28Jun

The total amount of fines imposed by the Financial Conduct Authority (FCA) fell by 36% in the 2015/16 financial year when compared to the previous 12 months. However, despite this fall in the overall total, the total amount of fines imposed on individuals rose by 142%, i.e. it more than doubled.

The research by law firm Clyde & Co shows that the regulator handed out total fines of £1.41 billion in 2014/15 and just £898 million in 2015/16. The 2014/15 figures included a number of large fines imposed on banks for LIBOR and foreign exchange manipulation.

The total fines imposed on firms fell from £1.4 billion to £880 million.

The fines imposed on individuals however rose from £7 million in 2014/15 to £17 million in 2015/16. While the total monetary amount of the fines handed to firms is still much larger, the actual number of fines handed to individuals and to firms in 2015/16 was equal, at 17 each.

Clyde & Co partner John Whittaker says:

“Although it is difficult to draw firm conclusions from just three years of statistics, it does suggest that the regulator now appears to be turning its focus towards individuals. This is supported by recent regulatory changes which are aimed at holding individuals to account for any behaviour that strays outside of the regulator’s rule book.

“The senior managers’ regime has sent shockwaves throughout the financial services industry. 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.

“Companies will be hoping that the new rules help to ensure employees play by the book but are not put off from taking calculated risks in order to boost profits.”

The FCA introduced the Senior Managers & Certification Regime (SM&CR) in the banking sector in March 2016, and this will be rolled out to all authorised firms from 2018. But the latest fines information shows that, even under the existing Approved Persons Regime, the era of individual accountability has already arrived.

At present, all individuals carrying out ‘approved persons’ roles need to be individually ratified by the FCA before they commence their duties. Under the SM&CR, the firms themselves will need to carry out their own assessment on at least an annual basis. Essentially, this new Regime will replace the Approved Persons Regime.

Anyone who carries out an approved person role must demonstrate that they are a ‘fit and proper’ person, having regard to their honesty, integrity and reputation; competence and capability; and financial soundness.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.