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London - Stiffer fines for banks caught trying to rig markets have not undermined financial stability or the ability of lenders to stay solvent, a senior British regulator said on Wednesday.
Georgina Philippou, acting director of enforcement at the Financial Conduct Authority (FCA), dismissed criticisms that recent penalties amounting to billions of pounds were damaging the stability of the industry.
The FCA has been levying record amounts of fines on an annual and individual firm basis, saying previous sanctions clearly failed to have an impact.
"We don't consider that fines in the UK are anywhere near that level," Philippou told a press conference. "Our fines are related to profits from misconduct... even then we are a long way from undermining financial stability."
Bank of England Deputy Governor Andrew Bailey has said regulators from the United States and elsewhere should better coordinate how they levy fines to avoid making it harder to rebuild strength in the banking system,
Philippou was speaking at the launch of the International Organisation of Securities Commissions (IOSCO) paper on improving "credible deterrence" in enforcement.
The term was coined by the Financial Services Authority after the 2007 to 2009 financial crisis with mixed results as the watchdog was scrapped and replaced by the FCA, while misconduct continued with the Libor and forex scandals.
"Nobody is saying that credible deterrence is easy," she said. "We are trying to change behaviour and some of that behaviour has been engrained in market practices for decades if not hundreds of years. We are making progress."
The IOSCO paper calls for strong punishments and bold investigation and prosecution of misconduct. It adds that regulators must cooperate and avoid "safe havens" but Philippou said not all of body's 120 members, have signed up to its memorandum of understanding on sharing information.
"It is a concern there are jurisdictions out there which in particular have not signed up. It a key tool to share information with each other," she said.
Philippou also signalled there could be some changes in the way the FCA handles so-called final notices or details of a misconduct case such as Libor or forex rigging.
There have been criticisms that some unnamed traders in the notices can be identified. This was a "live issue" and the FCA was considering its response, she told reporters.
