In 2011, total FSA fines were "only" £66m. This compares with around £79m in 2010, however that number was heavily weighted by two large fines against JP Morgan (£33m - client money) and Goldman Sachs (£17.5m - systems and controls). In 2011, the largest fine was on HSBC (£10.5m - mis-selling of investment bonds).

The fines only tell part of the story, there are also the costs of redress (£160m in 2011, up from £62.7m in 2010), as well as other remedial action which is often required by the FSA, such as commissioning skilled persons reports under section 166 of the Financial Services and Markets Act 2000 (FSMA), which are being handed out like sweets by the FSA (though not particularly nice ones).

There should be no question that the FSA has gone soft, particularly where enforcement against individuals is concerned. A good indicator is the fine imposed on Rameshkumar Goenka for committing market abuse (£6m), and the FSA regards the minimum acceptable fine for market abuse as £100,000. This assumes that the FSA does not bring criminal proceedings for market abuse: last month the court sentenced Rupinder Sidhu, a management consultant, to two years imprisonment for committing insider dealing. There are other 15 other criminal prosecutions pending.

The FSA will also be bringing more regulatory cases against individuals. Tracey McDermott, the Acting Director of Enforcement at the FSA, recently stated that "the spread of enforcement cases against individuals is the broadest it has ever been. It is a product of the focus on individuals we have had for the past two or three years". Perhaps a good example of the type of case that the FSA will be increasingly bringing is the case against the compliance officer of a hedge fund, Dr Sandradee Joseph, based on lack of competence/capability. This case is required reading for all compliance officers. The FSA is more inclined now to second-guess or make judgments about how well individuals have performed their roles, rather than merely bringing cases against individuals based on dishonesty or lack of probity.

One of the criticisms made of regulators in the financial crisis in 2007-8 was that they had not "joined up the dots" to foresee the impending storm. Bodies such as the European Systemic Risk Board (ESRB) have been set up to act as an early warning system of future crises. And they are certainly giving warnings: just before Christmas, Mervyn King, the Vice Chair of the ESRB (perhaps better known wearing his other hat as the Governor of the Bank of England) said "In September, the ESRB characterised the current crisis as a threat to systemic stability. Since then, overall conditions have worsened as a result of the intensification of negative interlinkages between sovereign risks and the uncertainty about the resilience of the financial system, and on account of deteriorating growth prospects."

Given these Eeyore-like prognostications, it seems highly likely that there will be more Lehmans and MF Global type failures, but many firms still seem underprepared for this. In-house lawyers and compliance professionals might like to attend the joint PLC Financial Services and Baker & McKenzie seminar on dealing with defaulting counterparties, to be held on 21 February 2012 at Baker & McKenzie's offices. For more information, please contact [email protected].

Many organisations have spent a lot of time (and money) preparing for the Bribery Act 2010. The Act only came into force on 1 July 2011, but so far there has been one successful prosecution against a court clerk, Munir Patel, who received a 6 year prison sentence. Given the noise made by the SFO (and the Government) about the importance of stamping out corruption, it is time to land some bigger scalps, so expect to see some cases involving directors in 2012.

The FSA may also take more action in this area based on firms having inadequate systems and controls for reducing the risk of bribery, a much easier case to prove than the substantive criminal offence.

Readers of a certain age may remember the cottage industry that developed around compliance with Principle 6 of the FSA's Principles for Businesses: Treating Customers Fairly (TCF). Many firms, perhaps not unreasonably, did not know what TCF meant (or at least what the FSA wanted it to mean), so the FSA developed a massive body of theory including the six TCF outcomes, the product lifecycle and the TCF Culture Framework. (A TCF library can even be found on the FSA website, but it does not contain many bestsellers.) Firms were required to develop TCF risk maps, TCF "traffic lights" and similar devices.

But when the financial crisis came along, the FSA's focus switched increasingly to prudential matters and over the past couple of years there were few speeches concerning TCF. The latest document highlighted in the TCF Library is dated October 2009, although it is actually very topical as it is concerned with TCF in structured products.

Now the TCF band are back (the FSA will deny that they ever left the stage), and in December 2011 the FSA fined the Combined Insurance Company of America £2.8m for various TCF breaches.

Therefore, and counter-intuitively, I predict more TCF cases in 2012.

Another key theme in 2012 will be the increasing importance and power of the new European Supervisory Authorities (ESAs) such as ESMA, the European Securities and Markets Authority. ESMA is already becoming increasingly influential, for example the final advice to the European Commission on the Alternative Investment Fund Managers Directive (AIFMD), published in November 2011, and a recent paper on suitability provide important insights into European regulators' thinking in those areas. Unlike its predecessor, CESR, ESMA has real teeth, with powers to issue binding technical standards, arbitrate in disputes between national regulators, and is the direct supervisor of credit agencies.

It is a common remark that ESMA is under-resourced, but its recently published 2012 work programme shows that it has now reached 75 staff, although this is still desperately low given its huge responsibilities and tasks. The work programme runs to 28 pages and lists 71 items, and the range is incredible, the first ESMA publication of 2012 being "an open letter to cement companies", not an obvious topic for a securities regulator.

Led by the highly competent Verena Ross, ESMA will be a regulator to watch in 2012.