• Step 2: The seriousness of the contravention

    • 6.6.2

      We will determine a financial penalty figure that reflects the seriousness of the contravention. In determining such a figure, we will take into account the following factors relating to:

      (a) the impact of the contravention;
      (b) the nature of the contravention;
      (c) whether the contravention was deliberate; and
      (d) whether the contravention was reckless.

    • 6.6.3

      Factors relating to the impact of a contravention committed by an individual include:

      (a) the level of benefit gained or loss avoided, or intended to be gained or avoided, by the individual from the contravention;
      (b) the loss or risk of loss, as a whole, caused to clients, investors or other market users in general;
      (c) the loss or risk of loss caused to individual clients, investors or other market users;
      (d) whether the contravention had an effect on particularly vulnerable people, whether intentionally or otherwise;
      (e) the distress or inconvenience caused to clients; and
      (f) whether the contravention had an adverse effect on orderliness of, or confidence in, markets and, if so, how serious that effect was.

    • 6.6.4

      Factors relating to the nature of a contravention by an individual include:

      (a) the nature of the FSMR or Rules contravened;
      (b) the frequency of the contravention;
      (c) the nature and extent of any financial crime facilitated, occasioned or otherwise attributable to the contravention;
      (d) the scope for any potential financial crime to be facilitated, occasioned or otherwise occur as a result of the contravention;
      (e) whether the individual failed to act with integrity or abused a position of trust;
      (f) whether the individual committed a contravention of any professional code of conduct;
      (g) whether the individual caused or encouraged other individuals to commit contraventions;
      (h) whether the individual held a prominent position within the industry;
      (i) whether the individual is an experienced industry professional;
      (j) whether the individual held a senior position with the firm;
      (k) the extent of the responsibility of the individual for the product or business areas affected by the contravention, and for the particular matter that was the subject of the contravention;
      (l) whether the individual acted under duress; and
      (m) whether the individual took any steps to comply with Regulatory rules, and the adequacy of those steps.

    • 6.6.5

      Factors tending to show the contravention was deliberate include:

      (a) the contravention was intentional, in that the individual intended, could reasonably have foreseen or foresaw that the likely or actual consequences of his actions or inaction would result in a contravention;
      (b) the individual intended to benefit financially from the contravention, either directly or indirectly;
      (c) the individual knew that his actions were not in accordance with his firm's internal procedures;
      (d) the individual sought to conceal his misconduct;
      (e) the individual committed the contravention in such a way as to avoid or reduce the risk that the contravention would be discovered;
      (f) the individual was influenced to commit the contravention by the belief that it would be difficult to detect;
      (g) the individual knowingly took decisions relating to the contravention beyond his field of competence; and
      (h) the individual's actions were repeated.

    • 6.6.6

      Factors tending to show the contravention was reckless include:

      (a) the individual appreciated there was a risk that his actions or inaction could result in a contravention and failed to adequately mitigate that risk; and
      (b) the individual was aware there was a risk that his actions or inaction could result in a contravention but failed to check if he was acting in accordance with the firm's internal procedures.