the Asian insurer AIA, with some £14m charged against it for listing rules breaches.
The work of the FSA has now been split, with the FCA dealing with conduct issues while the Prudential Regulation Authority takes over the oversight of the soundness of financial companies under the auspices of the Bank of England.
There is still a prospect that penalties levied by the new regulators, when combined with the £136m during the last three months of the FSA's existence, will beat last year's record FSA total because a number of banks are still in the cross-hairs of regulators on both sides of the Atlantic over attempted Libor fixing.
However, the increasing fine inflation has drawn criticism from lawyers operating in the regulatory arena. Simon Morris, partner at CMS Cameron McKenna, said: "It is FSA policy to ensure that misconduct gets maximum attention, both to punish the firm and to warn the market about what's required. The FSA wants the publicity and the transgressor pays for this through the fine.
"The FSA does this by imposing a spiral of ever-increasing fines and the FCA and PRA are sure to follow suit. The result, though, is that firms now live in environment of fine-inflation, where each record for 'highest ever' will last for a few months at most."
- 1 Crystal meth addict 'gouged out his eyes and ate them' while high on drug, Australian MP claims
- 2 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 3 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
- 4 Witch doctor arrested after forcing newborn baby to walk in Indian village
- 5 Arsenal fan asks the Queen for tickets to the FA Cup final - gets a reply from Buckingham Palace
Ireland's same-sex marriage vote: Dublin in party mood ahead of historic poll result
Saudi Arabia 'seeking to head United Nations Human Rights Council'
Toddler throws a tantrum at the White House – in front of Barack Obama
Irish people are travelling home from all over the world so they can vote to legalise gay marriage
Witch doctor arrested after forcing newborn baby to walk in Indian village
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...