The Financial Conduct Authority is under pressure to rethink its entire approach to enforcement penalties after a series of successful tribunal challenges left the regulator’s most high-profile fines significantly reduced. At the same time, campaigners and anti-corruption bodies are warning that overall deterrence is weakening at precisely the moment when financial crime risks are escalating across British institutions.
The tension at the heart of the FCA’s current position is difficult to overstate. The value of fines handed out by the UK financial regulator has plummeted, with the FCA issuing approximately £124 million in penalties in its most recent full year, a decline of around 78% over a five-year period according to data obtained through freedom of information requests. For context, in 2021 the agency secured a £264.8 million fine against NatWest for allowing Fowler Oldfield, a jewellery business in Bradford, to launder hundreds of millions through the bank’s accounts, with cash deposits delivered in bin bags to local branches. Those scale penalties now appear to belong to a different era.
The FCA’s most recent public difficulty came from the Upper Tribunal’s decision in the Banque Havilland case, which exposed fundamental problems with how the regulator arrives at penalty figures. The tribunal cut the FCA’s fine on Banque Havilland, a private lender now rebranded as Rangecourt SA, from £10 million to £4 million, describing the original figure as arbitrary. Legal practitioners have been quick to draw conclusions. According to Claire Cross, a partner at Corker Binning, the FCA may need to go back to the drawing board on penalty-setting and should stop trying to chase headlines.
The criticism extends well beyond individual cases. Practitioners across the legal profession have broadly agreed with the tribunal that FCA penalty-setting has become opaque and that the regulator ought to set out in significantly more detail how it has determined each penalty, including references to comparable cases relied upon. The FCA’s Regulatory Decisions Committee, which handles fines in cases not settled directly with the regulator, is now operating under greater legal scrutiny than at any point in recent memory.
Lawyers have warned that the multiple criticisms coming from the tribunal over the FCA’s approach to fines has increased the likelihood of government intervention, which is considered more probable where tribunal findings generate sustained adverse publicity and a perception of systemic concern. Lisa McKinnon-Lower, criminal litigation partner at Spencer West LLP, has noted that meaningful government intervention is more likely to emerge from a pattern of tribunal criticism than from any single isolated decision.
That scrutiny lands in the middle of a wider debate about whether the Starmer government’s pro-growth agenda is inadvertently softening enforcement standards across financial services. Some campaigners fear that the growth agenda, which was explicitly included in the regulator’s most recent five-year strategy, has deterred the FCA from cracking down on wrongdoing as aggressively as the scale of financial crime requires. James Bolton-Jones, senior policy researcher at Spotlight on Corruption, has warned that strong regulation is key to sustainable economic growth and that pressure to tread lightly risks undermining the very economic credibility the government is seeking to build.
The FCA has pushed back firmly against that characterisation, pointing to its record on criminal prosecutions, employment restrictions, and banning orders alongside financial penalties. The regulator has noted that since 2021 it has imposed 14 fines totalling more than £344 million on banks and building societies for anti-money laundering systems and controls failings, separate from the criminal NatWest conviction.
The enforcement action against Barclays remains the most instructive recent example of what inadequate anti-money laundering controls can cost a major institution. The FCA fined Barclays Bank UK PLC and Barclays Bank PLC a combined £42 million for separate instances of financial crime risk management failings, one relating to WealthTek and one relating to Stunt and Co. In the second case, Barclays Bank PLC received a £39.3 million penalty for failing to adequately manage money laundering risks associated with providing banking services to Stunt and Co, a firm that received £46.8 million from Fowler Oldfield, a multimillion-pound criminal laundering operation, across just over a year of activity.
What made the Barclays enforcement particularly striking was the timeline of the failure. Barclays failed to properly consider the money laundering risks associated with Stunt and Co even after receiving information from law enforcement about suspected criminal activity linked to Fowler Oldfield and after learning that police had raided both firms. A review of Barclays’ exposure only followed once the bank learned that the FCA had decided to prosecute NatWest over its own relationship with Fowler Oldfield. Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, described the failures as a clear demonstration that the consequences of poor financial crime controls are very real and that banks must act promptly when obvious risks are brought to their attention.
The FCA’s 2026 running total of fines stands at just over £16 million for the year to date, a figure that reflects both the regulator’s stated ambition to run fewer but faster investigations and the continuing pressure from tribunal decisions that have forced penalty reductions. The running total for all of 2025 reached approximately £124 million, itself a significant increase from the £42.6 million recorded in the prior financial year.
Beyond the headline numbers, 2026 has introduced new dimensions to the FCA’s enforcement posture. The regulator has confirmed it plans to focus closely on how firms are tackling nonfinancial misconduct in practice, following amendments that clarified that bullying, harassment, and violence qualify as misconduct under the FCA’s code of conduct. These rules will extend to nonbank firms from September 2026, aligning the approach to behavioural standards across almost all financial services firms operating in the UK. Senior Managers and Certification Regime obligations are being scrutinised more closely as part of this push, with the FCA making clear that fitness and propriety assessments may be directly affected by findings of nonfinancial misconduct.
The FCA has also intensified its focus on off-channel communications, following in the footsteps of the US Securities and Exchange Commission, which imposed significant penalties on major Wall Street banks over the past three years for employees using WhatsApp and other personal messaging platforms to discuss business matters. The FCA’s multifirm review found that most firms continue to uncover breaches in their internal policies governing off-channel communications, raising the prospect of further enforcement action in this area during the second half of 2026.
For compliance functions inside regulated firms, the overall picture demands significant investment in control frameworks that can withstand tribunal-level scrutiny. Anti-money laundering programmes that rely on periodic rather than continuous monitoring are increasingly exposed. The Barclays case made clear that being notified by law enforcement of a potential risk and failing to act constitutes a serious breach, not merely a procedural oversight. Firms including HSBC, Lloyds Banking Group, and Santander UK, all of which have faced AML-related regulatory attention in prior years, will be watching the FCA’s evolving penalty framework with considerable attention as the regulator attempts to rebuild coherent enforcement precedents while managing the political crosscurrents of a growth-focused government.
The Grant Thornton regulatory team has noted that the FCA’s ESG ratings pilot, which invited providers to join a voluntary reporting regime ahead of formal regulation, reflects the broader direction of the regulator’s strategy: using soft-power and collaborative engagement ahead of binding obligations, while reserving hard enforcement for cases where the evidential record is sufficiently watertight to survive Upper Tribunal review. That approach may prove prudent in the short term but risks creating an impression, among both regulated firms and the public, that the FCA’s bark is increasingly louder than its bite.
