The FSA says the Financial Conduct Authority will review its approach to enforcement action following MPs’ calls for a more flexible system of fines with much bigger penalties for firms and individuals that do not cooperate.
A Treasury select committee report into Libor rigging recommended the FSA introduce greater flexibility around fines, with much heavier fines for those that do not co-operate and smaller ones for those that do.
In its response to the report, published last week, the FSA says it already has substantial discounts for firms that co-operate. It adds it introduced a new penalties policy in 2010 to provide greater transparency on the fines it imposes.
The regulator says: “As we take on more cases where the new policy applies, we will consider on an ongoing basis how well the policy is working in practice and whether it needs amending.
“Our overall approach to enforcement and penalties will also be subject to early consideration by the FCA board to ensure it is satisfied with the approach.”
The FSA points out that Barclays received a 30 per cent discount on its fine for Libor rigging, reducing it from £85m to £59.5m, because it highlighted its own wrongdoing to the regulator.
It also outlined new procedures for whistleblowers in smaller firms and has introduced a new IT structure to better manage and respond to them.
The regulator says it has not yet completed its own internal review into its awareness of Libor rigging and effectiveness in dealing with it, but it will report back to MPs when it does.
Conservative MP and TSC chair Andrew Tyrie says: “The systemic rigging of important rates appears to have been pervasive in the banking industry over a long period of time.
“Serious regulatory shortcomings also came to light. It is only right that the FSA has had to shoulder its share of the blame for this scandal.”
Highclere Financial Services partner Alan Lakey says: “The FCA should review the current approach to fines so they are more proportionate, reflecting not just what the firm has done, but its size, the profit it has made from any wrongdoing and any past conduct issues.”