City fines set to treble

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The Independent Online

Fines for firms which mis-sell financial products to consumers and individuals guilty of insider trading could treble under a new crackdown, the City watchdog said today.

The Financial Services Authority (FSA) said penalties would be more closely tied to companies' income from wrongdoing to act as a deterrent.

Firms could be fined up to 20 per cent of their income from products or business areas related to the breach, with individuals failing to prevent it liable for penalties of up to 40 per cent of salary and bonuses.

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.

Under the new regime, A&L would have faced a potential maximum fine of £30 million for the same offence, the regulator said.

Those guilty of market abuse such as insider trading also face a minimum £100,000 fine, the FSA added.

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."