New figures show while the total value of fines handed down by the Financial Conduct Authority (FCA) has dropped by more than a third in the past year, new regulations relating to senior management has caused penalties to individuals to more than double over the same period.
While the total number of fines fell about a third from £1.41bn in 2014/15 to £898m in the last financial year, fines against individuals more than doubled to £17m from £7m the year before. Fines against companies fell to £880m from £1.4bn the previous year.
The overall number of fines has fallen from 46 in 2013/14 to 34 in 2015/16. Fines in 2014/15 in particular were boosted by investigations into foreign exchange and Libor rigging, with JP Morgan, HSBC, RBS and UBS all receiving fines of more than £200m.
While the value of fines fell, it remains more than double the value of fines in 2013/14, when penalties totalled £421m.
Stephenson Harwood partner Tony Woodcock told Legal Business: ‘The dip in fines in relation to companies is largely due to the dry-up of work relating to Libor and Forex. Companies tend to settle these matters fairly quickly. The dip should not be taken as the FCA softening; more a case of a surfeit of work arising out of Libor and Forex.’
Clyde & Co partner John Whittaker said: ‘The big ticket fines from the recent banking scandals look to have dried up, but other cases may be in the pipeline.’
Clyde & Co suggests rules under the Senior Managers Regime have placed greater focus on managers and directors to take greater responsibility for their mistakes or wrongdoing of staff, and resulted in the £10m increase in fines to individuals over the past financial year.
Whittaker (pictured) said: ‘In the past senior figures at financial services companies have largely managed to avoid punishment for their own and their team’s actions. That has now all changed.’
Woodcock said it was too early to judge the Senior Managers Regime, but said the FCA had ‘maintained its view that culture in institutions is driven by individuals at the top, and I don’t expect there to be a chance in that principle’.
The FCA has been consulting on whether in-house lawyers should be subject to the same rules of the Senior Managers Regime. There is still some uncertainty as to whether a firm’s legal function requires approval under the regulations.
The FCA declined to comment.
matthew.field@legalease.co.uk
