Bank of England predicts lower inflation; banks fined for forex rigging – live updates

Over in Greece political tensions are rising as the opposition once again steps up calls for early elections amid mounting controversy over Troika demands. Helena Smith reports:

Racheting up the pressure on a government that is feeling increasingly wobbly in power, the radical left main opposition Syriza leader, Alexis Tsipras, said the only exit for debt-stricken Greece was fresh elections.

“[We have] to hold elections of deliverance and change so that the people can decide which strategy Greece should follow to get out of the crisis,” the politician told his parliamentary group today.

Syriza has been steadfastly leading polls and would likely emerge as the first party if snap elections were held in the event that the government fails to muster enough support to replace the outgoing president in February.

The leftist spoke as pressure from international creditors mounted on Greece’s coalition government. Short of bringing in radical reforms – “actions” that include re-negotiating the pension system and public sector jobs – foreign lenders at the EU, ECB and IMF have said, bluntly, they will not support Athens’ plans to exit its bailout programme by the end of the year.

“A Syriza government will accept neither the prior actions nor the actions that are being presented as a fait accompli,” said Tsipras hinting at the head-on confrontation that may well be looming with creditors.

The bleak view is not just confined to Greece. In Brussels, Greek MEPs representing the ruling New Democracy party, also believe the government is losing ground because of its failure to enforce reforms. “The government is not implementing all the measures it has agreed to,” the MEP Georgios Kyrtsos told me in the Belgian capital.

“Greece cannot expect to restructure its debt by 30% or 50% unless it moves faster [on reforms] and a rescheduling of the debt is absolutely necessary,” said Kyrtsos, a member of the EU’s Committee on Economic and Monetary Affairs.

“At the same time the opposition is living in its own world without a viable, alternative policy to offer. The Greek economy is in great difficulty.”

Crude oil prices continue to slide, with Brent down more than 1% at $80.73 a barrel amid talk of a large increase in US stocks last week.

Meanwhile Saudi Arabia has said it wants stable oil markets and prices, and suggestions of an oil price war was just a misunderstanding. Later this month - 27 November - comes a key Opec meeting when the oil producers have to decide whether to cut output to combat the recent plunge in prices.

My colleague Larry Elliott agrees with the last part of J.P. Morgan’s assessment and says a rate rise is unlikely to come before next year’s election. He writes:

The economy is humming along. Growth will be strong this year and next. Wages have started to rise more rapidly than prices. Interest rates have been at 0.5% for more than five years. So when is the first increase in borrowing costs coming?

Not yet. That was the clear message from the governor of the Bank of England, Mark Carney, as he opened his Inflation Report press conference with a nod to Karl Marx. “A spectre is now haunting Europe,” the governor said. “The spectre of economic stagnation.”

The Bank thinks the weakness of the eurozone will affect growth in the UK, but not by much. Exports will take a bit of a hit and investment is expected to soften slightly, but the outlook is still rosy.

...But while the Bank has only slightly pared back its growth forecasts since its last Inflation Report in August, the same can’t be said of inflation.

Threadneedle Street did not expect inflation to come down with such a bump and expects a further moderation in the months to come. CPI inflation is forecast to be 1% in the first half of next year, with a better-than-even chance that it will slip below 1% for the first time since 2002.

That would require Carney to write a letter to the chancellor explaining why inflation was more than a percentage point away from its 2% target and what – if anything – the Bank’s monetary policy committee intended to do about it. The chances of Carney raising rates at the same time as he is writing letters explaining away low inflation look pretty slim. That’s why George Osborne can assume that there will be no rate rise this side of the election.

Full story here:

The economic news may be good, but interest rates will not rise yet

Despite today’s dovish comments on interest rates from the Bank of England, the timing of the next rise is still uncertain, said Kerry Craig, global market strategist at J.P. Morgan Asset Management:

Markets interpreted the tone of today’s report and associated press conference as dovish given weaker inflation forecasts and Mark Carney’s downbeat view of the global economy outside of the US.

This release broadly confirmed markets expectations that interest rates could be on hold until October 2015 – but it’s worth remembering how much the expected timetable for rates has changed in the past six months. At the Mansion House speech back in June, Mark Carney warned markets that rates might well rise faster than what was then expected – which was interpreted by many as suggesting a rate rise before the end of 2014. Since then weaker global growth outlook and sharp fall in global inflationary pressures have pushed the expected date of the first rate rise by nearly 12 months. We have also seen a similar shift in the US.

Investors should prepare for the first rate rise in the UK. We believe this will happen in 2015 and could still happen before the first rate rise in the US if UK productivity does not pick up. But the timing has slipped significantly in both countries and remains highly data dependent.

We don’t believe the Monetary Policy Committee would hesitate to raise interest rates earlier than expected if the economic data seems to warrant it. However, the lack of inflationary pressure means that there is now scope for rates to remain at historic lows until the second half of 2015.

Jean-Claude Juncker, the head of the EU executive, has said he would lead a European campaign against tax avoidance and evasion, after dominating Luxembourg politics for 20 years during which the Grand Duchy got rich on the most systematic tax avoidance practices known in Europe, writes Ian Traynor.

Less than a fortnight into his five-year term as the new president of the European commission, Juncker broke his silence on last week’s revelations in The Guardian and other newspapers showing how the Luxembourg tax authorities exploited complex loopholes to enable multinationals to minimise their tax exposure, depriving other EU countries of tens of billions in revenue.

Juncker said he had just ordered the drafting of a new EU directive on automatic exchange of information on national tax rulings between member states, and argued he had supported tax harmonisation in the EU since 1991.

“This commission will fight tax evasion and tax avoidance,” he declared. “This is not just words. This is very much the intention.”

Full story here:

Jean-Claude Juncker: I will lead EU campaign against tax avoidance

The European Central Bank is committed to taking further unconvential measures to boost the struggling eurozone economy, the bank’s president Mario Draghi has reiterated.

There had been talk that some ECB members were unhappy with Draghi’s style and would, like the Germans, resist what would effectively be full blown quantitative easing. But after last week’s ECB meeting, Draghi brushed aside such speculation, and speaking in Rome he ran through what the bank has already done - cutting interest rates, activating €1tn of credit lines for the banking system, the “now famous” outright monetary transaction programme, the three measures of unconventionalo monetary policy including purchasing covered bonds - before adding:

All these policy actions, accompanied by the expected maintenance of interest rates at their current level for a long period of time and an ongoing expansion of the ECB’s balance sheet, together with the commitment by the Governing Council to take further unconventional policy actions should medium-term inflation expectations worsen or if the measures already decided on prove to be insufficient, has led to an unprecedented degree of monetary accommodation. Today, all the current and expected market interest rates over all horizons are lower than they have ever been, and lower than they are today in the United States.

He also called again for further action beyond monetary and fiscal policy:

A fiscal policy which, in compliance with the existing rules, may see more investment and lower taxes, together with an accommodative monetary policy are not enough to generate a revival of strong and sustainable growth without the necessary structural reforms in product and labour markets.

Increased competition, the completion of Europe’s single market, measures which would allow unemployed workers to quickly find a new job, thus reducing the period of unemployment, measures which would raise the level of specialisation and adapt it to the demand have long been on the economic policy agenda of many euro area countries: may the thought now make way for action.

Full speech here:

The economic policy of Federico Caffè in our times

The FX scandal underlines why bankers’ bonuses should be subject to hefty clawbacks over many years, argues Andrew Tyrie MP, who heads up the UK parliament’s Treasury Committee.

Tyrie says:

“This settlement also makes the strongest possible case that market participants, who are in a position seriously to harm their firm, customers or markets, should be required to defer some remuneration for long periods. It is essential to ensure that such market participants are put on contracts that leave ‘skin in the game’, some of it for long periods.

“With or without an FCA regulatory intervention, they need to know that their firms may withdraw deferred remuneration when they identify involvement in misconduct or failure to report it. This was a central proposal of the Parliamentary Commission on Banking Standards. Regulators should not be swayed by complaints from banks about long deferral.

Tyrie also reveals that his committee will start examining the situation next week:

“The settlement is part of a much needed clean-up operation, which includes the Fair and Effective Markets Review.

“The Treasury Committee will start to take evidence on this during a session with Dr Shafik, Deputy Governor of the Bank of England, on the Fair and Effective Markets Review next week.”

And with that, I’m handing over to my colleague Nick Fletcher.

If you’re trying to get up to speed on the currency rate-fixing scandal, check out our round-up of the transcripts between FX-rigging traders.

‘Nice work gents’: FCA transcripts show forex traders’ back-slapping culture

It explains how traders were able to conspire to target the 4pm fix, and how they congratulated each other for doing so....

Over in America, traders are waking up to the news that JPMorgan and Citigroup have been fined for allowing their traders to manipulate the forex market.

And the revelation that some traders tried to profit by triggering their own clients stop loss contracts has send shivers through Wall Street [I covered this earlier in the blog]

We’re running a poll, asking whether our readers think fining banks actually forces them to act better:

Vote here: Will banking fines be enough to change banker behaviour?

Back on the foreign exchange rigging scandal....and some lawyers are asking whether the whole affair has been wrapped up too quickly.

Brian Spiro, a defence lawyer at BCL Burton Copeland, suggests that the Financial Conduct Authority may have acted too speedily. He points out that the FCA relied on information gathered by the banks and their lawyers for some of its findings.

Spiro told the Financial Times that:

“If they can sub it out, get a speedy result and bring money into the coffers, it’s tempting to ask what more could you want?”.

“But some, myself included, ask: where does due process enter the equation? Do the enforcement agencies now operate within an environment solely governed by budget and pragmatism?”

If you watched/followed this morning’s FCA’s press conference, you’ll know that enforcement chief Tracey McDermott has denied being too soft on the banks. The FCA has spent “45 man years on this investigation”, she said.

And if you missed it, highlights start at 9am.

Is this the first time that a Bank of England governor has alluded to The Communist Manifesto?

Mark Carney’s statement on the quarterly inflation report began with the warning that:

A spectre is now haunting Europe – the spectre of economic stagnation, with growth disappointing again and confidence falling back.

Which sounds awfully like Marx and Engels:

A spectre is haunting Europe — the spectre of communism. All the powers of old Europe have entered into a holy alliance to exorcise this spectre: Pope and Tsar, Metternich and Guizot, French Radicals and German police-spies.

Here’s a handy summary of how the Bank of England’s forecasts have changed in today’s quarterly inflation report, from Rob Wood of Berenberg Bank:

• Growth little changed. The BoE’s mean growth forecasts were 3.5%, 2.9%, 2.6%, 2.6% for 2014, 2015, 2016, and 2017 respectively, little changed from the previous forecasts of 3.5%, 3.0% and 2.6%........
• There were some fiddly details though. Carney explained that rate setters believe that downside risks in the previous forecasts have now materialised. So rate setters cut their modal forecast, or their single most likely forecast, but did not change their mean forecast much.
• Inflation down in the near-term, unchanged after 2 years. The BoE cut its 2014 and 2015 inflation forecasts to 1.2% and 1.4% from 1.9% and 1.7% respectively. They left 2016 unchanged at 1.8%. The central bank published its 2017 forecast for the first time, and expects inflation at 2.0% by the end of that final year of their forecast.

• Unemployment down, to 5.7% and 5.4% in 2014 and 2015 from 5.9% and 5.6% respectively. For 2016 they cut unemployment to 5.3% from 5.4% and the BoE expects unemployment to end 2017 at 5.2%.
  
• Pay growth little changed.
  
• Slack now estimated at 1% of GDP, unchanged from 1% in the third quarter.
  

And finally, Mark Carney was asked whether he is “offended” by suggestions that he’s refusing to raise interest rates low until after the next election as a favour to George Osborne.

The governor doesn’t appear offended, and explains that the bank sets policy to achieve the inflation target.

How concerned are you about the damage that the Forex scandal will have on the reputation of the City?

We are concerned, Mark Carney replies.

Deputy governor Minouche Shafik takes up the issue, saying that the Bank’s review of the City will discover whether more needs to be done to improve conduct.

Why did the Bank of England announce the firing of its chief FX dealer today? A good day to bury bad news?

No, Carney replies. We followed employment law through the disciplinary procedure -- and it wasn’t related to Lord Grabiner’s inquiry into the FX issue.

The two events “came together” but there’s nothing beyond that.

Why no mention of forward guidance, asks Sky’s Ed Conway. Is that because market participants see it as something of a joke?

I have mentioned the word ‘guidance’, Mark Carney replies. Not my fault if you don’t pay attention. Read the transcript.

<forward guidance is that UK interest rates won't rise until various economic conditions have been met -- it's fair to say it's evolved since August 2013 when it was a 7% unemployment rate>

Carney says: our view of the global economy when we began forward guidance.. have become a mainstream view.

Conway tried to interject.

Carney slaps him down - “it’s not a discussion”.

The forward guidance we have been giving (since August 2013) has been consistent, and proportionate.

The markets think you’re being dovish today, but would you like to say anything hawkish, governor? <corrected>

I’m still the only G7 governor who has raised interest rates, Carney smiles. I’ve just not done it here. And I know how to hit an inflation target. [he’s referring to

Some people - “some who have spoken this morning” - were calling for interest rates to rise this year. That wouldn’t have been a very bright call.

And we’re trying to represent the views of the MPC today - sometimes I might disagree with my colleagues, but I’ll try to represent the committee.

How will Mark Carney explain the Bank of England’s failure to keep inflation to target if, as appears likely, it falls below 1%.

I’ll decide what I write in my letter to the chancellor if, and when, I write it, Carney replies. At the moment, it’s more likely than not than I will write it, but it’s not certain.

The Bank ‘looked through’ inflation when commodity prices were pushing prices up, so will they do the same now the falling oil price is pushing inflation down?

Carney replies that yes, there is a symmetry, but not a “blind symmetry”.

Which means... that at the time, the Bank was confident that the inflation spike was a temporary factor.

This time, we don’t expect inflation to pick up soon - partly due to pressure from overseas (ie, the eurozone)

We expect inflation to only get back to our 2% target at the end of three years, Carney points out.

And as the Bank is at the “zero lower bound”, it has fewer options to loosen monetary policy to stimulate inflation (rates can hardly go much lower, but a cut is possible)

What does rising real wages mean for interest rates?

Carney replies that borrowing costs will rise at a gradual pace and a limited extent.

Does today’s unemployment data, showing wages rising ahead of prices, means the cost of living squeeze over?

Carney isn’t blowing any trumpets, warning that one swallow doesn’t make a summer. But he does predict that wages will rise above inflation next year (especially if inflation falls below 1%).

The FT explains how the BoE has trimmed its growth and inflation forecasts, a little:

The Monetary Policy Committee’s growth forecasts were revised down a little from the forecasts published in August, reflecting a weaker global economic outlook and slower housing market.

But this weakness was offset by lower assumptions for interest rates leaving the growth and inflation forecasts stable three years ahead.

What really matters is the broad process of monetary policy, not a specific date for the first interest rate rise, Mark Carney insists.

Despite the global gloom, the Bank of England still reckons the UK can grow at above trend levels.

Carney cites the prospect of wages (FINALLY) growing faster than inflation, and confidence in the recovery.

The pound has dipped as foreign exchange traders digest the quarterly inflation report.

Nearly time for the next event of the day, the Bank of England’s quarterly inflation report.

It will be streamed live here.

John Mann MP has weighed in, demanding that banks pay today’s fines out of their bonuses, not their profits:

“This fraudulent trading has taken place over a five-year period during which time the taxpayer has had to provide massive financial assistance to the banking sector and we have clearly been taken for a fool by the bankers.

“What must happen now is that the bankers and senior managers are actually held accountable for this behaviour and RBS, the taxpayer-owned bank, must ensure that these fines are paid from its bonus pool and not simply taken from its profits.”

Campaigners are shocked that the foreign exchange market was being rigged five years after the financial crisis began.

Here’s David Hillman, Robin Hood Tax spokesperson:

“What’s truly shocking is that this blatant corruption carried on for years after the financial crisis. Not content with crashing the economy banks continued manipulating markets and ripping us off while at the same time telling us they had changed.

Hillman also argues that fines simply don’t work as a weapon to improve standards:

“It is good news the Chancellor has promised some of the £2bn will be used for the wider public good but he can no longer pretend that one-off fines are enough to change banks’ greed obsessed culture. It’s time the Government dropped its opposition to the financial transactions tax which would make markets harder to scam and at the same time make banks contribute to the wider interests of society.”

The latest UK unemployment data hit the wires while I was on that FCA call.

The top line is that the jobless rate remained at a six-year low of 6.0%, and wages are finally growing faster than inflation again

All the details are in Andrew Sparrow’s politics liveblog.

And that’s the end of the FCA’s press conference (highlights start here).

No big fireworks, but notable that financial reporters aren’t terribly impressed with the regulator’s conduct.

Rightly so? After all....why did this scandal run for so long? Why should banks get a 30% discount for putting their hands up? And will bonuses actually be held back at banks which allowed their traders to manipulate the forex market for so long?

How much money has the FCA now raised from the banking sector since the financial crisis began, and where will today’s fines go?

Full details of historic fines are on the FCA’s website, and today’s money will go to the Treasury (once the regulator’s costs are deducted)

How many firms are still being investigated?

Only Barclays.

What’s the status of the Libor investigation? (which began several years ago).

Investigations are ongoing, and ongoing criminal prosecutions are underway, scheduled to run until 2016 and beyond.

Does the failure to get a settlement with Barclays mean the FCA has failed to get the co-ordinated agreement it wanted?

No, Tracey McDermott insists. We wanted to get a co-ordinated settlement with as many firms as possible. Barclays chose not to take part. But this is the biggest fine we’ve ever imposed. We don’t see this as a failure at all.

Could any of the deferred prosecution agreements that banks currently hold with the US Department of Justice have been broken by the FX scandal?

Tracey McDermott replies that the FCA is in ‘close’ talks with US regulators over this issue.....

Have the UK banks actually suffered any reputational damage through the series of scandals that have rocked the City? After all, they’ve got roughly the same number of customers since the financial criss began?

Martin Wheatley insists that banks have suffered damage to their public image.

But he agrees that they have not suffered a major loss of customers.

One of our broader concerns is giving customers the power, or reshaping the market, so that this could happen, he adds.

Are the days of London ‘gold-plating’ international financial standards over?

Wheatley says that the only way to improve standards is through international agreements, even though London controls around 40% of the FX market.

Isn’t it simply absurd that the FX market was not regulated properly for so long?

Not sure that you can say it’s absurd, Wheatley replies.

Some markets have very firm regulation from outside, and others have relied on self-regulation.

What we are seeing is that self-regulation does not work....in markets where there are very large rewards, he concludes.

How much damage has been caused to the reputation of the City?

These scandals do hurt market confidence, Wheatley replies.

The Fair and Effective Markets Review will get to the core of what needs to change, and help rebuild confidence.

Does the fact that the FX market was being manipulated until October 2013 show that banks learned nothing from Libor?

Martin Wheatley replies that the FCA is concerned that the affair went on too long.

He insists, though, that banks have learned some lessons from recent scandals.

Who decided to pursue a ‘group approach’ to the investigation?

The FCA did, Wheatley replied. We didn’t want a repeat of the Libor investigation, which dragged on a long time. We want to get changes made quickly.

Why should banks get a 30% discount on their fines for settling early, when the evidence of misconduct is so clear?

Tracey McDermott says the FCA’s policy is clear and open, and similar to criminal law where offenders get a sentence reduction for settling early.

It incentivises early settlement on proper terms rather than incentivising fighting all the way, she concludes.

Does the FCA reject the suggestion that some of this collusion was to do with day-to-day market operation, rather than something worse?

Clive Adamson, the FCA’s director of supervision, isn’t convinced by this argument.

This is about something fundamental about how these firms ran their business, Adamson says.

Have consumers lost out?

Wheatley explains that FX traders were moving FX rates by two or three basis points. That’s a smaller margin than you or I would normally get at the airport.

It’s hard to draw a threat through to consumers, he adds.

Why did it take the regulator so long to spot that this misconduct was taking place?

It’s not fair to say we took too long, Tracey McDermott replies. We took action once we were alerted to the problems, and have conducted our probe within a year.

We don’t accept that the regulator took too long, she insists.

Martin Wheatley adds that these markets, like Libor, are often out of the public eye.

But not the regulators eye, surely?

Why did some bank shares rise this morning?

Markets don’t like uncertainty, Wheatley replies.

Could there be criminal charges against individuals?

The Serious Fraud Office is already investigating.

The FCA explains that spot FX trading isn’t directly within its jurisdiction.

We will be looking at the conduct of individuals within the extent that we can, they add.

Onto questions. What happens next, and what’s the plan for banks who have not settled today?

Tracey McDermott, the FCA’s director of enforcement and financial crime, says that the issue is now closed with the five banks who have settled.

She can’t speculate about what might happen with other banks.

“The industry must prove it has changed if it is ever to recover the trust it has lost,” Martin Wheatley concludes.

Wheatley says the UK’s “Fair and effective market review” will continue.

We expect firms to put conduct at the heart of their business, and improve standards from the trading floor to the boardroom, he adds.

Some FX traders have abused the trust of their employers and the regulator, Martin Wheatley adds.

Martin Wheatley, of the FCA, begins the press conference by confirming that today’s fines, totalling £1.1bn, are the biggest in the regulators’ history.

It reflects the serious of the failings we have uncovered, and which put the integrity of Britain’s financial system at risk, he says.

City editor Jill Treanor writes:

The corruption of the world’s biggest currency dealers was laid bare on Wednesday when regulators imposed £2bn of fines on five major banks for rigging the £3.5tn a day foreign exchange markets.

Regulators said they had found a “free for all culture” rife on their trading floors which allowed the markets to be rigged for five years, from January 2008 to October 2013.

The much-anticipated record settlement with US and UK regulators did not include Barclays, which remains in discussions with other regulators.

Each of the fines imposed on Royal Bank of Scotland, HSBC, Citibank, JP Morgan and UBS were records for the Financial Conduct Authority (FCA), smashing the penalties imposed over the last two years for Libor rigging......

Here’s Jill full story:

Foreign exchange fines: banks handed £2bn in penalties for market rigging

A JP Morgan spokesperson has responded thus (via the WSJ):

“The trader conduct described in today’s settlements is unacceptable. In addition to making significant improvements to our systems and controls, we have spent a lot of time reinforcing the high standards of conduct expected of our people.

Although the settlements acknowledge our progress, further training and enhancements are ongoing and will remain a priority.”

Banking analyst Sandy Chen of Cenkos reckons that Barclays failed to settle today because of the non-prosecution agreement it currently holds with the US Department of Justice, dating back to the Libor scandal.

He adds:

Barclays doesn’t have much bargaining power versus the US DOJ and other regulators, in our view; the risks are that (1) Barclays’ £500m of forex provisions won’t be enough, and (2) the LIBOR NPA unravels.

Treasury minister Andrea Leadsom has pledged that the traders responsible for manipulating the FX market “will not be back in a dealing room on a big salary” and “everything that can be done to punish this type of behaviour” will be done.

She told BBC Radio 4’s Today programme:

“It’s completely disgusting. I think taxpayers will be horrified... I don’t know if corruption is a strong enough word for it.”

She said it was particularly bad that this was going on among a small group of foreign exchange traders at a time when taxpayers were bailing out the banks.

As flagged up earlier, the FCA probe found wrong-doing took place between early 2008 and October 2013.

And shares in UBS have risen by 0.7% in early trading.

Shares in Barclays have fallen 1% in early trading in London, as traders ponder why the bank has not settled with regulators.

RBS are down just 0.1%, and HSBC are down 0.4%.

Banking analyst Christopher Wheeler reckons Barclays’ shareholders may be alarmed that it has not settled with the FCA and the CFTC, and is instead pursuing its own path.

He also reckons the five banks fined today have got off lightly:

The FCA has also released transcripts from private chat rooms.

Its settlement with HSBC shows traders at different banks chatting before the daily 4pm forex fix. The transcripts show traders agreeing to “team whack” a currency, and congratulating each other afterwards.

Here’s a better link to the CFTC’s transcripts of private chat room conversations (the 7.25am link may not work, sorry)

This transcript shows FX traders at three banks discussing whether to invite a fourth into their chatroom.

One trader urges caution, as we don’t want “other numpty’s (sic) in the market” to know what they’re up to.

A numpty is slang for a stupid or dozy person. Who’s the numpty now?....

Remarkably, this misconduct took place over more than five years, and only ended a year ago.

And here’s how the fines from America’s CFTC break down:

$310m on both Citibank and JPMorgan, $290 million each on Royal Bank of Scotland and UBS and $275 million on HSBC..

The FCA also says that it will “progress our investigation” into Barclays.

As City editor Jill Treanor explains, Barclays was expected to settle with the FCA and CFTC, but has now got it alone...

Martin Wheatley, chief executive of the FCA, says the regulator is not prepared to tolerate conduct which “imperils market integrity or the wider UK financial system”

Today’s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right. They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about.

Today’s fines are the largest ever imposed by the FCA, or its predecessor the Financial Services Authority (FSA), and this is the first time the FCA has pursued a settlement with a group of banks in this way.