Step 2: The seriousness of the contravention
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.
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.
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.
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.
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.