Financial firms have escaped £1.2bn in FCA fines over the past four years due to the regulator’s settlement discount mechanism, which liberal democrat Lord Sharkey says should be “put to better use”.
Currently, if banks and other financial firms are faced with enforcement action by the FCA, they can receive a 30 per cent discount if they settle the case. Lord Sharkey proposes the Criminal Finances Bill be amended to stipulate financial firms take disciplinary action against those responsible for the misconduct before the discount kicks in.
Commenting through online think tank New City Agenda, Lord Sharkey says: “The amendment proposes to put the gigantic discount mechanism to better use. This is a simple proposal. It would give the FCA more power, more say and more insight into how transgressors had modified their behaviour and addressed individual and structural capability. It would give the firms involved a powerful incentive to take proper remedial action – which, unfortunately still seems to be needed.”
Between 2013 and 2017 banks and other financial firms incurred 82 financial penalties totalling £4.2bn, which was cut to £3bn following the discounts.
Deutsche Bank received the largest total discount at £165m, followed by RBS at £157m and JP Morgan at £155m.