Fines imposed on market actors by the Financial Conduct Authority (FCA) increased by 68% last year in terms of value as the average size of penalties grew.
Firms were fined a total of £1.47 billion (€2.03 billion) in 2014, according to research by Kinetic Partners, a consultancy.
The growth is partly explained by historic fines given out for Libor and foreign exchange fixing, but Kinetic’s Monique Melis, global head of regulatory consulting, also warns that exceptionally severe fines are part of the “new normal” for financial regulation.
The 68% increase was from £474.27 million, the value of fines given out in 2013, the Global Enforcement Review
from Kinetic Partners says.
However, the FCA imposed fewer fines: 46 fines during the 2013/14 fiscal year – down from 51 issued by the FCA’s predecessor, the Financial Services Authority (FSA), in 2012/13, and 83 in 2010/11.
Yet the average monetary sanction has increased by more than 1,800% since 2009, when the average fine by the FSA was £20.7 million. In 2014 average fines were two and a half times higher than in 2013, at £36.79 million.
“2014 saw a significant spike in the severity of financial penalties virtually across the board, as regulators have been getting tougher on both firms and individuals,” says Melis.
The US Securities and Exchange Commission issued a record number of enforcements in 2013/14: 755, up from 686 in the previous fiscal year. Penalty values grew to $4.6 billion (€4.08 billion) in 2013/14 compared to $3.4 billion in 2012/13.
The Hong Kong Securities and Futures Commission issued 62.8 million Hong Kong dollars (€7.19 million) in fines in 2014, compared to 40.7 million Hong Kong dollars in 2013 – a 50% increase in one year.
FCA fines against individuals fell, but Kinetic says research suggests that the focus on individual bad actors is still a priority globally. For example, January 2015 saw the first individuals fined by the FCA in relation to Libor rate-rigging offences.
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