June 17 (Bloomberg) -- The U.K. markets watchdog increased fines for risk management failings by more than seven times last year, according to a report by the Chartered Institute of Internal Auditors.
The Financial Services Authority, which was replaced in April by the Financial Conduct Authority, levied 292 million pounds ($458 million) in fines against firms that didn’t have adequate risk management and controls in place in 2012, up from 38 million pounds in 2011, the group said in an e-mailed survey.
“The financial crisis and scandals like Libor and interest rate swaps mis-selling have underlined how easily weak internal controls can lead to inappropriate conduct, and, at the extreme, even let potentially criminal practices go unnoticed,” Ian Peters, chief executive officer of the CIIA, said in the statement.
In one of the biggest penalties last year, the FSA fined Barclays Plc, the U.K.’s second-biggest bank, about 60 million pounds for attempting to manipulate the London interbank offered rate. UBS AG was fined 29.7 million pounds in 2012 by the FSA for operational risks after a $2.3 billion loss from unauthorized trading by Kweku Adoboli.
“The massive scale of fines for financial services firms demonstrates that as well as causing reputational damage, the regulatory response alone can really hurt,” said Peters.
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