The FSA today slapped a £5.6 million fine on Credit Suisse in London over its £1.4 billion rogue trading scandal.

In February, Credit Suisse admitted a small number of Canary Wharf dealers had intentionally inflated the value of their trading positions. The affair forced the bank to take a £1.4 billion writedown.

Today it emerged that the bank's supervision of its traders in the structured credit division was so lax that it took five months for it to spot that the positions were wrongly priced.

FSA director of enforcement Margaret Cole fined and harshly chastised the firm, which admitted it had not acted quickly enough even after it had identified concerns about the traders.

The fine was originally £8 million but was reduced due to the bank's co-operation with the regulator.

Cole said of the CSFB scandal: “The penalty reflects our tougher stance on enforcement and our policy of imposing higher penalties to achieve credible deterrence.”

She said the current financial crisis meant it was particularly imperative for firms to have proper controls in place. “The sudden and unexpected announcement of the writedown had the potential to undermine market confidence,” she added.

It was the second-biggest fine of its kind after the £13.9 million on Citigroup in 2005 for its attack on the eurobond market. However, that fine was largely made up of an effective confiscation of the £9.9 million profit Citi made when it dumped billions of euros of bonds on the market within 18 seconds.

Credit Suisse breached FSA principles two and three regarding the need to have proper systems and controls and to act quickly on any concerns about trading positions.

It revealed its results on 12 February, but a week later said it had uncovered deliberate mispricing of a “small number” of traders and outlined the size of the writedown at $2.65 billion.

Cole said: “The subsidiaries here failed to take appropriate steps to control the potentially high-risk combination in the structured credit group's holdings of exotic products, opaque valuations and high leverage.”