View more on these topics

FSA should add rewards to fine line

The FSA this week continued its tough talking by announcing measures to hit firms and individuals with bigger fines.

The new measures mean that some fines could treble in size, with penalties linked more closely to income.

Under the proposals, fines could take the form of up to 20 per cent of the company’s income from the product or business area linked to the breach. Individuals could be landed with a fine of up to 40 per cent of their salary and benefits, with a minimum starting point of £100,000 in market abuse cases.

Fines are an effective deterrent and, taking into account some of the behaviour in the financial world in recent times, it is right that the FSA is seen to be as tough as possible. Linking fines more closely to income is a fairer way of dealing with firms and individuals with big pockets.

Money raised from fines is funnelled back into the FSA budget and can lead to a reduction in fees for all firms, as was seen this year.

But alongside this new punishment regime, the FSA should also provide a regulatory dividend for good firms.

As part of the retail distribution review, the FSA should announce regulatory carrots for firms reaching certain standards of professionalism in terms of lower fees, especially when considering the extra layer of cost expected from the proposed Professional Standards Board.

Recommended

Aifa opens online RDR academy

Aifa has launched the first phase of its online business academy, developed with Skandia, to help firms meet RDR requirements. The first phase offers a tool to generate a business action plan.

Curtis Banks makes Sipp debut

New self-invested pension specialist Curtis Banks is targeting the middle market and high-net-worth investors with a self-invested personal pension that allows investors to pay only for the features they need.

Pain defends the specialists

FSA retail markets managing director Jon Pain has defended specialist lenders, saying they offer access to the mortgage market for many borrowers who would otherwise be excluded.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment