Monday 23 January 2017 5:31 am

Financial Conduct Authority fines to increase in 2017 as new rules take effect

Unusually low level of fines handed down by City watchdogs in 2016 will not be repeated this year, with new rules and a broadening of remits likely to mean more penalties are on the cards in 2017.

Fines issued by the Financial Conduct Authority (FCA) fell by 97 per cent in 2016 compared with the year before, dropping to £22m from £905m, according to law firm RPC.

But according to another City firm, Fox Williams, businesses in the Square Mile should not be resting on their laurels in 2017.

“When it became clear that fines levied in 2016 were the lowest since 2007, there was a view that financial services had finally responded to increased scrutiny and cleaned up its act. Or conversely that the regulator had softened its approach to misconduct," said Peter Wright, partner and head of financial services investigations at Fox Williams. "Our analysis shows this is far from the case.”

Fox Williams highlighted five key areas it expects the FCA to target over the next year. Top of the list was prioritising anti-money laundering and a crackdown on insider trading through the application of market abuse regulation.

One year after the introduction of the Senior Managers' Regime, Fox Williams added the FCA will start cracking down on shared responsibility among junior managers. Also, regulators will continue their focus on consumer credit firms and likely revive investigations over Libor rigging.

Small firm focus

Wright said:

Big banks and trading floors have been the popular target for several years, but now it is the turn of smaller firms, independents, insurers, credit companies and anyone handling client money to be in the spotlight.

Separate analysis by RPC in December on the level of fines handed out by the FCA indicated a willingness for the FCA to pay more attention to how staff are behaving at regulated firms , rather than the overall actions of the institutions themselves.