FSA fines must be paid by insurers shareholders, not policyholders
18/10/2002
The Financial Services Authority has effected rules meaning that in future any fines it imposes on life insurance companies must be paid by shareholders, and not out of long term or with profits funds.
FSA chairman, Howard Davies said:
"In the past, firms have paid fines for rule breaches out of long term funds. We proposed this rule change as we believe that, where possible, fines imposed on a firm should be paid by its the owners and shareholders rather than out of funds from which policyholder benefits are paid. This helps to ensure that any fine is paid by those to whom the management of the firm are accountable and creates an incentive for the management to comply in the future with the FSAs regulatory regime."
The rule change was made yesterday by the Board of the FSA and comes into effect on 1 November this year.
Notes for editors
The FSA set out the rationale for the rule change in Consultation Paper 137 Miscellaneous Amendments to the Handbook (No2). This is available on the FSA Website. www.fsa.gov.uk.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.
The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.