wo new regulators formed from splitting the FSA could compete to set the highest fines
Reynolds Porter Chamberlain has published research showing a trebling in Financial Services Authority (FSA) fines in just one year and warned they could treble again.
According to the city law firm, the FSA collected £96.7m in fines in the year to 31 March 2011 compared to £33.1m over the same period the previous year.
With the FSA set to be split into two there are fears in the market that competition between the Financial Conduct Authority, which will regulate brokers, and the Prudential Regulation Authority could cause confusion and further complicate matters.
“A significant concern we hear from clients is that the two new regulators will compete with each other to set the highest fines,” said Jonathan Davies, partner in RPC’s financial services team warning that following the implementation of a new FSA fines policy the amount of fines could treble again.
However, over at the British Insurance Brokers’ Association (Biba), Steve White, said that although the surge in fines was proof of a more intrusive approach to supervision, he argued brokers had little to fear provided they were acting responsibly.
He said: “For the FSA, enforcement is an expensive tool and not something that they enter into lightly. As far as Biba members are concerned we do not have too many problems with the approach. Our members take compliance very seriously and they put a lot of time, effort, money and resources into being compliant.”
RPC argued that fines paid by firms were just one small element of the total costs to the financial services sector of enforcement activity and that only roughly half of the enforcement cases brought by the FSA resulted in a fine while all cases meant firms incurred substantial professional costs.
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