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Discounts on fines have cost FCA £10m so far


The FCA has given firms over £10m worth of discounts on penalties in the past four months, according to research by Pinsent Masons.

Discounts are usually applied when a business being investigated for wrongdoing accepts responsibility early to secure a speedy resolution.

Since the regulator’s inception on 1 April, it has published around 30 enforcement notices. Almost one in four have applied a discount on the fine. A similar discount system was applied by the FSA. 

Pinsent Masons financial services regulation partner Monica Gogna says: “The discounting regime is an effective way of incentivising regulated businesses to comply with investigations. People may be surprised by the £10m figure though and will be watching carefully to see whether the recent run of discounts is a ‘flurry’ or a more subtle shift in FCA policy.”

The second biggest discount was applied to an £8,616,000 handed to Sesame Bankhall Group in May. The £2,584,800 discount reduced this fine levied to £6,031200.

An FCA spokesman says: “Investigations take time and can be costly, so the discount system encourages firms to comply with our investigations and settle early. As well as providing savings to firms or individuals being investigated as well as the FCA, it also means compensations, where it is due, can be paid out earlier than would otherwise be the case.”

FCA Fines and discounts since 1 April 2013
Firm   Original Fine  Discount Rate  Actual Fine  Cash Difference
Swinton £10,543,500  30%  £7,380,450 £3,163,050
Sesame Bankhall Group £8,616,000  30% £6,031,200 £2,584,800
Royal Bank of Scotland £5,029,137 30% £3,520,395.90p £1,508,741.10p
JP Morgan £4,394,695 30% £3,076,286.50p £1,318,408.50p
Policy Administration Services £4,049,637 30% £2,834,745.90p £1,214,891.10p
Michael Cosica £764,000 30% £534,800 £229,200
XCap £151,136 20% £120,908.80p £30,227.20p
Totals £33,548,105  N/A £23,498,787.10p  £10,049,317.90p


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Lets be honest and look at it from a different angle.

    It is extremely rare for a regulator fine to be successfully appealed and reduced never mind actually overturned so from a pragmatic point of view the regulator is saying pay now or we will increase the fine by increments until we get to the enforcement notice and then we will hit you with a much bigger fine – so much easier and cheaper to roll over now and accept the beating rather than argue and get a bigger beating later!

    Thank heavens its Friday – even though I know I am a cynic it does seem to be getting worse towards the end of the week these days

    I need a large G & T

  2. RegulatorSaurusRex 2nd August 2013 at 5:00 pm

    It is POETS day, the regulators went home long ago.

  3. @Anon at 3:39.

    I think you’ll find that half of all enforcement investigations actually result in discontinuance.

    Whatsmore, even where fines go through, what does not get disclosed are such things as the difference between the Warning Notice and Decision Notice figures, or indeed the difference from what the Regulator opened at. These hide the fact that fines are often reduced sharply when one puts up a fight.

    To illustrate, I remember one case where the FSA opened at £160k. By the time it came to the RDC, the Warning Notice figure was down to £70k. Only at that point did we open settlement negotiations – the result being £60k paying in handy interest-free monthly installments. That result was £50k less than had we taken a 30% discount.

    On a general point, this article is silly. Discounts on fines cost the Regulator nothing. They don’t collect the fine money for starters. Then, as above, its often a ruse to put people off a serious defence and probably brings in rather more fines anyway.

  4. Agree with Anon 3.39. By the time thr regulator decides on the amount of the fine, that is the amount they actually want the offender to. As anon says – “pay this now or when (not if) you loose we will increase it dramatically. This is not really a story but made a good Friday afternoon headline.

  5. Man In Black – interesting you paid the fine over installments, presumably you paid these over less than 4 installments as from a quick check i cant see that the FSA or the FCA hold a Consumer Credit Licence and therefore cant take installments for payment over 4 months.

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