The PSR has the power to impose financial penalties on firms who fail to comply with the rules and requirements it enforces. Today’s updated penalty statement will help firms more easily understand how the PSR determines whether to impose a financial penalty and its amount. Firms will have greater clarity about what to expect if the PSR identifies non-compliance.
This is important as the PSR places requirements on an increasing number of firms to implement measures protecting businesses and consumers - like the Confirmation of Payee name checking service, and authorised push payment (APP) fraud mandatory reimbursement.
In its March consultation, the regulator proposed the following changes to its penalty statements:
- To combine its three penalty statements into one.
- To change the way in which it considers the duration of a compliance failure and how it takes account of revenue when calculating penalties.
- To clarify what it means by senior management.
- To add further clarity when it considers a compliance failure is deliberate or reckless.
- To reinforce the principle that penalties should disincentivise compliance failures.
After considering all feedback received to its consultation and recent legal developments, the PSR has decided to implement all but one change.
The PSR will proceed with its general proposal of adding clarity around how it identifies deliberateness and recklessness. But it is no longer proposing that awareness of a risk can be assessed on an objective basis, when considering whether a compliance failure is reckless. This is in line with the outcome of the recent Seiler, Raitzin and Whitestone v FCA Upper Tribunal case, which looked at this particular issue.
Oliver Hanmer, Head of Supervision and Compliance Monitoring says:
“Enforcement action is one of our key tools to reduce non-compliance and improve outcomes for people and businesses across the UK.
“This updated penalty statement will give industry greater clarity about what to expect if we find they have broken our rules or not followed our directions. It will also help the PSR to explain any decisions we take in the event of enforcement action.”