A promised regulatory crackdown on individual behaviour rather than headline-grabbing fines on companies is beginning to bear fruit, with the number of people banned from holding jobs in the City of London rising for the first time in four years.
The UK’s Financial Conduct Authority banned 27 people after regulatory infractions last year — a slight uptick on the 25 who were prohibited the previous year, according to new statistics. There has been a sharp decline, though, since the financial crisis, when 72 people were banned in 2010.
More fines and bans against individuals have popular support. Regulators and prosecutors have been criticised for not taking action against bank bosses; a point underscored when, after inaction at the time, the regulator began an investigation earlier this year into the former bosses of HBOS, the lender that collapsed eight years ago.
Meanwhile, policymakers have questioned the wisdom of multimillion-pound fines, which they argue can weigh on a bank’s ability to lend and do not do much to address individual failings.
“Many at the FCA believe that it is prohibition orders, fines against individuals and prison sentences that act as the best deterrent. However, these are harder to come by than some expect,” said Richard Burger, a partner at Reynolds Porter Chamberlain, the law firm that gathered the data.
“There is still enormous pressure from politicians and other commentators on the FCA to bring more enforcement cases.”
Parallel data show that fines meted out by the FCA on corporates have fallen for the first time in four years. The high level of fines was caused by settlements of the probes into rigging of Libor and foreign-exchange benchmarks.
Those investigations sapped resources at the regulator, explained Mr Burger.
“Now work in that area has been wound down, it has freed up enforcement staff to pursue other matters,” he said.
Cases against individuals, whose livelihoods are at risk, can be fiercely contested, however, while regulatory cases against companies mostly settle. The FCA confirmed earlier this month that a former Barclays executive is challenging the watchdog’s planned ban for sitting on a damning dossier detailing cultural failings at a US unit.
The statistics come as the FCA has pledged to root out poor culture across the City. Last week, the head of the watchdog railed against some lenders and insurers that had tried to game tough new rules designed to hold the most senior executives to account for failings on their watch.
The FCA has forecast that it will take more enforcement action against individuals as a result of the new rules, which came into effect in March and which will be extended across all financial firms by 2018.
The FCA declined to comment.