The FCA racks up a record total of £472m in fines in its first year

FCA will take action where the expected standards are not met

City watchdogs have racked up a record £472.3m in fines in 2013, with less than a week to go. The total in the first year of the Financial Conduct Authority represents a 51 per cent increase on the £311.6m imposed in 2012, the last full year of the Financial Services Authority, which was itself a record.

And the regulator’s chief enforcer warned City firms that they needed to heed the message contained in the penalties in the new year.

Tracey McDermott, the director of enforcement and financial crime, told The Independent: “The fines show the range of activity we are regulating, from a firm such as Lloyds, to individuals failing to act in the way we expect, or people pushing products consumers don’t need. In all cases there is a clear link back to how this behaviour can impact on consumers.

“The fines show that where the standards that are expected are not met... the FCA will take action and I think that is an important message for the industry and consumers to hear.”

The record penalty remains the £160m imposed on Swiss bank UBS for its role in the Libor fixing scandal. It came in 2012 and made up more than half of that year’s total.

This year’s biggest fine was the £137.6m imposed on JP Morgan, the American bank, over the activities of the trader known as the “London whale”. His positions led to the bank taking $6.2bn (£3.8bn) in trading losses.

However, there were also several other substantial penalties imposed, with regulators increasingly keen to levy fines that have a real impact on firms beyond simply generating negative publicity.

Other big actions included an £87.5m fine imposed on Royal Bank of Scotland for its traders’ role in the Libor scandal and a £105m penalty against the Dutch Rabobank over the same issue.

Lloyds Banking Group, referenced by Ms McDermott, was ordered to pay a record £28m over sales incentives and penalties that led one salesman to mis-sell policies to himself, his wife and a colleague to avoid automatic demotion, and resulted in widespread bad advice to customers.

Prudential, the insurer, was also told to pay an unprecedented £30m for breaching Britain’s share listing rules and failing to communicate with watchdogs over its botched attempt to takeover Asian insurer AIA.

The step change in fines can be seen in the way the amount levied has mushroomed in recent years. In 2011, for example, the grand total hit just £66.1m and in 2010 it reached £89m. As recently as 2007 the total of all the fines levied by the Financial Services Authority reached just £5.31m.

A single fine for that amount would barely rate a mention in the new landscape of nine-figure fines. The new year promises further pain for the financial sector, as the Libor affair continues to wash through the system, with new probes under way into the activities of foreign exchange traders and into other previously unregulated “dark corners” in the City.

Royal Bank of Scotland has also been ordered to pay for a senior approved person to report into the activities of its Global Reconstruction Group, which handles distressed debt and was accused earlier this year by Lawrence Tomlinson, the Government’s adviser, of forcing viable companies to go bust. Ross McEwan, RBS’s chief executive, has denied Mr Tomlinson’s most serious allegations.