Trends in Regulatory Enforcement in UK Financial Markets: Q3 Update

Wed Mar 11 00:00:00 UTC 2020
By Erin B. McHugh

This update, authored by NERA Associate Director Erin B. McHugh, extends NERA’s analyses of regulatory enforcement in UK financial markets to include data for the first three quarters of the current financial year (i.e., from 1 April to 31 December 2019).

NERA Economic Consulting maintains a proprietary database (the NERA FCA database) of fines and nonpecuniary enforcement by the Financial Conduct Authority (FCA). In this report, we present a detailed analysis of these data, supplemented with data on redress schemes agreed with the FCA and fines associated with deferred prosecution agreements (DPAs) agreed with the Serious Fraud Office (SFO), to reveal trends that may not be apparent from a review of individual cases.

Q1–Q3 Highlights

  • From 1 April to 31 December 2019, the number and aggregate amount (total value) of fines imposed on firms and individuals remained low relative to the high-water marks established from 2013/14 to 2015/16, when substantial fines were imposed for foreign exchange and interbank rate manipulation.

  • The FCA imposed fines on nine firms and three individuals totalling £119,100,800 and £299,500, respectively. In comparison, in the first nine months of 2018/19, the FCA imposed fines on five firms and six individuals, totalling £56,078,700 and £899,100, respectively.

  • The amount and number of fines imposed on individuals is on track to be lower than in any of the previous six financial years. Although the number of fines imposed on firms in 2019/20 is on track to be higher than in any of the three prior financial years, the aggregate amount of fines imposed on firms is on track to remain within the range observed during that same period.

  • Most of the fines imposed on firms and individuals in the current financial year were in relation to compliance failures or customer protection failures. The SFO also issued two fines in connection with DPAs in the first nine months of 2019/20, bringing the total to six since their introduction.

    Additional data on the number and amount of FCA fines by period (including by category of alleged misconduct) are outlined in the table below. 

NERA plans to release its 2019/20 FCA financial year-end report in April 2020.