FCA Chairman Says Public Anger May Lead to Bigger Banking Fines

Fines for bank misconduct levied by the U.K. Financial Conduct Authority may escalate due to public pressure, the chairman of the market regulator told a gathering of London’s lenders.

“Jacking up fines for the sake of it, absent anything else, doesn’t seem to me the most appropriate way forward,” though that outcome may ultimately come to pass, John Griffith-Jones said at the British Bankers Association’s annual conference today.

BNP Paribas SA was fined $8.97 billion after pleading guilty to criminal charges in the U.S. on June 30, a record sum for a bank accused of violating sanctions. Neil Woodford, a fund manager who has been one of the biggest investors in U.K. stocks, said last month that he sold his shares in HSBC Holdings Plc as the risk of fines had become “unquantifiable.”

Regulators are focusing on penalties “more and more,” Adam Farkas, executive director of the European Banking Authority, said in a panel discussion with Griffith-Jones at the BBA conference today. “The amounts became prudentially significant and important” after North American regulators raised fines to records for misconduct this year, he added.

The FCA handed out 307.2 million pounds ($494 million) of fines to banks this year, including a 105 million-pound levy on Lloyds Banking Group Plc in July for rigging benchmark interest rates. That compares with 5.3 million pounds of fines in 2007.

“The public don’t think sufficient individuals have been punished -- there’s enormous pressure to fire people, which can be counterproductive,” Sharon Bowles, a former head of the European Parliament committee dealing with financial regulation, said at the BBA conference. She was also speaking as a member of the panel on banking regulation.

There should be “a few more bankers in jail” than there are, said Bowles, a director of of London Stock Exchange Group Plc. Those “who’ve done bad are basically having free lunch on the firm.”

FCA Chief Executive Officer Martin Wheatley said on Sept. 9 the regulator consults with the U.K.’s Prudential Regulation Authority banking supervisor to ensure fines don’t put banks at risk of failure. Fines in the U.S. are a “completely different ball game” to the U.K., he said.

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