personal finance

FCA fines hit highest level in four years

A crackdown on mis-selling and financial crime has driven fines issued by the UK’s financial watchdog to their highest level in four years.

Penalties levied by the Financial Conduct Authority have totalled £391.8m so far in 2019, the highest since 2015 and more than six times the amount last year, according to new data.

The regulator has also meted out more £10m-plus “blockbuster” fines, with nine of its 17 penalties this year topping that amount, compared with just two in 2018.

Standard Chartered landed the largest FCA fine of 2019 to date, with the £102m issued in April as part of a global $1.1bn set of penalties to settle charges that the bank violated sanctions and ignored red flags about its customers. The latter included a diplomat who opened an account with £500,000 stuffed in a suitcase.

The FCA also issued a record penalty against an individual this year when it levied £76m in January against Stewart Ford, the man behind the failed “death bond” firm Keydata, after a tribunal upheld the watchdog’s decision in late 2018. Mr Ford said at the time that he did not accept the tribunal’s findings.

Mis-selling has been a common cause of FCA enforcement action, accounting for £163m of the total this year. That includes Standard Life landing a £30.8m penalty for mis-selling pension annuities and Carphone Warehouse receiving a £29.1m fine for mis-selling insurance.

RPC, the law firm that collated the data, said the regulator had “reinforced its commitment to protecting consumers from the risk of being mis-sold financial products” in its 2019-20 business plan, adding: “This outlined priorities such as reviewing remuneration practices that may encourage mis-selling and preventing mis-selling regarding defined-benefit pension transfers.”

The step-up in fines comes at the end of a year in which the regulator has faced criticism that it has not done enough to protect ordinary consumers across a range of scandals. These include the £236m collapse of London Capital & Finance, which pushed unregulated mini-bonds on retail customers, and the implosion of Neil Woodford’s flagship equity fund.

Penalties have see-sawed over the past four years, at points dropping to levels not seen since before the financial crisis. This has led some commentators to question whether the regulator was returning to a light-touch approach that was partly blamed for exacerbating the crisis. “After several years of relatively low levels of fines, the FCA is baring its teeth,” said Jonathan Cary, a partner at RPC.

The FCA has a record number of investigations open on its books, at nearly 700, according to its most recent statistics. Lawyers complain that this means investigations are taking longer to complete — settled cases in the 2018-19 financial year had taken an average of 29 months — which has a knock-on effect on the level of fines.

The FCA declined to comment.


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