6.4 6.4 Determining the appropriate level of financial penalty
Our penalty-setting regime is based on three principles:(a) disgorgement: a firm or individual should not benefit from any contravention;(b) sanction: a firm or individual should be penalised for wrongdoing; and(c) deterrence: any penalty imposed should deter the firm or individual who committed the contravention, and others, from committing further or similar contraventions.
The total amount payable by a person subject to enforcement action may be made up of two elements:(a) disgorgement of the benefit received as a result of the contravention; and(b) a financial penalty reflecting the seriousness of the contravention.
These elements are incorporated in a five-step framework, which can be summarised as follows:(a) Step 1: the removal of any economic benefit derived from a contravention;(b) Step 2: the determination of a figure which reflects the seriousness of the contravention;(c) Step 3: an adjustment made to the step 2 figure to take account of any aggravating and mitigating circumstances;(d) Step 4: an adjustment made to the step 3 figure, where appropriate, to ensure that the penalty has an appropriate deterrent effect; and(e) Step 5: if applicable, an adjustment for cooperation/early settlement may be made.
These steps will apply in all cases, although the details of Steps 1 to 4 will differ for cases against firms (paragraph 6.5), and cases against individuals (paragraph 6.6).
The lists of factors and circumstances in paragraphs 6.5 and 6.6 are not exhaustive. Not all of the factors or circumstances listed will necessarily be relevant in a particular case and there may be other factors or circumstances not listed which are relevant.
We will not, in determining our policy with respect to the amount of penalties, take account of expenses which we incur, or expect to incur, in discharging its functions.