The FSA has published its new penalties policy, which could see enforcement fines treble in size.
Under the new framework, fines will be linked more closely to income and be based on up to 20% of a firm’s revenue 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 and a minimum starting point of £100,000 for individuals in serious market abuse cases.
The regulator’s policy statement, ‘Enforcement Financial Penalties’, creates a new and structured five-step penalty-setting framework. This has been established following a period of consultation with the industry subsequent to the publication of a Consultation Paper in July 2009.
The new framework is based on the three principles of disgorgement, discipline and deterrence and consists of removing any profits made from the misconduct setting a figure to reflect the seriousness of the breach considering any aggravating and mitigating factors achieving the appropriate deterrent effect and applying any settlement discount.
The policy statement also sets out a new policy in relation to the circumstances when the FSA may reduce a fine because of its financial impact and
clarifies the situations in which the FSA may publicise enforcement action in criminal cases bringing the FSA’s approach in line with other agencies.
Margaret Cole , FSA director of enforcement and financial crime, said: “Despite industry opposition we have decided to implement these proposals as we believe enforcement penalties are a powerful tool to help change behaviour in the industry. We imposed record fines in 2009
