Fines issued to individuals by the Financial Conduct Authority (FCA) fell by nearly 95% in 2017, but this is ahead of a growing emphasis on the personal accountability of senior staff at financial service firms by the regulator.
The fifth edition of the Annual Global Enforcement Review, published by consultancy Duff & Phelps, shows penalties against individuals dropped from £18.8m in 2016 to £970,000 in 2017; the lowest amount on record since the financial crisis in 2008.
However, total UK fines rose markedly to £866m in 2017 from just £71m in 2016, primarily as a result of two large penalties totalling £673m, targeting Deutsche Bank and Rolls-Royce.
Meanwhile, worldwide financial conduct fines have grown by 30% between 2015 and 2017 to $26.5bn, but this is forecast to fall in 2018 following just $8.1bn in fines over the first six months of the year, compared to $18.4bn over the same period in 2017.
Along with the rest of the world, total penalty amounts in the UK are forecast to be lower this year, having reached just £175m in the first six months of 2018.
Commenting on the findings, Nick Bayley, managing director of regulatory and compliance consulting at Duff & Phelps, said: "The declining penalty amounts from previous years in the UK point to the end of the big benchmark manipulation cases, but also potentially suggest a change in regulators' enforcement approach
and their faith in the ability of big fines alone to change culture.
"Massive fines on firms have lost their power to shock, not just in the industry but also among the public."
However, with the December 2019 rollout of the Senior Managers and Certification Regime (SMCR) to all firms, Duff & Phelps expects enforcement cases and penalties against individuals to rise in the UK over the next few years.
SMCR, which came into force for banks in 2016, aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.
According to the FCA, compliance with SMCR involves encouraging a "culture of staff at all levels taking personal responsibility for their actions", and ensuring "firms and staff clearly understand and can demonstrate where responsibility lies".
Bayley said: "The UK regulators have led the way in promoting the importance of individual accountability through the SMCR. As a result, we can expect the FCA to increasingly focus on enforcement action against individuals as it seeks to make the new regime bare its teeth."
However, Bayley pointed out that, as most UK financial services firms will not be accountable under SMCR until 2019 - in addition to the time it takes for regulators to investigate and conclude cases - it could be "up to three years before a significant increase in penalties against individuals start to come through".