FSA Seeks To Ban Insurance Cover For Regulatory Fines

Regulated firms and individuals will not be able to use insurance to pay FSA fines under new rules proposed by the FSA today. The changes are intended to ensure that anyone who is fined must pay the fine himself rather than claim it under insurance. The proposed changes reflect concerns that firms are increasingly taking out insurance policies designed to pay for FSA fines.

Carol Sergeant, Managing Director responsible for Enforcement at the FSA said: "Our proposals are designed to plug a potential hole. Insurance to pay FSA fines not only reduces the impact of those fines but also lessens the incentive for firms and individuals to meet appropriate standards. We cannot allow such developments to go ahead unchecked."

The new rules would apply from 1 January 2004. The consultation ends on 24 September 2003. Consultation paper 191 "Miscellaneous Amendments to the Handbook" can be accessed at www.fsa.gov.uk/pubs/cp.