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The FCA’s proposals would raise the minimum initial individual penalty for market abuse from £100,000 to £150,000 and applying the existing enforcement framework to crypto asset market abuse offences.
The Financial Conduct Authority (FCA) has issued a consultation paper (CP26/19) on proposed changes to its penalty regime to reflect inflation, market abuse through crypto assets, and to increase flexibility in its decision-making.
The FCA has a five-step process for calculating the appropriate level for the financial penalties it imposes, set out in its Decision Procedure and Penalties Manual (DEPP). These steps include a consideration of how proportionate the penalty is to the misconduct, deterrence and any mitigating circumstances.
The consultation sets out a number of proposals, including in relation to:
- deterrence): increasing the minimum initial penalty for market abuse offences by individuals (from £100,000 to £150,000), and introducing an automatic adjustment of this minimum figure every two years to reflect inflation (based on consumer price index including occupiers’ housing costs (CPIH) inflation);
- changes to the FCA’s penalty policy : in both market abuse and non-market abuse cases:
- amending how the FCA treats an individual’s deferred income when calculating penalties (in order to reflect the approach taken by the Upper Tribunal in recent decisions, which included income earned during the misconduct period but received after it); and
- increasing the threshold at which a proposed penalty would cause serious financial hardship, which is grounds for reducing the proposed penalty under the DEPP, to reflect inflation from where (were they to pay the penalty over 3 years) annual income would fall below £14,000 and capital below £16,000 to £21,000 for income and £24,000 for capital.
- changes to the FCA’s decision-making : clarifying that the penalty framework will apply equally to market abuse offences committed in relation to crypto assets, when the crypto asset regulatory regime comes into force in October 2027.
The consultation closes on 10 August 2026.
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