The Independent (UK): OUTLOOK: FSA fines: “It was the FSA's seventh fine in as many days and brings the total raised from financial penalties so far this financial year to just over pounds 24m with three months still go. The total has been swollen by the pounds 17m penalty meted out to Shell for not being able to count its oil reserves properly and the increasing number of fines for market abuse.” (ShellNews.net) 23 Dec 04
MICHAEL HARRISON
Dec 23, 2004
ONLY TWO fining days left to Christmas and the boys from the Financial Services Authority are spanking it like there's no tomorrow. Yesterday, it was the turn of Bradford & Bingley to feel the lash of the FSA's mighty enforcement division as it handed down a fine of pounds 650,00 for mis-selling precipice and with-profits bonds. The pounds 6m in compensation that B&B has also agreed to pay to investors will hurt more than the fine but not as much as the adverse publicity that the FSA's censure ensures. The size of the fine is designed to reflect the brand recognition that B&B enjoys, which in turn ensured that a lot of people would be attracted to the bonds in question on the assumption that they would get a good deal.
It was the FSA's seventh fine in as many days and brings the total raised from financial penalties so far this financial year to just over pounds 24m with three months still go. The total has been swollen by the pounds 17m penalty meted out to Shell for not being able to count its oil reserves properly and the increasing number of fines for market abuse.
The money raised from fines is equivalent to about 10 per cent of the organisation's pounds 200m annual running costs. With that sort of cash burning a hole in his pocket, the FSA chairman Callum McCarthy could be forgiven for wanting to re-carpet his Canary Wharf headquarters (he already has a private road to the office).
In fact, the FSA is required to use the money to reduce the fees paid by the 20,000 firms it regulates - soon to become 45,000 when it takes over responsibility for general insurance next year.
The cost of compliance was one of the main bugbears identified in the latest City practitioners' report. So perhaps the Square Mile should raise a small festive cheer for the likes of Sir Philip Watts, Robert Bonnier and the Plumber - working to keep the cost of regulation down.