Watchdog defends hefty fines for rate-rigging banks

Stiffer fines for banks caught rigging markets have not undermined financial stability or the solvency of lenders, a senior British regulator said yesterday.

Georgina Philippou, acting director of enforcement at the Financial Conduct Authority (FCA), dismissed criticisms that recent penalties amounting to billions of pounds were damaging the stability of the industry.

The FCA has been levying record amounts of fines, saying previous sanctions failed to impact. “We don’t consider that fines in the UK are anywhere near that level,” Philippou said.

“Our fines are related to profits from misconduct... even then we are a long way from undermining financial stability.”

Bank of England deputy governor, Andrew Bailey, has said regulators from the US and elsewhere should better co-ordinate fines to avoid weakening the banking system. Philippou was speaking at the launch of the International Organisation of Securities Commissions’ (IOSCO) paper on improving “credible deterrence” in enforcement.

The paper calls for strong punishments and bold prosecution of misconduct. It adds that regulators must co-operate and avoid “safe havens”, but Philippou said not all of the body’s 120 members had signed up to its memorandum.

Reuters