Generous discount on FCA fines leads to call for UK law changes

Maria Nikolova

The top five discounts applied to individual fines concerned penalties for FX manipulation, according to New City Agenda think-tank.

UK banks and financial services firms have often made use of discounts in settlements with the UK Financial Conduct Authority (FCA) over the past four years, with the mechanism spurring concerns and calls for legislative changes.

According to data from the New City Agenda think-tank, UK banks and financial services firms have benefited from a total discount of £1.2 billion on FCA financial penalties between 2013 and 2017. Companies that are subject to enforcement action by the FCA can receive discounts of as much as 30% on their fines if they settle the case.

During the period in question, the FCA levied a total of 82 financial penalties. Out of these, 66 occasions firms received a 30% discount, on 8 occasions firms benefited from a 20% discount and on 8 occasions firms got no discount. Excluding the discounts, the fines would have been £4.2 billion, the think-tank estimates.

The top five discounts applied to individual fines were all to penalties for FX manipulation.

The heavy use of discounts has prompted calls for legislative changes. Lord Sharkey, a co-founder of the think-tank, has proposed an amendment to the Criminal Finances Bill which would oblige banks and other financial firms to take disciplinary action against the employee(s) responsible for the violation before they can receive the entire discount on an FCA fine.

According to Lord Sharkey, the amendment would permit the FCA “to have direct sight of the improvements in process and behaviour agreed in any settlement. It would enable it to see that appropriate disciplinary action had been taken against those responsible for the transgressions. It would give the settling firms a powerful incentive to fulfill any settlement conditions. It would do this by making part of any discount withholdable until the settling firm had satisfied the FCA that all appropriate disciplinary actions had been taken. Only then would the full discount be realised.”

Lord Sharkey has referred to a survey by the Banking Standards Board, which has found that 12% of bank employees had seen instances where unethical behaviour had been rewarded, whereas 13% saw it as difficult to grow their careers without “flexing ethical standards”.

Read this next

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

Retail FX

Prop firm The Funded Trader shuts down, claims relaunch in April

Prop trading firm The Funded Trader has ceased all operations, with claims for a relaunch in the near future.

Digital Assets

Ethereum-Based Tokenized Real Estate Platform USP Launches On Republic

How This Californian Startup Is Revolutionizing Real Estate Investment through Ethereum-Based Tokenization.

Digital Assets

Sui Spikes in Weekly DEX Volume, Joins Top 10 of All Blockchains

March DEX volume on Sui stands at over $2.88B – up more than 49% from February – with decentralized exchange Cetus and wholesale liquidity layer DeepBook leading.

Digital Assets

Prisma Finance suffers $10 million crypto exploit, attack ongoing

Liquid staking protocol Prisma Finance fell victim to a security exploit on March 28, resulting in nearly $10 million in Prisma mkUSD and wrapped stETH being stolen by hackers.

<