06Jan

FCA annual fines at a record low, but it highlights the sums paid in redress as evidence it maintains a tough enforcement stance

The Financial Conduct Authority issued just 10 fines during 2020, the lowest number since the organisation’s foundation in 2013. The total of these penalties was £183.6 million, which is the third lowest annual total.

The number of fines is significantly lower than in previous years. It is less than half the 2019 total of 21, and scarcely one-third of the annual average of 29. In its first year, 2013, the FCA issued 48 monetary penalties.

The total amount of the 2019 fines was £392 million, so this year’s total is less than half of that. The average since 2013 in this respect is £508 million, with a peak of £1.47 billion in 2014.

The largest fine this year was a £64 million penalty for a high street bank over its treatment of mortgage customers who were in financial difficulties.

The FCA stressed that, in addition to the £183.6 million in fines, it has forced firms to pay a further £617 million in compensation to disadvantaged customers. This is illustrated by the last of the year’s fines, where another high street bank paid received a £26 million fine for its treatment of consumer credit customers who fell into arrears or experienced financial difficulties. However, the bank has also paid £273 million in compensation to disadvantaged customers affected by this issue.

Other fines imposed by the regulator this year include: 

  • £100,000, and a prohibition, for market abuse (on two occasions)
  • £107,200 for an advisory firm that gave unsuitable advice regarding Self Invested Personal Pensions
  • £3.4 million for a firm that failed to manage risks relating to wholesale broking
  • £48 million for an investment bank for its role in the 1MDB embezzlement saga
  • £873,118 for a firm that failed to disclose a short position
  • £41,400 and £23,200, together with prohibitions, for directors of an advisory firm that gave unsuitable advice regarding Self Invested Personal Pensions
  • £2.8 million for a motor finance lender that didn’t give customers in arrears sufficient time to pay their debts

2020 also saw the FCA cancel the permissions of 132 firms, issue prohibitions to 15 individuals and commence five sets of criminal proceedings.

An FCA spokeswoman said:

“The purpose of enforcement is not just penalties. It is to ensure just outcomes and to deter future misconduct. Dealing with the consequences of misconduct is as important as any penalty. This year alone we secured redress and compensation totalling £617 million, making sure that firms made good losses for consumers. This includes cases where we did not impose a penalty.

“Enforcement has continued as normal during the pandemic. We will open cases where we suspect serious misconduct. The number of new cases and outcomes fluctuates month-on-month and year-on-year and nothing much should be read into the figures.

“As well as imposing financial penalties totalling £183 million, we have cancelled the permissions of 132 firms, prohibited 15 individuals and commenced criminal proceedings against five individuals. We have also successfully obtained restitution orders in the High Court worth £16.8 million. We have commenced 154 investigations into firms and individuals so far in 2020.”

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