FSA may treble fines

by Gill Montia

Story link: FSA may treble fines

The Financial Services Authority (FSA) will be pulling no punches in future, having announced plans to treble fines for breaches in certain circumstances.

The regulator has published proposals which aim to ensure penalties better reflect the scale of misdemeanours and that profits made in the process are clawed back.

Under the proposed new regime fines are to be linked more closely to income and will be based on:

Up to 20% of the company’s income from the product or business area linked to the breach over the relevant period;

Up to 40% of an individual’s salary and benefits (including bonuses) from their job relating to the breach in non-market abuse cases.

For individuals in market abuse cases, a minimum starting point of £100,000 is proposed.

The total fine imposed will also take into account other factors, such as the desired deterrent effect and any settlement discount.

Margaret Cole, director of enforcement at the FSA, says: “These proposals are an important step in pushing forward our ethos of credible deterrence.”

She adds: “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 period will close on 21st October and any new policy is likely to apply to breaches committed after February 2010.

The credit crisis has already prompted the FSA to hugely increase the penalties it hands out.

In its 2008/09 report the regulator revealed that a record £27.3 million in fines had been levied during the year, compared to £4.4 million during the previous twelve months.