This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM+Cover+small+101214
Categories:Regulation

FSA ordered firms to pay almost £100m more in compensation during 2011

  • Print
  • Comment

Firms regulated by the FSA paid out more than £160m in compensation to their clients last year, according to City law firm Freshfields Bruckhaus Deringer.

Figures from Freshfields shows £160.55m in redress was paid out by the UK’s financial firms during 2011, rising from the £62.65m reported in 2010.

The compensation is almost three times higher than the £55.7m in corporate fines the watchdog imposed on regulated firms last year. The value of fines fell about 40 per cent from the £79.46m seen in 2010.

Freshfields notes that an estimated £59m of compensation payments stemmed from the FSA’s investigation of how Barclays sold funds labelled ‘balanced’ and ‘cautious’ to its retail clients. A £7.7m fine was also levied.

HSBC was ordered to pay £29.3m in compensation for mis-selling investment bonds to its elderly customers, alongside the FSA’s largest ever retail fine of £10.5m. Norwich and Peterborough building society paid £51m in redress with a £1.4m fine in the Keydata case.

Andrew Hart, partner at Freshfields, says the “staggering outlay” for compensation is likely to be even higher after all associated costs are factored in.

“When you take into account that there are other penalties imposed by the FSA, such as the requirement to overhaul IT systems, bring in new teams to assure new processes are implemented or change operational systems the ’hidden’ costs here can easily dwarf any obvious costs,” Hart says.

 

To receive more relevant articles like this one, why not sign up to our briefings and breaking alerts by clicking here.

  • Print
  • Comment

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Have your sayEdit my profile/screen name

You must sign in to make a comment

AXA Wealth


Fund Data

Editor's Pick



Poll

Two years on from the RDR, do you think consumers are better off as a result?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments