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Regulator triples fines as a deterrent

The FSA set out plans this week to treble fines with a new framework for calculating financial penalties.

The regulator say the new framework will be more “consistent and transparent” and “better reflect the scale of the wrongdoing”. It will also ensure that any profits made from the breaches are clawed back.

The FSA says where the likelihood of detection is relatively low, such as in a small firm, the penalty must be high in order to achieve credible deterrence.

Under the new proposals, fines will be closely tied to a company’s earnings and based on up to 20 per cent of the firm’s income from the product or business area linked to the breach over the relevant period.

Fines will be based on up to 40 per cent of an individual’s salary and benefits, including bonuses, from their job relating to the breach in non-market abuse cases.

In market abuse cases, individuals will face a minimum fine of 100,000.

FSA director of enforcement Margaret Cole says: “By hitting companies and individuals in the pocket where it hurts, the fines will be a stark warning to others on what they can expect to pay for flouting our rules.”

The consultation will close on October 21 and any new policy is likely to apply to breaches committed after February 2010.

Highclere Financial Services partner Alan Lakey says: “The worry for firms is that the FSA will impose high fines where advisers forget to tick a box but clients are not adversely affected.”


Newcastle and Skipton deny talks

Skipton and Newcastle building societies have both denied reports that they are in talks over a potential takeover deal. Press reports suggested that Skipton could be poised to take over Newcastle to create a 21bn mutual with more than a million members.

Index pointers

Are absolute return funds starting to be accepted in the market again?

Hall: I think some absolute return funds are starting to be accepted again. A lot of them really let themselves down. They were supposed to deliver cash plus returns but they didn’t. Some managers have not covered themselves in glory but there are some good ones, from Insight and BlackRock, for example.

Branch lines

The FSA has suggested a system of local legal entities for global banks, making each country responsible for rescuing their domestic part of the bank is an institution fails.


Guide: how to change your auto-enrolment support

As we approach the two-year milestone of auto-enrolment, employers have had the opportunity to truly assess the capabilities of their chosen support. They are also now realising that getting to the staging date was the easy part, and that support is required for almost every aspect of the day to day running of their scheme. With the three-year re-enrolment window coinciding for many with the total removal of commission and Active Member Discounts from pension-related products and services, as well as the introduction of the pension charge cap in April 2015, many employers will have no choice but to review their support options. But, what is involved in transitioning your auto-enrolment scheme away from your current support options? This guide from Johnson Fleming aims to outline some of these key areas and provide information and discussion points on what you need to consider.


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