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SII critical of FSA enforcement

The FSA would achieve a greater deterrent effect against financial crime if it focused on supervision rather than enforcement, according to the Securities & Investment Institute.

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.”


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Ah yes, but the trouble is that the FSA doesn’t really know what it’s doing in so many areas (despite regulation being now 20 years old) and tends to make up regulations on the hoof after it’s identified something as having gone wrong. These newly devised regulations are then applied with the benefit of hindsight, whilst the FSA refuses always to address the question “Why are we being held to account now for breaching regulations that didn’t even exist at the time we are found now to have been committing these so called transgressions?” How can any business function under that kind of regulatory regime?

    As for more compliance visits, the FSA doesn’t have enough competent people to undertake compliance visits on any sort of wide ranging and regular basis. They’re all too busy pushing paper around, attending meetings and planning how they’re going to spend their next bonus.

    Whatever happened to this once great, albeit imperfect industry? It got ruined by regulation, that’s what.

  2. I agree, this is what I have always said. The problem is finding the right standard of supervisor and finding the money to pay for it all, but having said that surely the same team could do both jobs? Just a thought. Oh, another thought, how about dragging the policy makers, the paper shufflers, the ones in ‘intelligence’ and the rest of them who don’t really ‘regulate’ and make them supervisors, if they are up to the job. I don’t know any of them nor do I have any idea what they do on a daily basis but that is what makes us equal, ignorance of the opposition.

  3. Whereas I have sympaathy with the views, supervision without enforcement would provide a dog with no teeth, barking away in the background. Supervision is needed but of a standard where the supervisors are suitably experienced in the types of firms they are involved with. Sending a small firms IFA supervisor to visit a stockbroker/dealing desk is inappropriate.

    I cannot comment on bonuses as I am unaware of bonuses that are paid to FSA staff, but would agree they need to sharpen up to justify the respect they try to demand from the people that keep them in business.

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