The City watchdog have announced that firms which mis-sell financial products to consumers and individuals guilty of insider trading are to face a hard new crackdown which could lead to serious fines.
The Financial Services Authority (FSA) wants penalties to be linked to the companies income, with up to 20% of their income from the products or business areas related to the breach being susceptible to the fine.
Last October Alliance & Leicester was fined £10 million by the FSA for serious failings in telephone sales of payment protection insurance – although this was reduced to £7 million due to early co-operation from the firm.
However under the new regime Alliance & Leicester could of faced a maximum fine of £30 million
Individuals found guilty of insider trading will be fined a minimum of £100,000.
Enforcement director Margaret Cole said: "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 consultation on the penalties regime will close in October and the new policy is likely to apply to breaches committed after February 2010.
In the last financial year the FSA imposed a record £27.3m in fines, up from just £4.4m the year before.
So far a total of 20 firms have been fined £11.8m over payment protection insurance.
Source: BBC & Press Association