When will misbehaving banks learn?

While multi-billion dollar fines levied on investment banks have been grabbing the headlines recently, there is another regulatory scandal that has not had the coverage it deserves.

Our investigation into the sale and promotion of venture capital trusts (VCTs), and the significant commissions that can be generated on them, reveals some shocking facts.

Money Observer has called on regulator the Financial Conduct Authority (FCA) to ban trail commissions on VCTs by the end of the year, before the VCT fundraising season begins in earnest.

The FCA has certainly had a busy year, though. It's probably fair to say that outlawing commission on VCT sales has not been at the top of its regulatory agenda.

Punitive finds

In November it flexed its regulatory muscles and levied punitive fines on banks whose traders and managers had failed to learn the lessons of the 2012 Libor rate-rigging scandal.

Five banks will fork out £1.1 billion to the FCA for rigging interest rates in so-called G10 currencies between January 2008 and 15 October 2013.

You might have thought the scale of the fines levied on the likes of UBS, Rabobank and Royal Bank of Scotland in late 2012 and early 2013 (see table and link, click to enlarge) for misconduct relating to the Libor scandal might have been a powerful deterrent to engage in what surely is criminal behaviour, but apparently not.

Even markets displayed a worrying insouciance: the share prices of these banks barely budged on the news that fines levied by global regulators exceeded $4 billion (£2.6 billion).

If the Serious Fraud Office has been called in to investigate the overstating of profits at Tesco and presumably to hold senior employees there to account, why is the FCA not taking more robust action against the individuals responsible for manipulating global currencies and interest rates?

It seems perverse to think that people can be sent to prison for up to 90 days for failing to pay council tax, while the worst that the proponents of this latest global financial deception can expect to suffer is to lose their jobs and maybe have previous years' bonuses clawed back.

Laying charges against the "untouchables" who show no regard for the rule book would undoubtedly do more to change the so-called culture of these banks than simply putting a dent in their quarterly operating profits and providing another welcome and sizeable windfall for the Treasury.

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