Average fines levied by the Financial Conduct Authority jumped five-fold over the past year from £624,000 to £3.2m, as the regulator stepped up pressure on businesses who have breached its rules, according to City law firm RPC.
In 2014, the overall amount levied by the FCA in fines trebled and reached a record level of £1.47bn, up from £474m in 2013. This suggests that while the volume of fines has reduced, the regulator has issued larger penalties for wrongdoing.
Together with sector specific tax rises and redress payments, these fines have begun to impact the ability of financial services businesses to pay dividends or to take on new business, RPC said, in a reference to major fines on banking groups for benchmark fixing and other issues.
Richard Burger, partner at RPC, stated: “Even when you look past the blockbuster Forex fines it is clear that in the last twelve months fines have threatened to enter hyperinflation territory.”
However, many commentators have argued institutions for too long escaped action over severe wrongdoing - and on the scale of fines the government last week published recommendations that would reduce the fines on offer for early settlement of enforcement.
Mr Burger added: “We don’t yet see the evidence that the FCA is going to change its regulatory strategy of high touch, high levels of intervention, and very big fines.
“Multi-million pound fines might have lost some of their ability to ‘shock and awe’ but they are still the FCA’s preferred option.”
peter.walker@ft.com
