FSA to ramp fines for City rulebreakers
CITY watchdog the Financial Services Authority (FSA) has unveiled plans to treble penalties for serious breaches of its rules, and called for individuals caught insider dealing to face a £100,000 minimum fine.
A consultation paper from the regulator proposes a beefed-up regime in which the most serious abuses could land companies with fines of up to 20 per cent of their incomes from the products linked with the fine.
The severe-fine push comes after FSA chief executive Hector Sants has pledged an end to the era of “light-touch” regulation, after the body was blamed for failing to prevent the climate of excess that triggered the credit crunch and associated frauds.
FSA enforcement head Margaret Cole said the higher fines come as part of an ethos of “credible deterrence”. She said: “By hitting companies and individuals in the pocket where it hurts, the fines will be a stark warning to others.”
Alliance & Leicester was recently fined £10m for failings on its payment-protection insurance, but that figure would have been closer to £30m under the new regime.
As well as the minimum fine for market abuses like insider dealing, individuals carrying out FSA-regulated activities face fines of up to 40 per cent of their income for failing to properly enforce regulatory controls.
In a case study provided by the FSA, an executive is charged £25,515 for failings in which customers of his firm were put at risk of financial losses on a product it sold them.
The consultation ends on 21 October and the rules are likely to take effect from February 2010.