Responding to the FSA consultation paper on enforcement and financial penalties, the SII Compliance Professional Interest Forum says the FSA is over-reliant on using penalties to change behaviour.
It says: “The focus on penalties has excluded what must be the primary aim of the enforcement regime – to change behaviour. This cannot be achieved without equal prominence being given to the detection regime. Thus we believe that the focus of the discussion paper is too far weighted to penalties as a cure for non-compliant behaviour, rather than detection as a prevention.”
The SII Forum adds that the FSA’s determination of penalties in cases against firms follows a one-size-fits-all policy that is “over reliant on mechanistic process”.
It says the minimum fine against individuals for market abuse of £100,000 is excessive and those found guilty are often “small people of limited means”.
SII Compliance Forum chairman Julian Sampson says: “Far greater deterrent effect would be achieved, and greater changes to behaviour result, if the FSA changed its focus from enforcement to supervision. The Forum believes that the FSA would have far greater impact on behaviour were it to actually visit those firms.”