Biggest U.K. Firms See Legal Liabilities Climb in 2012

Britain’s 100 biggest companies saw their combined legal liabilities rise 22 percent to 22 billion pounds ($34 billion) last year due in part to increased regulatory enforcement by U.K. and U.S. agencies.

The cost of litigation against FTSE 100-listed companies, as well as fines by regulators including the Financial Services Authority in Britain and the U.S. Commodity Futures Trading Commission, rose from $28.3 billion in 2011, according to an analysis released today by legal publisher Sweet & Maxwell.

“When the credit crunch started there was the expectation that legal liabilities would rise as commercial pressure led to more litigation between companies,” Teri Hawksworth, Sweet & Maxwell’s managing director, said in the statement. “What was not so widely forecast was that the biggest source of this pain would be from regulatory bodies.”

The highest-profile fines have been levied against the U.K.’s banking industry as regulators on both sides of the Atlantic probe scandals including the rigging of London’s interbank offered rate, or Libor. Barclays Plc was fined $450 million in June following a Libor investigation, while HSBC Holdings Plc, Europe’s largest bank, agreed in December to pay $1.92 billion to settle U.S. probes into money laundering.

More substantial fines have been imposed this year, with Royal Bank of Scotland Group Plc, Britain’s biggest publicly owned lender, fined $612 million by U.K. and U.S. regulators earlier this month over the Libor scandal.

Among U.K. banks, legal liabilities rose to $9.8 billion in 2012 from $1.54 billion a year earlier as lenders also sought to repay customers over improper sales of so-called payment-protection insurance, Sweet & Maxwell said. The oil and gas industry had the largest share of the FTSE 100 companies’ combined liabilities, with 37 percent of the total.

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