Another year, another £213m in fines imposed on financial services firms and individuals by the Financial Conduct Authority.
Not a record; in fact one of the lowest totals in the 10 years of the FCA’s existence and barely a third of what it cost to run it in 2021/22.
But still a lot of money. Enough, for example, to run the Money & Pensions Service for nearly 18 months.
In 10 years, the FCA has levied 247 fines, totalling £4.54bn. No other lawful industry requires such policing
So, may I present the FCA Fines Awards for 2022. First, please welcome the winner of Newcomer of the Year: TSB. The bank has never been in the fines table since its 2013 split from Lloyds.
And what a debut! The £29.8m penalty for its collapsing IT system of 2018, which left millions of customers without access to their money or banking, was just the start. The Prudential Regulation Authority added its own fine of £18.9m and TSB paid out £32.7m in customer redress on top — a total cost of £81.4m.
Well done, TSB.
The FCA found senior individuals at the bank had seen and ignored corrupt relationships
But even that eye-watering total does not win the Biggest Fine of the Year award. That accolade goes to Santander, a familiar figure in the all-time greats with 10 penalties since 2002 totalling £165.3m. The bulk of that was the latest £107.8m fine for failing to put adequate money-laundering checks in place.
Money laundering has been one of the biggest fine generators of recent years, second only to cheating other banks over foreign exchange rates.
Across the board
Most of the money — 78% — raised from fines in 2022 came from banks. However, they accounted for just six of the penalties.
The other 20 were split between brokers (mainly for market abuse), investment firms (some of which failed to manage conflicts of interest), traders and one hapless individual, Sir Christopher Gent, fined £80,000 for unlawfully disclosing inside information.
JLT Specialty had been fined in 2013. Nine years later, despite improvements in its procedures, the FCA fined it again
Sadly, financial advisers also featured, all guilty of misselling.
Bank House Investment Management and five of its advisers missold pension transfers without the proper permissions and put the pensions of 265 individuals, worth a total of £8.5m, into illiquid and unsuitable investments. They also put their interests above those of customers.
They were fined fairly modest amounts, ranging from £42,898 to £361,071 — a total of £1.5m between them. The individuals, who were also banned from any regulated activities, appealed to the Upper Tribunal but lost.
The company went into administration. The clients are unlikely to receive any compensation.
Another year, another £213m in fines imposed on financial services firms and individuals
TFS Loans failed to treat fairly its customers who had acted as guarantors of business loans. The firm failed to assess whether the guarantors could afford the monthly payments if they had to. It was fined £811,900 but is also in administration, so that may not be paid.
Repeat offender
JLT Specialty had been fined before in 2013 for failing to have controls in place to prevent bribery and corruption in commission paid to people in the supply chain. Nine years later, despite improvements in its procedures, the FCA fined it again for failings related to anti-bribery and corruption in the general insurance and protection sector.
It co-operated with the regulator and its fine was reduced to just under £7.9m.
The firm failed to assess whether the guarantors could afford the monthly payments if they had to
Julius Baer International is a private bank based in Zurich that provides investment and wealth management for some UK clients. Its website says: “For more than 130 years, we have managed our clients’ wealth and served them as trusted, truly personal and holistic advisers.”
But the FCA found senior individuals at the bank had seen and ignored corrupt relationships, and it said these weaknesses “create the circumstances in which financial crime of the most serious kind can flourish”.
May I present the FCA Fines Awards for 2022. First, please welcome the winner of Newcomer of the Year: TSB
Three individuals who worked for the firm were banned by the FCA but have referred their cases to the Upper Tribunal. The decisions on them and the bank — totalling 329 pages — can be found at fca.org.uk; search ‘Julius Baer’.
During its first decade the FCA has levied 247 fines, totalling £4.54bn. No other lawful industry requires such policing.
Paul Lewis is a financial journalist, host of Radio 4’s Money Box and author of ‘Money Box — a money toolkit for life’
This article featured in the February 2023 edition of MM. If you would like to subscribe to the monthly magazine, please click here.
Nothing about Portal LLP Paul? Portal became Portafina then Portal again. Now there’s another Portafina. But it’s absolutely not a phoenix, oh no, perish the thought, don’t anyone even dare think that never mind say it. It’s absolutely nothing to do with portal, despite high commonality of key personages between the two. Wonder why Portal sold all that illiquid dodgy junk? Just like BlueInfinitas and a few more who nobody has gone after. The suspicious-minded might think that it was all a put-up job with mug punters’ pension funds being used to hoover up junk shares and bonds from crooks who’d picked them up for pennies. We’ll never knmow though, because nobody but nobody seems to be interested in investigating them properly. Not the FCA, not the LSE, not the City of London Police, and not even the media. So instead, sooner or later, we’ll pick up the bill from the FSCS. Again.
The last paragraph, give I a rise smile Paul.
“During its first decade the FCA has levied 247 fines, totalling £4.54bn. No other lawful industry requires such policing.”
Ever to lay blame squarely at the feet of the regulated …as a whole I hasten to add, not individually…. I hear you shout they have been fined as individuals .. but have they ?
Yeah the big banks and firms pay up, they have many customers with big, medium, and small pockets all chipping in to help the banks that like to say-: more cake please, we are quite partial to a Victoria sponge.
Then there is the FSCS, for all the others who fold and run away with the loot ….. collected (from our clients) and paid by us…
Why do you (really) think this is ?
What happens to all this lovely loot, not only the fines themselves but the ill gotten gains ?
Biggest scam of it all it all ends up exactly where the government and treasury, wants it …either back in the system or their own back pockets !!
So back to the reason for my smile, are we an industry that requires such policing ? or are we the industry played and used a tax collector.
So with the FCA being so political, and used as the treasury Rottweiler I would argue …all is going to plan, collective punishment reins supreme and ultimately the consumer pays we are just summoner’s, collecting cash for our ecclesiastical (if you will) over lords, protected by the very Dogma, that proves its infallible.
Was it not the policy when the enigma cade was broken….not all souls would be saved as to not alert the enemy, (we know your plans) …… so the FCA let a lot past their very own noses to feed their master… and just enough to make us all squeak !!
All this reporting …RMAR and quarterly “financial” audits … are they really so highlight risk to the consumer or ….. a budget setting exercise for the coming years harvest ?
“During its first decade the FCA has levied 247 fines, totalling £4.54bn. No other lawful industry requires such policing.”
What a load of sanctimonous rubbish!!!
One quick check and in 2021-2022 there were 2,198 football related arrests. Now correct me if I am wrong, but that sounds like a lot more ‘policing’ than less than 25 a year over a 10 year period.
And please Paul look at who those fines were dished out to and you will find very very few small IFA’s – you know the ones, the ones you hate so much and keep telling people not to use because they cause so much damage to the industry.
Statistics can be used to prove whatever you want as long as you frame them in a context that suits your narrative.
Paul
Why do you not make the case for those fines being used to pay compensation to all those who have suffered loss? In that way the polluter pays, not the good guys and their clients.
Or is it just easier to keep tarring and feathering all of us?
So are you now suggesting Paul, that it’s not such a good idea to invest with banks as they can’t be trusted either?
What is the point of this article ?
Paul, please draw some MEANINGFUL comparisons with the likes of : the energy industry, telecomms, legal, investment banking, professional football, political parties, broadcasters…..etc, etc.