By Max Clarke
Members of the UK200Group of independent accountancy and lawyer firms have commented on reports that the Financial Services Authority more than doubled the amount raised by fining financial institutions during 2010, to £88million.
Jonathan Russell, partner at ReesRussell and vice-president of the UK200Group:
“We are in an era where regulators are having to demonstrate to their political masters that they are doing their job, and one of the easiest ways is to show a higher level of discipline towards wrongdoing.
“It is doubtful that this necessarily is a result of any greater wrongdoing or greater monitoring and it certainly does not guarantee a better delivery to or protection of ultimate customers. This may be a sceptical view and only time will tell whether the increased level of monitoring and prosecution leads to a reduced number of issues in the future.”
David Ingall, partner, JWPCreers:
“Governments have learned that regulation and compliance are an easier way of raising revenues. Look at the posturing of HMRC on compliance issues. It is easier to collect moneys from the middle classes for breaches of our tax laws than pursuing the black economy.
“It should be remembered that nearly £51million of the fines from the FSA came from two penalties, so they accounted for the entire increase and some more besides. It is intriguing to consider how such gargantuan fines (£33million for JP Morgan and £17.5million for Goldman Sachs) were assessed. The Goldman Sachs fine was because they failed to tell the FSA that they were under investigation by the US authorities — something of a double whammy!”
Anthony Harris, director, Critchleys:
“I fear, but without evidence, that these FSA fines are an indication that our worthy regulator has found more instances of business’s failing to dot I’s and cross T’s. It gives me no confidence that they are working to ‘clean up’ the financial services industry. Anecdotal evidence shows ‘wide boys’ still in action; and good businesses struggling with an over-burdensome regulator!”