UK & Europe
The value of fines handed down by the FCA has decreased by 88% in a year, according to research from global law firm Clyde & Co.
An analysis of the FCA's enforcement database shows that fines handed down by the regulator so far this year (data accurate as of 5 December) fell to £27.6m, down from £229.5m in 2017.
According to the research, fines levied against individuals this year made up £1.3m, while those against companies totalled £26.3m.
Charles Kuhn, partner at Clyde & Co, comments: "The sharp drop in the value of fines over the last year does not paint the full picture. Last year there were a number of record-breaking fines against companies that somewhat skewed the figures."
Clyde & Co explains that Deutsche Bank's £163m penalty in January 2017 was an FCA record for money-laundering failures. Similarly, Rio Tinto was given a £27m fine in October 2017 for listing-rules breaches, another record.
FCA taking aim at individuals
The research shows the average fine for an individual this year has almost trebled to £186,000, up from £63,000 in 2017.
Kuhn continues: "City executives should certainly not be breathing a sigh of relief. The FCA has made a conscious effort to put the onus of responsibility on individuals. The introduction of the Senior Managers Regime is testament to this and the statistics demonstrate that this approach might be starting to bear fruit."
Clyde & Co explains that the Senior Managers Regime (SMR) has placed the onus on managers to take responsibility for their own actions and those of their staff.
Senior managers and key non-executive directors risk fines or bans from the industry unless they can show they took all reasonable steps to prevent wrongdoing within their teams. There is also a parallel criminal offence of recklessly mismanaging a financial institution that fails. The new rules came into effect in March 2016.
Record number of cases open
Clyde & Co points out that the number of cases the FCA had open at 1 April 2018 was a record high of 504, up from 410 in the previous 12 month period.
Last year the FCA's Head of Enforcement, Mark Steward, announced that it would be opening more cases sooner but should not be afraid to dropping them if there is no evidence of wrongdoing.
Kuhn says: "The FCA has its foot firmly on the gas. However, it has come under some criticism over taking too long to prosecute and with a record number of cases in the pipeline some are questioning the regulator's capacity to handle so many investigations."
"Eventually, these cases will be concluded and we could see a continual uptick in the level of fines levied against individuals. Especially, as a number of the cases in the pipeline involve examination of the conduct of senior managers, which will of course test whether the SMCR might result in heavier punishments for individuals."