Firms will no longer pay employees' fines
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The FSA has proposed new rules to prevent firms paying financial penalties imposed on present or former employees.
In a consultation paper published last week relating to penalties and enforcement, the FSA proposes new rules to prevent any authorised firm, except a sole trader, paying a financial penalty imposed on a present or former employee, partner or director of the firm or an affiliated company.
In the consultation paper, the regulator says: “We do not know how frequently firms may have paid financial penalties imposed on their employees in the past but concerns have been expressed to us about this practice.
“Such action could be in breach of principles 1 and 11 of our Principles for Busin-esses but we consider the introduction of such a rule would address a potential regulatory failure.”
The FSA is also changing its current policy on publishing decision notices. A decision notice is usually issued after a person makes representations to the FSA on the back of a warning notice.
The decision notice states the reasons for the action and informs that person they have 28 days in which to make a referral to the upper tribunal. A final notice is issued if the matter is not referred.
New proposals mean the FSA will only publish a decision notice if a person decides to refer the matter to the tribunal, unless there is a compelling reason to do otherwise, such as early publication being essential to allow consumers to avoid any potential harm from the firm’s actions. If the person does not make a referral the FSA will only publish a final notice.
Other proposals include extending the settlement discount scheme to the length of time for which a firm is suspended. A company currently receives a 30 per cent financial discount for settling at the earliest stage. This means a firm with a 10-month suspension that settles at the earliest point would have that suspension reduced to seven months.
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