FCA hits five banks with record £1.1bn fine for forex failings

In the biggest fines ever levied by the regulator or its predecessor the Financial Services Authority, five banks were tackled - Citibank N.A. (fined £225,575,000), HSBC (fined £216,363,000), JPMorgan Chase Bank N.A.(fined £222,166,000), Royal Bank of Scotland (fined £217,000,000) and UBS AG (fined £233,814,000).

The regulator stressed that the G10 spot FX market is a 'systemically important' financial market and that their actions took into account the fact that these banks had undermined confidence in the UK financial system and put its integrity at risk.

Investigations will continue into Barclays.

Ineffective controls at the Banks allowed G10 spot FX traders to put their banks’ interests ahead of those of their clients, other market participants and the wider UK financial system. The banks 'failed to manage obvious risks around confidentiality, conflicts of interest and trading conduct'.

Martin Wheatley, chief executive of the FCA, said:

“The FCA does not tolerate conduct which imperils market integrity or the wider UK financial system. Today’s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right. They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about. Senior management commitments to change need to become a reality in every area of their business.

"But this is not just about enforcement action. It is about a combination of actions aimed at driving up market standards across the industry. All firms need to work with us to deliver real and lasting change to the culture of the trading floor. This is essential to restoring the public’s trust in financial services and London maintaining its position as a strong and competitive financial centre.”

Tracey McDermott, the FCA’s director of enforcement and financial crime, said:

"Firms could have been in no doubt, especially after Libor, that failing to take steps to tackle the consequences of a free for all culture on their trading floors was unacceptable. This is not about having armies of compliance staff ticking boxes. It is about firms understanding, and managing, the risks their conduct might pose to markets. Where problems are identified we expect firms to deal with those quickly, decisively and effectively and to make sure they apply the lessons across their business.  If they fail to do so they will continue to face significant regulatory and reputational costs.”

Clive Adamson, the FCA’s director of supervision, said:

"The supervisory measures that we are announcing today will help make sure that real cultural change is delivered across the industry, and that senior management take responsibility for ensuring that the highest standards of integrity operate across all of their trading businesses.”