The UK’s Financial Conduct Authority (FCA) is proposing changes to its penalty regime to allow higher fines on individuals, following tribunal rulings that forced it to reduce sanctions, including in the case of former Barclays chief Jes Staley.
In a consultation paper, the regulator said it wants to be able to “increase for deterrence” fines that are based on an individual’s income where that income is later cut by an employer for the same misconduct.
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According to a Financial Times report , the move follows a decision that saw Staley’s fine reduced from £1.8m ($2.41m) to £1.1m after a judge ruled that the FCA should not have included deferred share awards later cancelled by Barclays when calculating his income.
The tribunal still upheld the ban on Staley for “recklessly” misleading the regulator over his links to Jeffrey Epstein.
The FCA said it will no longer count as income bonuses it knows will not be paid and will exclude benefits received during the misconduct period but earned earlier.
At the same time, it plans to give itself scope to lift penalties where needed for deterrence, including for wealthy individuals with low reported income but significant assets.
“This change will make clear that we may increase a penalty in all cases where it may not act as a deterrent given an individual’s income or net assets,” the FCA said.
The watchdog also proposes raising the minimum fine for “serious market abuse” from £100,000 to £150,000, reflecting inflation since 2010.
“We also want to ensure that this figure remains up to date and a suitable deterrent for the future,” it added, saying the minimum will be automatically adjusted every two years in line with inflation.
The regulator confirmed that penalties for market abuse could still fall below the minimum “for proportionality, mitigating factors, settlement” and where “serious financial hardship” is proven.
Thresholds for serious financial hardship have been increased in line with inflation to annual income of up to £21,000 and capital of up to £24,000.
