Financial watchdog imposes record £89m fines

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FINES levied by the UK markets watchdog nearly tripled during 2010 to a record £89m as the regulator stepped up enforcement action in the wake of the financial crisis.

The Financial Services Authority (FSA) imposed the largest fines in its history on JP Morgan and Goldman Sachs, while it also banned 60 people from working in the financial sector.

The figure for the penalties, which was disclosed in the Financial Times, compares with 35m in 2009 and come as the FSA prepares for its own dissolution with the creation of the planned Consumer Protection and Markets Authority.

The UK is still well behind the United States, where fines for big groups routinely run above 500 million US dollars (323m).

JP Morgan set the UK record in June when it paid 33.3m for failing to keep client money in separate accounts, while Goldman was fined 17.5m for regulatory control failings that led the investment bank to neglect to tell the FSA that it was under investigation by US authorities.

However, critics believe the FSA's focus on large fines is unhealthy.

Nathan Willmot, a partner at Berwin Leighton Paisner, said: "The regulator continues to be obsessed with how its enforcement cases will play out in the media."

As the financial regulator for the UK, the FSA has a wide range of rule-making, investigatory and enforcement powers.

It was set up under the Financial Services and Markets Act 2000 (FSMA).

The FSA aims to promote efficient, orderly and fair financial markets. It regulates most financial services markets, exchanges and firms. It can take action against firms if they fail to meet the required standards.

The FSA is an independent body which is funded entirely by the firms it regulates.

However, it is also accountable to the Treasury and Parliament.