Discounts for early settlement
Early settlement is in the public interest. Settling enforcement cases early results in consumers obtaining compensation earlier than would otherwise be the case and saves resources for both the firm/individual and the FSA.
Following the 2004 End-to-End Review of our procedures which recommended that early settlement be actively considered in every case, early settlement has been encouraged in appropriate cases. In recognition of the benefits of early settlement we have now introduced an explicit discount system for those who settle their cases early. We consulted our stakeholders on the discount scheme and have amended our Handbook (see DEPP 6.7) to implement it. The scheme is available in cases where investigators are appointed after 19 October 2005.
The discount for early settlement is distinct from credit a firm/individual may receive for co-operation. Proactive co-operation is likely to result in reduced financial penalties in the majority of cases. For more detail on the factors we take into account when considering a firm/individual’s co-operation, see the benefits to firms and individuals of cooperating with the FSA.
How does the discount operate?
In outline, it operates as follows: if settlement is reached, we and the firm/individual concerned will agree in principle the amount of a financial penalty, taking into account relevant factors set out in the Decision Procedure and Penalties Manual (apart from the existence of the discount scheme itself). A discount is then applied to this amount, depending on when settlement is reached.
How much is the discount?
The discount is available on a sliding scale, depending on the timing of the settlement, as follows:
Stage 1 (early settlement stage): 30%.
Stage 2 (up to the expiry of the period for making written representations to the RDC): 20%.
Stage 3 (up to the issue of the Decision Notice): 10%.