Global financial regulators have dramatically increased their expenditure by 59.4 per cent over the past seven years as governments try to crackdown on financial foul play since the financial crisis, latest research by wealth manager Kinetic Partners reveals.

Global financial regulators have increased their expenditure by 59.4 per cent over the past seven years as governments try to crack down on financial foul play since the financial crisis, latest research by advisory firm Kinetic Partners reveals.

The US Securities and Exchange Commission (SEC), the UK Financial Conduct Authority (FCA) and the Securities and Futures Commission of Hong Kong (SFC) had a combined expenditure of approximately $2.4 billion ($1.4 billion) in 2012/13 - over $900 million more than the total expenditure before the financial crisis in 2006/07 of nearly $1.5 billion.

A look at the breakdown shows that the SFC recorded the biggest increase over the period - up 120.2 per cent to $152.5 million in 2012/13 from $69.25 million during 2006/07. The US was second with a 61.9 per cent increase, while the UK and FCA finished last with a 48.4 per cent rise. The FCA spent $870.30 million in 2012/13, up from $586.37 million in 2006/07.

"The focus on effective regulation in the financial markets is no surprise following the 2008 crisis. The public is demanding that government agencies take greater steps to protect the public interest, which requires regulators to expand both the reach and efficiency of their monitoring activities,” said Julian Korek, chief executive at Kinetic Partners.

The survey also reveals that the size of the penalties is rising substantially. In the US, the average size of each penalty increased by 36 per cent between October 2008 and September 2013 while in the UK it increased from $0.75 million at the end of 2008/09 to $2.06 million at the end of 2012/13.

Recent LIBOR-related scandals are the reason for the steep increases in penalties. “Although 2012/2013 may be an outlier as far as regulatory activity, this spike nevertheless reinforces the trend that regulators are increasingly looking to bring severe action against big-ticket violations,” the report said.

Most of the spending took place on hiring more staff and technology, the survey adds. It revealed that the number of regulatory staff increased by 36.4 per cent from 2006/07 to 2012/13 across all three agencies.

“This not only requires more sophisticated tools, but also more feet on the ground. Regulators are demanding that firms have detailed policies, controls and monitoring such that if employees stray outside of these, it should be clear that they have committed a serious offence,” Korek added.