RBS announced that it has set aside a further £780m to cover the costs of conduct issues, including the PPI miss-selling scandal.
The news, released alongside its third-quarter results, showed that the bank’s recovery continues despite the ‘misdemeanour’ provisions for past mistakes.
The latest figures from the FCA show that fines levied during 2014 to date are a staggering £313,025,800 with most being collected from banks.
We have seen ‘misdemeanour’ payments and provisions for PPI, currency dealing, LIBOR rate fixing, money laundering, sanction breaches and trading scandals.
And it is always banks!
The top 10 reads like a list of the great and the good with HSBC at the top with a staggering $1.9bn fine for ‘money laundering ‘lapses’.
But the reality of the situation is that banks today are too big to fail, possibly because of ‘customer detriment’ fallout. Can you imagine your high street without a branch of……..well where do you start?
We worry about the restoration of trust in the financial services industry, wringing our hands with the regulator and consumer groups in the search of a way back to trust.
Sir David Walker, the outgoing chairman of Barclays said in late October that big fines on banks were making it harder for the industry to win back public trust and suggested fines were being levied for activities that in the past might have been regarded as acceptable.
Walker said regulators “cannot and should not try to regulate culture” and he may have a point. The FCA is certainly trying to regulate morality, a character trait sadly lacking in some quarters I would venture?
A point to consider going forward could be that the fines are aimed at the perpetrators on an individual basis and restitution a corporate and personal payment. Corporate fines mean nothing at all really. A bit of fiscal naming and shaming followed by a ‘get over it and move on’ attitude. The jailing of low-level offenders to set an example seems to not have done the trick at all when it happens, as that is very rare indeed.
The fact that only one top banker has been jailed for the financial crisis says it all.
Prosecution of white-collar crime, as it is sometimes referred to as, has seen some interesting MI over the last 20 years.
For example in the US, from the various loan scandals of the 1980’s, we saw 890 people convicted and jailed. The recent financial crisis has seen just one.
Says it all really.
On the subject of fines, that were supposed to be used to reduce the regulatory burden on firms that did do the right thing, we hear that part of this weeks banks £2bn Libor rate rigging fines will be used to fund a tour of the Tower of London poppies across the UK until 2018. George Osborne announced that £500,000 would be used “to ensure that people across the country will be able to see this moving tribute over the next four years”.
All very laudible, but I think it is time for a rethink on how fines are levied, who actually pays them and how they are used. Right now fines are treated as a windfall revenue source to distribute on a political whim for whatever cause is popular with the voting masses.
Osborne said “It’s only right that fines from those who have demonstrated the very worse of values should go to support those who have shown the best of British values.”
But fines should not be used as a political slush fund to ‘big up’ a government, any government especially in a lead in to an election.
Covering up the military loss of life and limb with a blanket of banking ‘misdemeanours’ demonstrates the very worst of politicians behavioural values, especially from recent administrations of varying hues (who have placed UK troops in harms way with little or no thought for their safety, wellbeing or exit strategy) and is just not on.
The Tower poppies represent a life lost, not a political or regulatory opportunity to look good.