Shadow Treasury financial secretary Cathy Jamieson says Labour is open to the idea of increasing regulatory fines, particularly for repeat offences.
Speaking to Money Marketing, Jamieson says it is hard for consumers to grasp why fines in the UK can be smaller than the profits that came from the misconduct.
She says: “The public sometimes find that difficult to understand and so on a point of principle we need to be open to the notion there should be increased fines for wrongdoing, particularly where it is persistent or there have been warnings.”
While the £59.5m Barclays Libor fine was a record for the FSA when it was imposed in June 2012, the biggest is now the £160m fine given to UBS over Libor rigging in December 2012. In contrast, US regulators fined JP Morgan chase £7.6bn in November over the sale of toxic mortgage-backed securities.
Jamieson says fines must send a clear signal to consumers about the seriousness of action taken against financial institutions, especially as many have tried to rebrand in the wake of the financial crisis and misselling scandals.
“We are in an environment now where banks say they are changing and that they want to do things differently,” she says. “There is a big charm offensive going on towards the public.
“Part of the point of a fine is to change behaviour to make sure things don’t go wrong in future, but it also has to send a message to the public. If people think firms have in essence got away with a slap on the wrist then I don’t think that helps restore confidence.”
Labour’s critics say the party cannot be trusted on the economy and the party often struggles in polls on economic credibility.
Jamieson says: “There is always a responsibility on us to show that we can do the sums, manage the budget and balance the books. That is why shadow Treasury chief secretary Chris Leslie is doing the zero-base budget review and by the time the election comes people will judge this on whether the economy is working for them.
“That is why we have been focusing on the cost of living, because that is what matters to people out in the real world.”