The UK's Financial Services Authority (FSA) announced last week that under new proposals recently released for consultation, financial services firms will not be permitted to pay regulatory fines out of insurance policies established for such eventualities.
Although this has never yet taken place, the FSA is hoping to close the loophole, and thus prevent its use. Speaking on Thursday, managing director of enforcement at the FSA, Carol Sergeant, explained that:
'Our proposals are designed to plug a potential hole. Insurance to pay FSA fines not only reduces the impact of those fines but also lessens the incentive for firms and individuals to meet appropriate standards.'
The consultation period for the proposals will end on September 24, and the new rules will apply from January 1, 2004, according to the FSA.
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