Banks 'are past the worst on fines and punishments'

Record-breaking fines for finance firms are likely to be a thing of the past, as the regulators cut back on huge financial penalties in the City

The FCA's founding chief executive Martin Wheatley fined financial services firms more than £2bn, but was ousted by the Chancellor this year Credit: Photo: Bloomberg News

Britain’s financial sector is past the worst of the storm of fines and charges from regulators, with the wave of penalties last year unlikely to be repeated, according to a new analysis of the sanctions handed out by the Financial Conduct Authority.

In 2014 the FCA dished out fines amounting to £1.47bn, according to information services group Wolters Kluwer.

So far in 2015 the City watchdog has levied charges of £827m, indicating the overall level of fines is down, and last year could prove to have been the peak for financial sanctions.

“It is clear that there is a slowdown in the number of penalties and value of fines issued against the banking sector in particular. The last significantly large financial penalty against a bank was in June 2015,” said Mary Stevens from Wolters Kluwer Financial Services.

The fine Ms Stevens referred to was a £117.4m penalty handed to Lloyds Banking Group.

The banking sector has received 93pc of all fines given out by the FCA so far.

“With just three months of the year remaining, it is not unreasonable to assume that 2015 will not breach the record level of fines issued in 2014.”

Ms Stevens expects the slowdown to continue as the FCA goes through a change of leadership.

When the regulator launched, it was keen to show the industry that it represented a change from the approach of the old Financial Services Authority – the FCA’s founding chief executive, Martin Wheatley, initially said he planned to “shoot first and ask questions later.”

Mr Wheatley left the FCA this month after being sacked by Chancellor George Osborne, who signalled he wanted a “different approach” from the watchdog.

“It is widely believed that his early exit was as a result of Mr Osborne’s determination to win back the trust of the banking sector, who saw Mr Wheatley as a threat and not helped by his initial comments about punishing firms first before asking questions,” Ms Stevens said.

The FCA is currently being run by former enforcement boss Tracey McDermott, but she has only been given the top job on an interim basis.

Chancellor George Osborne said he wants a change of direction at the City watchdog, which could mean fewer fines for banks

While the FCA may not be handing out as many fines, it is considering whether or not banks need to give more compensation to customers over the payment protection insurance (PPI) mis-selling scandal.

Officials are reviewing the case of a bank customer, Mrs Plevin, who won a court case arguing that her lender, Paragon Personal Finance, had unfairly failed to declare the commission on the PPI sale.

The regulators could order banks to compensate customers over similar commission payments, which could add substantial sums to the £24bn bill already incurred by the sector.