FSA fines could treble in size
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The FSA has published a new framework for penalties under which fines could treble in size.
The FSA says the framework links fines more closely to income and will take effect from March 6.
The framework sets out that fines will be based on up to 20 per cent of a firm’s revenue from the product or business area linked to the breach over the relevant period, up to 40 per cent of an individual’s salary and benefits including bonuses from their job relating to the breach and there will be a minimum fine of £100,000 for individuals involved in serious market abuse cases.
The FSA says its new policy is part of its principle of credible deterrence through imposing harder hitting penalties that reflect the scale of a firm’s wrongdoing.
The setting of financial penalties will be based on the following steps:
- Removing any profits made from the misconduct
- Setting a figure to reflect the seriousness of the breach
- Considering any aggravating and mitigating factors
- Achieving the appropriate deterrent effect
- Applying any settlement discount
FSA director of enforcement and financial crime Margaret Cole says: “Despite industry opposition we have decided to implement these proposals as we believe enforcement penalties are a powerful tool to help change behaviour in the industry.
“We imposed record fines in 2009, but this new approach further amplifies the deterrent effect of our penalties and sends a powerful message to firms which makes it clear that non-compliant behaviour will not be tolerated.”
Cole adds: “We have repeatedly seen breaches in particular areas where insufficient account has been taken of previous enforcement action. As well as delivering increased levels of fines, we believe that our new framework offers substantially more clarity and transparency around the penalty-setting process and will reap rewards in terms of an increase in compliant behaviour.”
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Readers' comments (35)
Anonymous | 1 Mar 2010 11:57 am
Good news - I assume therefore that the FSA will be fined £43 Million plus several indivdual fines of £100k for the total falings on regulating Keydata?
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Anonymous | 1 Mar 2010 11:59 am
A deliberate and life-endangering breach of health and safety legislation now seems to be a cheaper option than well-intentioned but poorly structured financial advice.
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Anonymous | 1 Mar 2010 12:00 pm
They need to treble their fees in order to line their own pockets and be in a position to give even bigger bonuses to their staff next year. Surely there is nothing wrong in that!!!!!
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Anonymous | 1 Mar 2010 12:00 pm
Good on you FSA! My question though, is how much is the FSA going to pay for years of neglecting their supervisory duties and leading us headlong into unsuitable lending and a credit crunch?
Also, if they want to enforce the rules, then they need to make the handbook language much clearer - clear, fair & not misleading - at present it carries just too many contradictions and abiguity.
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Anonymous | 1 Mar 2010 12:01 pm
Should be enough to cover Hector's leaving bash then.
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Anonymous | 1 Mar 2010 12:03 pm
The FSA live in a fantasy world where reality has no place. They wield a big stick and have not the slightest idea how hard this business is these days. Still it will bring money into their coffers as they have no need to worry about cashflow etc. just thinking up ideas of how to crack down on a once successful industry. God help us all
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Anonymous | 1 Mar 2010 12:05 pm
Could someone tell me how to get out of this bloody madhouse?
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Anonymous | 1 Mar 2010 12:06 pm
I trust this will extend to those banks and providers putting employed advisers under enormous pressure to 'stack 'em high and sell 'em cheap' with the financial products offered thus following the fact find to fit the product approach.
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Anonymous | 1 Mar 2010 12:07 pm
Thats the way to do it, ignore your own failings and hit out at everyone else in frustration. The FSA continues to display a fundemental lack of understanding of these issues, unless of course this is targeting the banks, which I very much doubt as they have the financial clout to fight back. This is so funny it beggars belief. The lunatics are running the asylum.
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Anonymous | 1 Mar 2010 12:11 pm
Government stops funding FSA. FSA increases fees and fines to brokders. Brokers cannot pay fees etc and go out of business. who funds it then?
The sham that is the FSA needs root and branch reform now
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