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FCA fines rise tenfold this year

FCA fines rise tenfold this year

The total value of the fines meted out by the Financial Conduct Authority (FCA) increased tenfold year-on-year in 2017.

The regulator has imposed penalties of £229.4 million since January, up from £22.2 million in 2016.

Twelve financial penalties over the course of this year, with eight against individuals and 12 on companies, according to analysis by law firm Clyde & Co.

But it was businesses that bore the brunt in absolute terms, paying £229 million compared to a combined £436,000 against individuals.

The largest penalty of the year was the £34.5 million enforced on Merrill Lynch International for reporting failings, followed by the £27.4 million paid by Rio Tinto for breaching accounting standards. The largest fine paid by an individual was the £105,000 levy on Worldspreads Group’s Lukhvir Thind for falsifying information.

While the rise in penalties year-on-year sounds stark, for context, the FCA imposed £1.5 billion in fines in 2014 and £905.2 million in 2015, during the peak of the Libor and FX market manipulation scandals.

And even these  were a far cry from the penalties dished out for malfeasance around the financial crisis and for payment protection insurance failings.

Clyde & Co partner John Whittaker said: ‘A tenfold increase is significant but it's worth remembering that this is the second lowest year of fines over the past five years.

‘It's certainly a far cry from the £1.5 billion of 2014 but it will still be worrying senior executives. Especially because it appears that the regulator is continuing to place greater attention on individuals than in previous years.’

He added that with the Senior Managers Regime due to come into force next year across the wider industry, the split of fines between individuals and companies could tip further towards the former in future.

‘Senior executives need to ensure they are clued up on the rules or they could face a hefty fine due to the activity of their staff.’

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