Regulatory fines for financial firms top $1.5bn in H1
Corporate governance failures have contributed to more than $1.5bn in regulatory fines paid by financial institutions so far this year, according to a recently released report.
The data, released by Irish regtech Corlytics, shows that financial crime, data protection and governance penalties reached $1.54 billion in the first half of the year, bringing the total value of fines to $47 billion since 2020.
Asset managers were among the ten most affected business lines, along with equity derivatives, mortgage lending and payment service providers among others.
In terms of risk categories, corporate governance failures incurred the most penalties with more than $100 million in fines.
Figures from the last quarter included the UK’s Financial Conduct Authority’s investigation into the collapse of the Woodford Equity Income Fund (WEIF) in 2019 and the role of the authorised corporate director, Link Fund Solutions.
Other notable penalties included the US Consumer Financial Protection Bureau’s fine of the US-based industrial supply chain company Sutherland Group for sending borrowers “due and payable” letters that often falsely conveyed that loans were in default and other customer communication failures.
In the UK, the FCA fined HSBC for its failures in its treatment of customers who were in arrears or experiencing financial difficulty.
Governance issues in sales and trading activities have also been the subject of regulatory action, with Citigroup Global Markets facing three fines from each of the FCA, Prudential Regulatory Authority and [German financial regulator] BaFin for failings in its trading systems and controls.
“The second quarter of 2024 has been a quiet one, both in terms of amounts and number of fines imposed,” said Susie Mackenzie, head of Corlytics’ Legal and Regulatory analysis.
“However, we have seen regulators on both sides of the Atlantic focus on unfair customer treatment, with three of the top ten fines relating to this issue.”
