FTSE 100 firms hit with four times more fines than last year
The value of fines against FTSE 100 companies has increased fourfold over the previous year, Thomson Reuters Regulatory Intelligence research shows.
Companies on the FTSE 100 index received £1.6bn in fines in the year ending on 30 June 2022, compared to just £354m worth of fines in the previous year.
The £1.6bn figure marks an eight-fold increase on the £192m fines handed out to the 100 biggest UK listed companies in 2019/20.
The uptick comes as watchdogs have taken advantage of new powers – including the ability to hand out turnover-linked penalties – to impose increasingly large fines on the UK’s top firms.
Thomson Reuters regulatory expert Michael Cowan said: “In recent years regulators have been given more powers to fine corporates as a percentage of their turnover – for example for breaches of GDPR or of competition law.
“Regulators are clearly willing to impose very large fines as they clamp down on corporates suspected of breaching regulations.”
“The aim of regulators has been to get fines up to the level where they are a real deterrent,” Cowan said. “Regulators like the FCA or SEC do not want fines to be seen as an acceptable cost of doing business.”
The surge in fines also comes as governments across the world have taken an increasingly interventionist stance towards regulating the private sector in the wake of the 2008 financial crash.
The more stringent approach – particularly towards the global financial sector – saw 64,152 significant regulatory changes across 190 jurisdictions in 2021, compared to averages of just 33,954 per annum in the decade from 2009-2019, the Thomson Reuters research shows.
Nonetheless, firms working in the natural resources and energy industries received the bulk (69 per cent) of all fines last year, in racking up penalties worth £1.1bn in 2021/22.
For comparison, the UK’s financial sector received just more than a fifth of the total fines, in being fined £354m over the same period of time.
“The increasingly international nature of FTSE100 companies means that they are having to deal with a patchwork of different regulators across their business,” Cowan said.
“That not only increases the risk that they will fall foul of regulatory or statutory rules but it also increases the risk that they can be fined by multiple regulators in different jurisdictions for the same mistake.”