FCA on track to dwarf FSA fines total

The Financial Conduct Authority has issued a total of £408m in financial penalties in the 10 months it has been in power, compared to the £752m the Financial Services Authority issued during its 11 years as the regulator.

According to data from Wolters Kluwer Financial Services, the monetary value of the fines peaked in September 2013 at £169,508,700.

In September, the FCA fined JP Morgan Chase Bank £137.6m for four breaches of its principles for business – principles 2, 3, 5 and 11 – which are the fundamental obligations firms have under the regulatory system.

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Mary Stevens, manager regulatory analysis Europe at Wolters Kluwer Financial Services, highlighted that the reason for penalties has not changed much over the years, although the fines issued have increased in value.

She said: “In just 10 months the FCA has issued financial penalties amounting to over half what the FSA managed in eleven and quarter years.”

She added that the reason for penalties has remained largely unchanged over the years, with penalties for breaching Principles for Business 3 (management & control), 6 (customers’ interests) and 7 (Communications with clients) continuing to dominate.

“The size of penalties though has significantly increased since the FCA took over regulation of conduct within the industry and therefore firms need to continue to monitor existing and new products and services to ensure they are fully compliant with regulatory requirements if they are to avoid the penalties that we are currently seeing.”

Ms Stevens added the FCA’s focus is “clearly on the customer and his/her interests being protected”.

She said: “The introduction of the Retail Distribution Review last year has already seen the first financial penalty issued against an individual who did not meet the professional standards expected of him.

“The Mortgage Market Review will also see finalised implementation on 26 April 2014 and it will be interesting to see if mortgage firms can meet the requirements expected from them this year and in to the future. There is no doubt though that there will be an unlucky mortgage lender out there who the regulator will make an example of.”