The Digital Panopticon: a Chance for Ethical Change
6th edition (2016/2017)
Regulation / Technology
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The Price of Immorality
In 2016, it was estimated that, over the last 15 years, market misconduct has cost the UK Financial Services industry £53 billion in fines, legal fees and compensation pay outs alone (Treanor, 2016). Additionally, market enforcement research identified that in 2014, market integrity violations accounted for 84% of total FCA fines (Duff and Phelps, 2015, p.16). With such damming statistics, alongside a plethora of misconduct cases hitting the headlines and instances of mis-selling, rate-fixing and front running tarnishing industry integrity, it is no surprise that trust in financial services is at an all-time low (CII, 2017). It all portrays an industry where opportunistic behaviours are rife and ethical considerations are a mere afterthought.
Steep financial penalties, when compounded by the reputational impact to firms and individuals actors, are a significant price to pay at both a macro and micro level, but as more examples of misconduct emerge, it appears that many banks view such penalties simply as an operating cost. This was underscored by the 2014 CEO of BNP Paribas, who stated that the $9bn fine imposed for violation of US Sanction laws would have “no major impact on the business” (Plender, 2014).