Regulators are increasingly targeting financial services individuals rather than firms, according to Duff & Phelps’ Global Enforcement Review 2018.
The review which explores the impact of regulatory enforcement on the global financial services industry shows that UK penalty amounts against individuals dropped between 2016 and 2017 to just £970,000 in total, from £18.8m.
While figures rose in the US, Europe and Hong Kong, Duff & Phelps predicts lower figures in 2019.
However, the UK has introduced the senior managers and certification regime for banks, which is being rolled out to all financial services institutions next year, which may mean fines pick up in the future.
Corporate fines climbed to $26.5bn (£20.3bn) in 2017, up 30% on two years’ earlier, but will fall in 2018.
“Massive fines on firms have lost their power to shock, not just in the industry but also among the public,” said Nick Bayley, MD of regulatory and compliance consulting at Duff & Phelps.
“The declining penalty amounts from previous years in the UK point to the end of the big benchmark manipulation cases but also potentially suggests a change in regulators’ enforcement approach and their faith in the ability of big fines alone to change culture. Regulators globally are also using a wider range of enforcement tools in an attempt to improve conduct.”
Other regimes have followed the UK’s lead in introducing individual accountability. Australia, Hong Kong and Singapore have introduced similar schemes.
A key area of focus for FS organisations will be managing cyber risk and tech developments in their markets. Data security obligations are now under greater penalty regimes (GDPR), while new products and services provided to clients using the latest technology can see a lag between regulation and those operating in these markets.
Kevin Reed is one of the UK’s most senior accounting and finance journalists. He is a former editor of Accountancy Age and Financial Director, and writes regularly on corporate and professional services governance.
To read more articles like this, sign up here
Further reading on this topic: