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FSA fines up 514%

The value of fines handed down by the FSA in the last year jumped 514 per cent to a record £27.3m.

City law firm Reynolds Porter Chamberlain has calculated that the average fine handed down by the FSA in the financial year 2008/09 came to £497,000 compared with £212,000 in the previous financial year. Even after taking out fines handed down worth more than £1m, it found that the average fine still increased 20 per cent from £111,000 to £133,000.

The number of fines handed out by the financial regulator more than doubled also over 2008/09, to a record 55. The FSA also prohibited more individuals or firms, 46, from carrying out regulated activity than in all previous years put together.

RPC regulatory partner Jonathan Davies says: “The FSA has been under significant public and political pressure this year for failing to foresee problems with failing banks and financial institutions. It has reacted to criticism by instituting a ‘get tough’ approach.

“The FSA is taking an aggressive approach towards mortgage advisors, probably because falling house prices have exposed fraudulent market practices which remained hidden when prices were rising.”

Davies says that more than a year can pass after the regulatory lapse of a firm or individual before the FSA publishes a ‘final notice’ of any consequential enforcement activity it took.

As a result, he says that many credit crunch fines have yet to surface. He says: “Any enforcement activity against financial institutions or their directors who failed as the credit crunch took the ground from under them will not feed through in FSA fines until next year or even the year after that. It seems likely that enforcement activity will continue to increase for several years to come.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. so what..
    The FSA came under critisim for failing to shortcomings of the banks and financial institutions, so why are they fining advisors? Advisors wouldn’t have been able to get away with half of the practises they have if the banks/lenders were doing their underwriting correctly, or are they not reasponsible for that either? Everytime we read of another mortgage broker/advisor being banned for mortgage fraud, do the FSA then prosecute the lender for having such lapse underwriting policies in place, enabling them to commit the crime in the first place? Probably not….. The level of fines now being given out doesnt mean anything other than the FSA brought in more money…….does mean they are any more effective …..or that they are regulating the right people

  2. The Mystery Shopper for IFAs 8th June 2009 at 4:12 pm

    FSA bonuses and pay
    Fines are nothing but ways to skank the industry. just like the MPs expenses. They do everything in secret with no transparency.

  3. FSA Fines.
    Increasing the number and amount of fines is just a smoke screen, allowing the FSA to slip away from having to face up to it’s failings.
    Just the same as brokers being blamed because the lenders underwriters failed to do their job properly.

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