FCA Proposes Tying Financial Penalties to Net Worth

The UK's Financial Conduct Authority (FCA) has issued a consultation paper, CP26/19, proposing a significant change to how it calculates financial penalties for individuals in non-market abuse cases. The proposal would amend the regulator's policy to explicitly allow for penalty uplifts based on the size of an individual’s income or net assets, aiming to ensure "credible deterrence," particularly for wealthier individuals.

This shift could substantially increase financial exposure for senior managers and other high-net-worth individuals within regulated firms. Critics, such as law firm BCLP in its public response, argue the change could untether penalties from the specific nature and severity of the misconduct. This might lead to arbitrary and inconsistent outcomes, where fines are determined by an individual's overall wealth, including assets like inheritance that are unrelated to their regulated activities. Such an approach, critics contend, risks being perceived as more punitive than deterrent, especially when applied to negligence cases rather than deliberate misconduct. Counsel should monitor the FCA's final policy statement following the consultation period.