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Number of FCA fines at lowest level since crisis

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Number of FCA fines at lowest level since crisis

The number of Financial Conduct Authority (FCA) fines has fallen to its lowest level since the financial crisis, analysis by Citywire Compliance has revealed.

Despite an increase in absolute fine levels this year, the number of fines imposed has fallen to its lowest level this decade.

Excluding a historical fine of £163 million levied against Deutsche Bank for failing to create an ‘adequate anti-money laundering control framework during the period between 1 January 2012 and 31 December 2015’, the FCA has only imposed four fines in the year to September 2017, amounting to £229,098.

This compares with the £23 million from 18 fines levied the intervening period last year, representing the slowest start to the year in over decade.

Fine levels had already dropped significantly between 2015 and 2016, falling 96% from £905.2 million to £35.3 million, before finishing the year just below double the previous year at £66.4 million.

This dramatic fall coincided with the high-profile resignation FCA’s former chief Martin Wheatley in 2015. Wheatley critics had argued that fines imposed under his watch had alienated the City.

During his tenure, the FCA had amassed £3.4 billion of fines, nearly 10 times that of the previous five-year period. 

These record numbers were partially due to a series of major financial scandals, including Libor (London Interbank Offered Rate) and foreign exchange (FX) rigging. Combined, these scandals accounted for £2.2 billion of the fines imposed during the period.

Stripping these out, fines imposed under Wheatley’s leadership still dwarfed his predecessors, amounting to £1.2 billion.

Wheatley was replaced by interim chief executive Tracey McDermott, who herself resigned in July 2016, joining Standard Chartered in January of this year.

During her time office McDermott had to defend the FCA’s enforcement outcomes from critics who commented that the Treasury successfully put pressure on the FCA to be more ‘light touch’ with financial firms.

‘We're not going soft on the banks, we're not being told what to do by the government,’ she said in interview with the BBC in January 2016.

‘We have objectives which are set for us by parliament and statute, and we are determined to deliver on those.’

Her successor, Andrew Bailey, appears to have an even lighter touch, imposing just 12 fines in the past 12 months. This compares with the 33 fines imposed during McDermott’s tenure.

However, Bailey has warned the drop-off in fines should not be read as a softening of the regulator’s approach.

‘If we were to maintain the level that we had a few years ago, it would imply we were having something on the level of Libor and foreign exchange every year,’ he told the Guardian earlier this year. ‘If that happened, we would be asking ourselves what is going on. We would need a major blow-up every year to maintain that level of activity, and that isn’t our objective.’

Rise of the clones

It is not just fines that seem to have dropped off over the past three years, with the number of bans imposed by the regulator also falling.

While in absolute terms the number of firms and individuals added to the FCA and its predecessor the Financial Services Authority (FSA) to the unauthorised list have been falling since 2012, the number of bans imposed over the past three years has been particularly low.  

Excluding bans given for ‘clone’ companies that defraud consumers by impersonating authorised companies, the FCA has banned 431 firms and individuals since 2015, a fall of 48% compared with three years prior.

This is partly due to the rise in clone companies over the past 10 years, which has led to bans on these sham companies rising from 9% of annual bans in 2007 to 48% in 2016. (See chart)


Some firms received the brunt of the regulator's fines, with most of the record penalties being felt in nine companies. These nine banking groups have been fined a combined £2.9 billion over the past 10 years. 

Name Amount fined
Barclays Bank £491,057,459
UBS £440,964,000
JPMorgan Chase £396,172,200
Deutsche Bank £394,595,024
The Royal Bank of Scotland £369,374,600
Lloyds Bank £250,469,400
HSBC £230,048,000
Citibank £225,575,000
(Rabobank) £105,000,000
total £2,903,255,683


This article first appeared in the Citywire Compliance e-zine. Read the latest issue in full here.

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