FCA fines and enforcement actions in 2015

The FCA fined Barclays Bank £72,069,400 in November 2015 over a £1.88 billion structured investment it arranged in 2011 and 2012 for a group of ultra-wealthy clients who were politically exposed persons, and who should therefore have been subject to enhanced checks. Barclays nicknamed it an "elephant deal" because of its size, but rather than applying its normal anti-money-laundering procedures it cut corners to take the clients on quickly and keep the business. The FCA found Barclays failed to act with due skill, care and diligence between May 2011 and November 2014. The penalty comprised £52.3 million of revenue the bank earned from the deal plus a £19.8 million fine; Barclays settled early for a 30% discount, without which the total would have been £80,542,000. At the time it was the largest financial crime penalty ever imposed by the FCA or its predecessor.

On 4 June 2015 the Financial Conduct Authority fined Lloyds Bank plc, Bank of Scotland plc and Black Horse Limited (LBG) £117,430,600 for breaching Principle 6 (Customers’ interests) in their handling of Payment Protection Insurance (PPI) complaints between 5 March 2012 and 28 May 2013. The FCA found LBG assessed complaints on more than 2.3 million PPI policies and rejected 37%, using an “Overriding Principle” that assumed sales processes were compliant, failing to take root‑cause analysis into account and sometimes issuing rejection letters that may have discouraged customers from pursuing valid complaints. LBG agreed an early settlement and received a 30% (Stage 1) discount; without that discount the penalty would have been £167,758,035.

The FCA fined Lloyds Bank plc, Bank of Scotland plc and Black Horse Limited £117,430,600 for treating customers unfairly when handling PPI complaints between 5 March 2012 and 28 May 2013. The regulator found complaint-handling guidance—the so-called 'Overriding Principle'—directed staff to assume sales processes were compliant and that root-cause findings were not taken into account, which led to many valid complaints being rejected; LBG assessed complaints on more than 2.3 million PPI policies and rejected 37% of them. LBG qualified for a 30% early settlement discount (Stage 1), so the penalty was reduced from £167,758,035 to £117,430,600. The breach was of Principle 6 (Customers' interests), which requires firms to pay due regard to their customers' interests and treat them fairly.

On 20 May 2015 the FCA fined Barclays Bank £284,432,000 — then the largest penalty ever imposed by the FCA or its predecessor the FSA — for failing to control its London foreign exchange business between 1 January 2008 and 15 October 2013. Barclays traders formed tight-knit groups with traders at other banks in electronic chat rooms, sharing confidential client information and colluding to move benchmark exchange rates in their favour, putting the bank's interests ahead of clients and the wider market. Because Barclays had not joined the five other banks that settled with the FCA in November 2014, it received only a 20% discount; the fine would otherwise have been £355,540,000. The same day Barclays reached settlements with US authorities that took its total forex-related penalties to around $2.4 billion.

The FCA fined Aviva Investors Global Services Limited £17,607,000 for failures in management and control and conflicts-of-interest rules and breaches of Conduct of Business sourcebook (COBS) rules. The firm failed to put in place adequate systems and controls to manage conflicts created by running hedge funds with high performance fees alongside other funds, creating incentives and a weak control environment that allowed two traders to delay trade bookings, misallocate trades and cherry‑pick in May 2013. Aviva Investors paid £135,000,000 compensation to eight impacted funds, and qualified for a 30% early‑settlement discount, so the undiscounted penalty would have been £25,152,900; the Final Notice was published by the FCA on 2015-02-24.