As another broker is banned FSA warns that fines set to treble

As another broker is banned FSA warns that fines set to treble


Following warnings that the City watchdog would be showing its teeth and that those in the financial services sector should be “very frightened”, The FSA has published plans for calculating financial penalties which could mean some fines treble in size.

In relation to mis-selling to consumers and market misconduct, the regulator has stated that it is determined to change behaviour and address concerns that firms are repeatedly failing to improve standards.

The FSA will also ensure that fines better reflect the scale of the wrongdoing and that any profits made from the breaches are clawed back.

This announcement has come just a couple of days after the regulator banned another mortgage broker for submitting a mortgage application for himself that was based on false information about his income.

East London based mortgage broker, Abdul Karim applied for a mortgage of £480,000 telling the lender that his annual income was more than £100,000 – while at the same time declaring an annual income to HM Revenue and Customs of £30,000. The FSA has now cancelled the permission of Mr Karim’s firm Monopoly@States Limited.

Under the new proposals, fines will be linked more closely to income and 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 or up to 40% of an individual’s salary and benefits – including bonuses – from their job relating to the breach in non-market abuse cases.

A minimum fine of £100,000 for individuals found guilty in market abuse cases, such as insider trading, will also be suggested by the regulator.


Margaret Cole, director of enforcement at the FSA, commented: “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 new approach to fines could apply to all enforcement actions including against firms, individuals and listed companies. The consultation will close on 21 October 2009 and any new policy is likely to apply to breaches committed after February 2010. 

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