ENF 13.6 Breaches of prudential requirements and financial penalties

Where a firm has breached prudential requirements (for example, rules relating to the adequacy of financial resources), the FSA will consider all the relevant circumstances of a case (including the factors listed in ENF 13.3.3 G) in determining whether to impose a financial penalty.

In considering whether to impose a financial penalty on a mutual (such as a building society), the FSA will take into account the impact that a penalty may have on a firm's customers, as the FSA would with any firm. However, the FSA may decide to impose a financial penalty on a mutual, taking into account all the circumstances of the case (including the factors listed in ENF 13.3.3 G), even though this may have a direct impact on that mutual's customers. This reflects the fact that a significant proportion of a mutual's customers are shareholder-members; to that extent, their position involves an assumption of risk that is not assumed by customers of a firm incorporated as a company. Whether a firm is a mutual will not, by itself, increase or decrease the level of a financial penalty.

INSPRU 1.5.33 R32 prohibits a long-term insurer (including a firm qualifying for authorisation under Schedule 3 or 4 to the Act), which is not a mutual, from paying a financial penalty from a long-term insurance fund.