Wolters Kluwer Compliance Solutions’ latest Regulatory Violations Intelligence Index shows notable increases in the total number of violations cited by agencies during H1/24 compared to H2/23 in two of three major category it tracks — consumer protection and financial offenses — while dramatically falling off in the competition-related offenses category. Collectively, penalty amounts declined significantly.
Across the three index categories, 199 violations were issued in H1/24, compared to 136 in the previous six-month period. In terms of penalty amounts, a total of $1.876 billion in penalties were issued in H1/24, a 76% decline from the $7.977 billion issued in H2/23.
“Notably, these latest results show the pronounced volatility of the financial services regulatory environment,” Vikram Savkar, executive vice president and general manager of Wolters Kluwer Compliance Solutions, who notes that enforcement action intelligence is a lagging indicator of regulatory supervision activities and strategic priorities, said. “Timing drivers can range from an institution’s investigation duration to examination cadences, while penalty values can be linked to external factors like whistleblower complaints or unexpected enterprise failures. While these variances manifest themselves at different volumes and intervals, it that clear that supervisory action is anything but static. Financial services firms would be well advised to remain vigilant in their compliance and risk management practices given today’s ever-evolving regulatory landscape.”
Competition-Related Violations: Competition-related violations experienced a dramatic fall-off between H2/23 and H1/24, declining from 41 actions to one, with penalty issuance dropping from approximately $324 million to $2 million. However, the H1/24 value may represent a mean reversion, as the 41 actions observed in H2/23 are an outlier to the six-year trendline for competition-related enforcement actions.
Consumer Protection-Related Violations: Consumer protection-related violations demonstrated a stable volume of enforcement actions, 66 in H1/24 versus 64 in H2/23, coupled with a substantial 63% drop in total penalty value. Notably, two of the largest agency actions in the period related to redlining practices and racially discriminatory mortgage lending practices.
Financial Violations: Financial violations reached a total of 132 in H1/24, a 128% increase over the 58 category violations issued in H2/23, while the total penalty value dropped by approximately 70%. Similar to the competition-related violations category, several blockbuster financial violation penalties in H2/23 issued to alternative asset and digital currency providers make the period appear to be an outlier to the overall trend in terms of average violation amounts.
