What did FCA fines look like in 2017?


Fines dished out by the Financial Conduct Authority took a massive leap in 2017, increasing tenfold year-on-year.

Why was this, and what can you do to make sure your firm avoids a penalty?

What were FCA fines for in 2017?

The regulator imposed penalties of £229.4 million from January to December 2017, up from £22.2 million in 2016.

In financial terms, while eight penalties were against individuals, the vast majority of fines were paid by businesses: £229 million compared to a combined £436,000 for individuals.

The year’s biggest penalty 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.

According to an analysis by Bloomberg, the fines show a return to a ‘new normal’ after a dip in 2016, ‘returning to figures more commonly seen from the regulator in the last five years’.

And a Citywire article on the news says that ‘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’.

Clyde & Co partner John Whittaker, quoted in that article, 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.’

He goes on to say that ‘….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.’

A focus on individual responsibility

This is something we have looked at previously, in a blog asking if you are prepared for increased individual accountability. Whittaker cites the Senior Managers & Certification Regime (SMCR) as something that could shift the proportion of fines more towards individuals.

In July last year, the FCA announced plans to extend it to apply to almost all regulated firms, and we asked whether the new regime would increase your risk of an FCA fine.

At the time, we picked out some key actions to help ensure the SMCR doesn’t increase your chances of being fined. These apply not just to the new Regime but to all areas of business if you want to avoid falling short of the FCA’s expectations.

How can your firm avoid an FCA penalty?

As we’ve noted before, the regulator is all about firms taking responsibility for their own actions, rather than using a tick-box approach to meet minimum required standards.

This is something we’ve looked at in blogs on the importance of cultural compliance and what is a ‘culture of compliance’ and how can you achieve it?

Achieving this compliant culture might seem a big step away from a governance approach based on ticking boxes. But there are some simple steps you can take to move towards an ethos where good behaviours are embedded:

Our 5 ways to embed a compliance culture within your business will give you some simple action points to get started.

For more suggestions and tips, you can download a copy of our free whitepaper, How to embed a compliance culture into your business. You can read the whitepaper here.

Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.

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