The UK Financial Conduct Authority has decided to fine Barclays a record 250m GBP for rigging the foreign exchange. Read on and we discuss the fine and ask whether the FCA is really justified in doling out the huge fines we have seen it issue since 2013.
Biggest fine ever
The fine that Barclays is set to be hit with relates to a bigger scandal which many banks have already been fined in connection with. Some refer to their as the foreign exchange rigging scandal, where banks are accused of having tolerated rogue traders fixing certain markets.
The fine is the biggest since UPS was fined 234m GBP for similar “rogue trading” in a scandal now known as the forex scandal.
FCA
Whereas for some the FCA is doing a great job – fining the “big bad boys” in the City, others are suggesting that the FCA is really going too far in its approach.
The FCA is part of a wider package of regulation the financial services market was hit with in 2013. The raft of regulation included price caps for certain financial products, and caps on interest rates which short-term creditors were allowed to charge.
Some are now asking – where is the accountability of the FCA and who is it answerable to? The answer is no one really, but should this be the case?
If the FCA is not really answerable to anyone, how do we know when, and if they ever get it wrong? Their every action – in their own eyes is bound to be a success, but how do we feedback to the FCA how damaging enormous fines really are?
More accountability needed
Some are suggesting that the FCA need to be made more accountable for the consequences of their penalties and any adverse consequences that arise from these actions. The short-term credit industry is a case in point.
Short-term lenders are still reeling from the effects of price caps on certain financial products, but they also have to cope with unfair regulations relating to APR. If they don’t express their financial products in terms of APR, they may well fall foul of the hardhitting FCA, but who can they turn to, to relay their side of the story? – which is that APR is not really suitable for short-term financial products, because these are not supposed to be taken out for anything more than a few days!
How can we get more accountability?
Some have suggested that the FCA need to pay more attention to the consequences of their penalties and fines, and consider how this is likely to impact the customer in the street.
Short-term credit providers and payday loans providers like Wizzcash are now forced to turn customers away because they don’t pass strict credit standards set. The harsher conditions have led to a heated debate, on one side – how is this fair to the customer, to be pre-emptively disqualified for an emergency loan service. On the other, the legislation was specifically created to protect the people most vulnerable and likely to use these loans.
Some say it is just one example of a problem that continues to simmer, and has not yet been addressed by any of the major political parties in the UK.