Following the FSA announcing proposals for a massive increase in fines for those companies and individuals involved in financial crime, Neill Blundell, Partner and Head of Fraud Group at international law firm Eversheds comments:

“This means that those companies involved in criminal conduct could be fined as much as £50 million and individuals involved in market abuse and insider dealing could face a minimum fine of £100,000. The FSA is looking for fines to amount to 20 per cent of a company’s turnover during the period of the alleged activity.

“These proposals support the aggressive line now being taken by the FSA when it deals with market abuse and insider dealing. It is showing, if these proposals come to fruition, that its rhetoric will be matched by significant penalties and that its bite will be worse than its bark. It is a significant development for the FSA and one designed to deter others from such activity. It hopes that companies, fearing such high fines, will ensure they have adequate systems and controls to prevent such behaviour occurring. The message being sent out to business is get your house in order or expect financial hardship."

Eversheds also draws attention to the fact that the FSA's proposals are not limited to issues of financial crime but affect the entire financial services sector, both retail and wholesale. Partner Jonathon Crook adds:

"The proposals for non-market abuse cases involving, for example, the misselling of financial products are draconian for both firms and individuals. The FSA is proposing substantial fines for individuals who breach their regulatory obligations. An example put forward by the FSA includes a fine of 25 per cent of salary for failings in the discharge of oversight functions even where the failings are not deliberate or reckless but raise issues of competence. How this all will work in practice remains to be seen. Whilst the FSA clearly wants to spread fear through all levels of the financial services sector as to the consequences of getting things wrong, there are serious questions as to whether what is being proposed is the way to approach matters."