A new, more effective FSA emerges.
January 12th, 2010
It would seem that the Financial Services Authority (FSA) is finally growing some teeth. The City regulator handed down record fines of nearly £35m in 2009, and it plans to increase the total in the future.
The FSA levied 41 significant fines during the year, the largest being the £8m ordered from Swiss banking giant UBS. The total amount is up from the £22.6m it demanded in 2008, which itself was a record annual amount.
It now wants to set a series of minimum fines for some offences.
The fines in 2009 were levied as a result of a range of offences. Some involved failure by financial firms to guard against employee fraud, whereas others came because customers were not treated fairly.
The UBS fine, the third largest recorded by the FSA to date, came because the bank failed to stop employees making unauthorised transactions and failed to spot “several warning signs” that systems were not working.
The bigger fines, record number of bans and successful criminal prosecutions this year reflect a tougher and more intensive enforcement approach.
These outcomes have made people sit up and take notice and analysts now expect to see a change in behaviour in the industry, although to what extent remains to be seen. If the FSA keeps this momentum in 2010 their enforcement actions will continue to support their aim of ‘credible deterrence’.
Now the FSA wants to increase fine levels, claiming fines have not been high enough to deter wrongdoers. It is consulting on plans that would treble its penalties in some cases.
Firms could be fined 20% of turnover, with individuals liable to penalties of 40% of their salary and bonuses. Individuals guilty of “market abuse” will be fined a minimum of £100,000.
Some people may say that the FSA has taken far too long to adopt this new aggressive pose and for too long turned a blind eye to a whole host of negligent and even criminal practises. I would, on the whole, agree with that analysis but at the same time I applaud their new stance and have every hope that it will rid the financial services industry of many of its failings.
