If you want to clean up the City fine individuals rather than institutions

Outlook In fining an individual £75m, the Financial Conduct Authority has not just thrown the book at him. It’s hurled the bookcase, the coffee table and the comfy reading chair too.

Stewart Ford, the former chief executive of Keydata, a purveyor of so-called death bonds, has been asked to find just over a quarter of the £284.4m that Barclays was ordered to stump up over the involvement of its traders in the City-wide foreign-exchange rigging scandal.

Barclays, however, is an enormous institution that makes billions of pounds in profits every year.

Mr Ford is just an individual, albeit a wealthy one. Such a substantial imposition, based on the money the FCA says he made from Keydata’s activities, almost dared him to appeal to the Upper Tribunal.

Which is what he is doing, along with former Keydata colleagues Mark Owen, who was its sales director, and Peter Johnson, who handled compliance. They have been asked to find £4m and £200,000, respectively. Mr Ford is also counter-suing the FCA and I don’t propose to comment on either case here.

However, the penalties imposed do seem to mark a toughening up of the regulator’s approach to individuals as opposed to institutions. And that is important.

Penalising institutions is of questionable benefit, even when they are hit with the sort of mega fines popular in the US. Such penalties might muck up the quarterly results. They might even result in the reduction of an institution’s bonus pool if the shareholders or the public kick up enough fuss. But their impact is usually shared quite widely.

The reaction of Barclays’ share price in the wake of its forex penalty – it ended up paying a total of £1.5bn because several US watchdogs were also involved – was telling: it rose because the grand total wasn’t as bad as most had feared.

Fining an individual, however, should have a far greater impact; not only on the recipient but in terms of the deterrent effect it might have on those tempted to follow in their footsteps.

In a matter of weeks we are likely to see proposals to make a host of previously unregulated markets – metals and energy as well as the aforementioned foreign exchange – subject to the same rules that govern the trading of equities, where there has long been an established framework for handling those who indulge in market manipulation.

While various court cases are pending (and some are under way) in the wake of recent scandals, this ought to make it much easier for the regulator to hold individuals to account. It will open the door to prosecutions, but also to many more individual fines like the ones the FCA wants to impose on the Keydata executives.

That may do far more to clean up the City than any institutional penalties. But don’t expect those on the receiving end to like it. The tribunal might need to start hiring. Business promises to be brisk.