After two major financial scandals hitting the banking and insurance sector since the inception of the Financial Services Act 1986, the FSA has decided it is time to take the gloves off and has ratcheted up the fine levels.
Individuals can now be hit with fines which are triple those previously levied and includes a minimum GBP 100,000 for market abuse.
The treasured bonus is also up for grabs and can be "appropriated" by the regulator as other breaches leave the miscreant open to a fine of 40% of their income Companies face fines which include 20% of turnover of the specified operating unit from which the naughtiness emanates.
Margaret Cole, the FSA's Director of Enforcement states, "These proposals are an important step in pushing forward our ethos of credible deterrence.
" The timing of the announcement is impeccable (as one would expect from Lord Turner and the FSA) further demonstrating the FSA is Alistair Darling's "kind of regulator".
Mervyn King is manfully throwing the odd bombshell around the Treasury Select Committee which was recently stunned by some of the answers he gave to them on the recent Banking Bill; this delayed the announcement on that Bill to give more "consultation time" between the Treasury and BoE.
In other words, Mervyn is gainfully distracted in the Commons backroom which leaves the field clear for Adair and the FSA mob to manipulate the media stage.
It is no secret Alistair Darling and the Treasury are furious with the Bank of England over the recent collapse in banking confidence but of more concern ought to be the collapse in trust between the BoE and the Treasury.
While that deep-seated spat is raging, the FSA is intent on making hay and wielding very hefty fines upon the unworthy, whether deserved or not, is a vote winner in Whitehall and probably High Street UK.
Does this signify a change in the traditional "light touch" approach of the UK regulator? No.
It signifies a realization that the regulated can support GBP 28.
4 million in fines at a time of serious erosion in their financial position while politically, hitting City Fat Cats in the wallet and bonus-laden pockets is publicly desirable.
It also signifies that the FSA knows which votes count - Whitehalls, and especially Alistair Darling's when it comes to claiming regulatory turf.
Regulators exist in order to ameliorate behavior and curb self-destructive excesses; no-one has anything to gain by creating distrust in the markets, not in the medium to long-term anyway.
Fines have been a sanction which served more as an embarrassment rather than a real financial deterrent; bluntly it embarrassed Big Bank plc to receive a few millions in fines which was duly trumpeted over the six-o-clock news to the dismay of the directors' wives who felt they couldn't show themselves off at Henley, Ascot or the bridge club.
The increase in fines is in direct alignment with the Treasury and Number 11; this type of regulation shows the public at large that someone is going to be blamed and punished.
As we see in the US, it is a no-brainer when it comes to winning votes but as we also see with AIFM and the EU Draft Directive, it does little to increase investor protection.
Tim Geithner, the US Treasury Secretary already has a full-time job just coordinating rather than protecting but it sure sounds good on the Fox and CNN news replete with soundbites.
On that final note, increasing investor protection is the raison d'etre of the FSA and in response to criticism it has failed to deal with insider trading, it has increased it's supervisory staff by 280 just for this.
All that money has to be used somehow.
Trending is always fraught but considering the FSA levied GBP 4.
5 million in fines in 2008 and has reported fine levies of GBP 28.
4 million for the year ended March 31 2009, I will hazard a guess that this number is not going to be heading south anytime soon but is investor protection really being served by the FSA Chief Executive Hector Sants claims that, "people should be very scared of the FSA"? I don't want a regulator which scares the pants off everyone, I want a regulator which is effective and fair...
or is that the sound of lawyers rubbing their hands together with glee at the thought of new clients lining up to take the FSA to court?