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FSA bows out with five-fold rise in fines

The Financial Services Authority (FSA) meted out a record £423mn in financial penalties in its final 12 months as the UK regulator - more than five times the £76mn in fines handed to errant firms and financiers the previous year.

The increase was due primarily to the bumper fines imposed on UBS, Barclays and RBS for their role in the Libor rate-rigging affair, which totalled some £307mn.

In April 2013 the FSA handed over its duties to the Financial Conduct Authority and the Prudential Regulation Authority. The new watchdogs were created as part of a shake-up of the UK's regulatory infrastructure launched in response to the 2008+ financial crisis.

"We have devoted significant resources to [levying financial penalties] in the past year, and expect to continue to do so during 2013/14," the FSA said in its annual report, published on 10 July.

The FSA, which was criticised for failing to prevent the 2008 crisis, responded by ditching its previous "light touch" style of regulation in favour of a more robust approach, cracking down aggressively on financial wrongdoing and imposing bigger penalties.

The Libor-related fines against UBS, Barclays and RBS were the three biggest ever imposed by the FSA. Even excluding these record fines, the average penalty last year was still higher than in each of the two previous years.

Under the Financial Services Act 2012, the net sum collected in penalties goes directly to the UK Treasury, rather than being used to offset the FSA's own costs.

The regulator's annual report also revealed that former chairman Adair Turner and CEO Hector Sants were handed one-off payouts totalling £552,000 at the end of their contracts.

Lord Turner, who in 2009 described sections of the financial services sector as "socially useless", received £252,000 on his departure.

Turner's pay in the financial year to 1 April 2013 was £446,000 - up from £435,000 the year before. He served as chairman from September 2008 to April 2013.

Sants, who had served at the UK regulator since 2004, received a £300,178 pay-off.

He received a total salary of just under £185,000 between April and June 2012. He had been CEO of the FSA from July 2007 until June 2012, when he left for a job at Barclays Bank.

Total remuneration for the FSA's chairman, executives and non-executive directors rose by 16 percent year-on-year to £2.4mn in its final year.

Total staff costs came in at £381mn, £15mn more than budgeted. The overspend reflected a one-off contribution to reduce the organisation's pension deficit, which stands at £115mn.

The FSA's final set of accounts also showed that a third of its reports were delayed, of which five-sevenths were stalled for more than three months.

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