• 6.4 6.4 Determining the appropriate level of financial penalty

    • 6.4.1

      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.

    • 6.4.2

      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.

    • 6.4.3

      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.

    • 6.4.4

      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).

    • 6.4.5

      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.

    • 6.4.6

      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.