Regulators have fined UK businesses and executives over £166m for business misconduct since the start of 2013, with the majority of offences committed by financial services personnel.
These are the findings of research undertaken by EY’s fraud investigation and dispute services team. The firm analysed data from 74 separate investigations over the past 12 months using information from the Office of Fair Trading, Serious Fraud Office and Financial Services Authority (FSA)/Financial Conduct Authority (FCA). In addition to the penalties issued this year, over £222m of fines were imposed in the latter half of 2012.
The study revealed that 76% of all investigations and 93% of the fines identified in the past six months were directed at financial services firms and personnel, resulting in over £154m in fines to the sector. It suggests that regulators’ focus on financial institutions is not waning in the wake of the FSA issuing its largest fine ever when it fined UBS £160m over its role in the Libor scandal at the end of 2012. This year, the FSA fined the Royal Bank of Scotland £87.5m for Libor rigging, while the FCA fined JPMorgan Chase £137.6m for failing to supervise its traders effectively.
There is some good news for financial services, however. EY’s EMEIA Fraud Survey suggests that the sector remains ahead of the pack when it comes to fighting corruption and bribery. For example, more than three-quarters (79%) of people surveyed who work in financial services said their company had a clear code of conduct and an anti-bribery/anti-corruption policy in place. This contrasts with the cross-industry average of 57% and a figure as low as 44% in the real estate industry.
John Smart, head of EY’s UK fraud investigation and disputes services practice, said: “This research clearly shows that there has been no let-up in regulator activity with regards to investigations into fraudulent activity and business misconduct.”
Sally Percy is editor of The Treasurer