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Financial firms save £1.2bn from FCA fine settlements

Financial firms have saved £1.2bn on their FCA fines over the past four years due to the regulator’s settlement discount mechanism.

Currently, if banks and other financial firms are faced with enforcement action by the FCA, they can receive a 30 per cent discount if they settle the case at an early stage.

Liberal democrat Lord Sharkey says this money should be “put to better use”. He proposes amending the Criminal Finances Bill to stipulate financial firms take disciplinary action against those responsible for the misconduct before the discount kicks in.

Commenting for the New City Agenda think tank, Lord Sharkey says: “The amendment proposes to put the gigantic discount mechanism to better use. This is a simple proposal. It would give the FCA more power, more say and more insight into how transgressors had modified their behaviour and addressed individual and structural capability.

“It would give the firms involved a powerful incentive to take proper remedial action – which, unfortunately still seems to be needed.”

Between 2013 and 2017 banks and other financial firms incurred 82 financial penalties totalling £4.2bn, which was cut to £3bn following the discounts.

Deutsche Bank received the largest total discount at £165m, followed by RBS at £157m and JP Morgan at £155m.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. It’s a shame that more of these fines are not simply used to reduce the cost of regulation on those who don’t break the rules. I personally think larger organisations just see it as an occupational hazard. The culture that perpetuated the sale of PPI for example in the Banks was not a sudden stupidity spasm. It was a long held profitable and largely corrupt sales strategy. The same with Investment Bonds paying 7% initial commission.

    The regulator only uses a stick though. They haven’t found the cupboard with the carrots in it. Good behaviour is not rewarded at all. It is expected. Bad behaviour results in fines, but rather than demonstrate the reward for good behaviour by paying those fines to their competitors, the miscreants are just faced with a form of tax charge. Still no one at the Treasury seems concerned.

    • Quite right too – totally agree, fines should be used to reduce costs for us good guys & not just go to the treasury to distribute as they see fit. The treasury does however have a conflict of interest
      as the more they use for their own ends, the less the government then have to stump up instead, so they are hardly likely to want to kill the golden goose by using the money for our benefit !

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