The FSA has published a Policy Statement (PS10/4) entitled: "Enforcement financial penalties - feedback on CP09/19". The new regime imposes a five-stage framework for the calculation of financial penalties, with the aim of creating more consistency and transparency. The new framework may lead to increased fines for larger firms and high-earning individuals. The new framework links fines with income in the following way:
- up to 20% (in 5% increments) of a firm’s revenue from the product or business area linked to the breach over the relevant period; or an "appropriate alternative" measure (such as market capitalisation in cases concerning breaches of listing rules);
- up to 40% (in 10% increments) of an individual’s salary and benefits (including bonuses and share options) from relevant employment in non-market abuse cases; and
- for market abuse cases against individuals the greater of: up to 40% (in 10% increments) of benefits from relevant employment; 0-4 times profit made, or loss avoided; or £100,000 in Level 4 and 5 seriousness cases (i.e. the most serious).
The Policy Statement also sets out a new policy in relation to the circumstances in which the FSA may reduce a fine because of its financial impact. It also clarifies the situations in which the FSA may publicise enforcement action in criminal cases. The new regime came into force on 6 March 2010 and now applies to any breaches which occur on or after this date. A newsletter is also available.