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A new FSA framework for penalties under which fines could treble in size
Leah Milner of Money Marketing has reported that the FSA penalty framework links fines more closely to income and will take effect from March 6.
The framework sets out that fines will be based on up to 20 per cent of a firm's revenue from the product or business area linked to the breach over the relevant period, up to 40 per cent of an individual's salary and benefits including bonuses from their job relating to the breach and there will be a minimum fine of £100,000 for individuals involved in serious market abuse cases.
The FSA says its new policy is part of its principle of credible deterrence through imposing harder hitting penalties that reflect the scale of a firm's wrongdoing.
The setting of financial penalties will be based on the following steps:
- 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
- Applying any settlement discount
FSA director of enforcement and financial crime Margaret Cole says: "Despite industry opposition we have decided to implement these proposals as we believe enforcement penalties are a powerful tool to help change behavior in the industry.
The FSA imposed record fines in 2009, reckons this new approach further amplifies the deterrent effect of their penalties and sends a powerful message to firms which makes it clear that non-compliant behavior will not be tolerated."
Now, the really disturbing bit. Such articles in MM allow a response and as usual they are many, varied and of course well thought out. But, I note how many replies are "Anonymous". At the time of my viewing 100% of respondents did not post a name with the comment. This is a clear indication that the FSA, in some subliminal way, is creating a situation where one can quite easily assume that many IFAs live in fear of the regulator.
Now without wishing to drag religious quotes into this to illustrate a point, I'm minded of the quote from John 8 "let he who is without sin, cast the first stone".
For a regulator that has got so much wrong, it seems quite hypocritical that those who act as police, rule maker, judge, jury and executioner escape any sanction for their failings whilst handing out, in some eyes, sentences of Draconian proportion.
I was however most heartened to note one IFA's response to the FSA and its carefully thought out rulebook.
Again anonymous he/she said-
"The Lord's Prayer has 66 words. The Ten Commandments have 179 words. The Gettysburg Address is just 286 words.The small FSA handbook 400,000 words, the FSA handbook has approx 4,000,000 words. OK, so I didn't count the words in the FSA handbook but I reckon 400 words per page is a good average. The FSA have designed the rules so you will always be deemed to fail"!
Article last updated: Mar 4, 2010
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