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Announcing New NERA Study: Trends in Regulatory Enforcement in UK Financial Markets


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Learn more about
the research team:
Paul Hinton
Robert Patton

NERA has released an in-depth report analyzing trends in regulatory enforcement by the Financial Services Authority (FSA). In addition to a detailed analysis of trends since April 2002, the authors of Trends in Regulatory Enforcement in UK Financial Markets, NERA Vice President Paul Hinton and Senior Consultant Robert Patton, provide background on the role of financial penalties in enforcement, discussion of recent developments in enforcement, and a look ahead to expected changes in enforcement policy in the UK.

As the authors note, UK financial enforcement activity has reached record levels as measured by the number and aggregate amount of fines imposed. However, behind these headline figures is a more nuanced picture: aside from a handful of recent fines among the largest ever imposed, the average size of fines has actually declined slightly. The FSA is imposing more fines than ever before, but not across the board: while enforcement has targeted certain conduct, such as unsuitable investments and mis-selling, market abuse cases against firms remain rare.

Key findings in the report include:

  • Aggregate fines assessed by the FSA rose to £98.6 million in the 2010/2011 fiscal year from £33.3 million in 2009/2010
  • The number of fines nearly doubled in 2010/11 as compared to the previous year, for both firms and individuals. For individuals, the number of fines assessed in 2010/11 was more than 10 times the average over the six years prior to 2008/09, before the FSA adopted a more assertive enforcement stance.
  • The increased number of fines, imposition of several very large fines, and increase in the number and size of fines against individuals starting in 2008/09 are consistent with a shift from "light touch" enforcement to a tougher "credible deterrence" approach and a recent enforcement focus by the FSA on sanctions against individuals.
  • A high proportion of the all-time top 10 fines have been assessed over the past three fiscal years, and in 2010/11 in particular. Excluding such exceptional fines, the average fine against individuals increased by 37 percent in 2010/11, while the average fine against firms outside the top 10 actually declined by 16 percent.

    • About the Report and NERA's "Trends" Series

    NERA has developed a proprietary database of fines and other enforcement activity by the FSA, covering the period beginning 1 April 2002, and has classified enforcement activity according to the underlying alleged misconduct described by the FSA. NERA has been analyzing trends in enforcement and shareholder class action litigation for more than 15 years. In addition to this new study, two reports analyzing trends in US Securities and Exchange Commission enforcement actions are published each year. NERA also publishes semi-annual reports analyzing shareholder class action litigation trends in the US, and annual reports on trends in Australia, Japan, Italy, and Canada.

    Download the report.