Nearly 86 per cent of the coin levied in fines by the FCA and its predecessor the FSA came from banks.

A total of £3.7bn was demanded from 56 banks over the 19 years up to October 2020.

Those figures come up from a new analysis of the Britain regulators' fines I accept been working on in the concluding few weeks. In that fourth dimension the FCA/FSA levied 620 fines. Only 137 of them (22 per cent) were on banks. But the fines imposed on banks exceeded those imposed on any other type of business organisation.

Barclays* topped the tabular array for the most fines (10) and the most money at £491,474,259. About one-half the full fines and 43 per cent of their value were from familiar high Street names. Afterward Barclays and fifth in the overall table was Royal Bank of Scotland at £376m. Lloyds was sixth at £321m and HSBC seventh at £230m.

I classify these banking concern fines into three groups:

  • cheating each other – roughly £6 out of every £ten fined
  • cheating customers – £2 out of £x,
  • cheating the regulator – £2 out of £x.

The fines for cheating each other were the biggest. They covered the inglorious menstruum in the noughties when the banks did more than rigging than the average sailor. They cheated on involvement charge per unit reporting (LIBOR) to such an extent that an entirely new way of averaging the rates at which they lend money to each other had to exist devised. They cheated on foreign exchange rates. And they cheated on commodities like the price of golden.

They as well cheated stock markets through insider trading, swaps, or fixing share prices. Altogether they were fined almost £two.3bn – 61 per cent of the money levied – for cheating each other.

Paul Lewis: A fine industry

Nearly ane in three of the fines (and xix per cent of their value at £692m) was for cheating customers. The fines were for misselling, failing to protect customer coin, not treating customers fairly, fraud, losing data, and not controlling sales staff. The biggest amount – but at £153m but a fifth of the total – related to the systematic misselling of payment protection insurance.

From the nineties to the noughties banks misled consumers about the cover information technology offered, sold it to people who were excluded from claiming, or added it to their payments without consent.

Near of the fines were non for misselling PPI but for mishandling complaints to endeavour to avert paying customers back. The fines were dwarfed past the redress that was paid. Past the end of 2019 banks had doled out a full of £38bn. An average £335m every unmarried month for 9 years was pumped into the economy in a sort of privatised quantitative easing. At the 2019 rate, in the 5 minutes information technology takes to read this article another £41,350 will accept been returned to missold customers.

PPI drives rise in overall complaints, FCA data shows

About half of the consumers sold PPI have not claimed redress. And even with the hefty statutory involvement of 8 per cent a year and the vast assistants costs it seems likely that the banks have cleaved even on this systematic cheating of their customers. The fines represent only 0.iv per cent of the redress paid out – no more than an overhead to most banks. And well-nigh have been healthily in turn a profit for most of the redress period.

Nevertheless, every bit part of its objective of merely providing an 'an appropriate degree of protection for consumers' the FCA decided that no new PPI claims would be accepted after 29 August 2019. It has not produced any figures in 2020 to show how effective – or not – that policy has been in stemming the cost.

The final category of fines was for cheating the regulator which represented iv out of 10 fines and 2 out of 10 pounds. Information technology includes failure to report important data which enables the regulator to practise its task and sloppy assistants. But by far the biggest amount was for actions that failed to terminate, written report, or adequately control coin laundering. Behind all these deceits was of class the hidden toll of the activities which the failures to written report allowed to go unsupervised.

The fines that I have analysed are only by United kingdom of great britain and northern ireland regulators on banks with a UK licence. They are dwarfed past the fines imposed globally. Finbold.com counts them. The 2020 total (excluding fines nether €500,000) to the middle of October this year was €11.61bn (£8.86bn) from 31 banks in 16 countries. The biggest number and the biggest fines were on American banks. The most common violation was for the highly-profitable-to-ignore money laundering.

Another international study, the CBR Conduct Costs Project by Cass Business School (now the Centre for Cyberbanking Research) includes not only fines simply also provisions made by the banks for redress payments and other costs. Its latest written report (September 2020) shows that in 2014-2018 the United kingdom is earth chirapsia with 3 out of the five top places. RBS group was first at £26.6bn, Lloyds tertiary with £xviii.8bn and Barclays fifth (£15.94bn). They shared the top 5 with Banking company of America (£26.5bn) and Deutsche Depository financial institution (£17.6bn). The global total of £218.3bn was down by eleven per cent on 2013-2017.

Regulation in the United kingdom of great britain and northern ireland costs £ane.75bn a yr – nearly half of that for the regulators (FCA, PRA, and PSR) and the other half to pay for the Ombudsman and the Financial Services Compensation Scheme. Every penny of that comes from the fiscal services industry through levies – paid past the good guys besides equally the bad – and all of it is ultimately paid by us through higher charges.

Of form, the toll does not but encompass policing the banks – insurance companies, investment funds, financial advisers, market traders, lenders, and claims managers all feature in the fines list. But it is a heavy price to pay for the venality of an industry that too often puts the awful in the lawful.

*All named banks include subsidiaries and employees

Paul Lewis is a financial journalist