FSA to be granted additional powers to punish white collar crime:
A raft of new measures designed to give regulators more power in tackling city crime are to be unveiled in the Queen’s Speech this week.
The FT reports today that Chancellor Alistair Darling will propose strengthening the FSA’s power to punish individuals and banks which break the rules, including imposing suspensions on certain forms of business, as part of a broader financial services bill to be introduced on Thursday.
It will also be granted a legal right to nullify bankers’ employment contracts if the terms are thought to encourage excessive risk taking or include multi-year guarantees.
Other proposed reforms include extending the time the regulator can instigate cases against individuals from two years to four, as well as conferring the right to discipline individuals who perform key functions rather than just fining the company, as is presently the case.
The bill also opens the way for disgruntled consumers to pursue class action lawsuits against finance companies. Currently investors have to pursue compensation claims individually potentially incurring huge costs.
A Treasury spokesman says: “We will give the FSA the power, when it has had a number of complaints about a particular bank or a particular financial product, to set up a one-stop redress mechanism. This will mean people will not need to go to court.”
The moves are part of a concerted effort to strengthen the FSA and make it a “credible deterrent” against financial crime by bringing more criminal cases and imposing tougher penalties.
Last week, a new law giving the FSA the power to grant immunity to whistleblowers and other co-operating witnesses received royal assent.
Margaret Cole, FSA enforcement director, says: “We have really changed the landscape in this agency about the use of enforcement. Everyone is now keen to use it to send a message.”