15th June 2020

Not quite ‘banged to rights’

“In an update June 11^th, the FCA said a leading bank had potentially unfairly treated more than a quarter of a million borrowers in mortgage arrears, including vulnerable customers.

The £64m fine comes as the regulator promised to continue to monitor how banks treat customers experiencing financial difficulty in a bid to boost standards in the sector.

Because the bank and its subsidiaries accepted the FCA's findings, according to FT Adviser, they qualified for a 30 per cent penalty discount, otherwise the fine would have totalled more than £91m”.  

These fines used to go to the FCA to offset the cost of regulation, they go to HM Treasury now less the FCA costs attached to the investigation. 

Redress payments totalling £300m have been paid to about 526,000 customers, including refunds for broken payment arrangement fees, arrears management fees and any accrued interest and unfair litigation fees”.  

That is only some £570 redress per customer. All this cost, £64m, to do that!

There is something quite disproportional about the average redress, this level of fine and who it is levied upon. In the new age of senior management responsibility why are fines not now levied on the individuals involved in the corporate chain of command? That would mean something that in the scheme of things £64m does not because it is a corporate fine, and everyone just moves on.

Or, as a footnote, not that I am suggesting any collusion here, is this a ‘helping hand’ case of regulation trying to do its bit to offset some of the £30bn plus Covid19 cost to UKplc?:)

FSA/FCA, Panacea Comment, Regulation