Data obtained by the firm as a result of a freedom of information request made to sector regulator the Financial Services Authority (FSA) showed a 76% increase in the number of staff dismissed or suspended in 2012 compared to figures for the previous year. This amounted to 1,373 individuals.
Financial services expert Helen Farr of Pinsent Masons said that the figures showed that firms were becoming increasingly less tolerant of wrongdoing by staff as a result of an increase in enforcement activity by the regulator.
"The FSA has increasingly shown that it is cracking down on financial crime and market abuse," she said. "Financial services firms are operating under increased scrutiny and as a result employers are imposing industry rules more strictly."
"FSA enforcement activity has clearly had an impact on firms' willingness to tolerate wrongdoing. Firms now appear much more likely to discipline employees for offences. The rise in number of staff dismissed from 778 to 1,373 in a twelve-month period suggests that the threat of enforcement and reputational damage associated with rogue traders such as Kweku Adoboli [formerly of UBS] are clearly having an impact."
Changes to the employment status of FSA authorised individuals must be registered with the regulator, while regulated businesses should also indicate when employees have been sacked or suspended. According to Pinsent Masons, a further 36,868 people employed in the sector lost their jobs in 2012, bringing the overall number of job losses in the sector to its highest level since the peak of the financial crisis in 2008.
"The total number of job losses in the sector is striking," financial services expert Helen Farr said. "While it should be kept in mind that many of these people may have been re-employed and some will have simply transferred internally, the numbers certainly tell a story."
She added that future structural reforms set to be introduced in the banking sector, such as the 'ring-fencing' of banks' retail and investment operations, could have a further impact on employment in the sector. Following the recommendations of Sir John Vickers' Independent Commission on Banking, UK banks are to be given until 2019 to separate their critical banking services from riskier investment activities in order to protect them from wider economic shocks, while a report by banking expert Erkii Liikanen published in October has raised the prospect of similar structural reform on an EU-wide level.
The figures do not take into account whether affected staff have been reemployed or subject to an internal transfer. However, according to the figures, 177,697 financial services employees have left their posts in the past five years.
The Financial Conduct Authority (FCA), the new enforcement body which is set to take on the conduct and compliance functions of the FSA when the current regulator is dissolved in April, has previously announced that it will focus on "effective enforcement", particularly against those "further up the chain of command". It also plans to "intervene earlier to minimise consumer detriment", rather than focus so much on individual penalties.