The Financial Conduct Authority has published a consultation paper  proposing targeted updates to parts of its Decision Procedure and Penalties Manual (DEPP) dealing with penalties imposed on individuals following enforcement action.

The proposed changes are incremental, but are designed to:

• maintain the deterrent effect of financial penalties by increasing minimum starting points to reflect inflation;
• improve clarity and consistency in penalty calculation by harmonising language used across market abuse and non-market abuse cases; and
• reflect some issues the FCA has encountered in high profile cases and its expanding remit (including cryptoassets).

The key proposals and their potential implications for firms and individuals are summarised below.

1. Increased minimum penalties for serious market abuse

The FCA proposes to increase the minimum starting point for fines in cases of "serious market abuse" (i.e. cases assessed at levels 4 or 5 on its five‑point seriousness scale, which typically includes deliberate misconduct) from £100,000 to £150,000.

The current £100,000 threshold dates back to 2010 and has not been updated since. The proposed uplift reflects inflation, using a CPI plus housing (CPIH) measure. Alongside this, the FCA proposes introducing automatic indexation, whereby the minimum figure would be reviewed every two years (from 1 May), with adjustments applied in line with CPIH and rounded to the nearest £10,000.

Although framed as a technical recalibration, the proposal reinforces the FCA's view that market abuse requires "particular and focused deterrence". It also underscores the regulator's continuing emphasis on individual accountability in enforcement outcomes.

2. Deterrence adjustments for wealthier individuals

The FCA is seeking to clarify its approach to increasing penalties for wealthier individuals.

An amendment to DEPP 6.5B.4G (which applies to penalties on individuals in non-market abuse cases) is proposed to make clear that the FCA may increase a penalty where it would not be regarded as a sufficient deterrent in light of the individual's income or net assets. The FCA has suggested this change based on its view that individuals have wrongly thought that it would only consider individuals' wealth for these purposes when income was low or zero.

3. Updated approach to "relevant income"

The consultation also proposes adjustments to how the FCA calculates "relevant income", a key component in determining financial penalties for individuals.

Under the existing framework, the FCA considers:

• the seriousness of the misconduct;
• its duration; and
• the individual's income during the period of misconduct, including salary, bonuses, and other benefits received from the role in question.

In practice, difficulties can arise in relation to deferred remuneration. Bonuses or share‑based awards may relate to work performed during the misconduct period but received later, or may be received during the relevant period but relate to earlier performance.

Following the Upper Tribunal's decisions in Staley v FCA and Gonzalez v FCA, the FCA proposes to clarify that:

• benefits received after the misconduct period but earned during it will be treated as relevant income;
• income that is uncertain at the time of calculation may be estimated or adjusted;
• benefits that will not be received, or which were earned before (but received during) the misconduct period, will not be treated as relevant income.

4. Higher serious financial hardship thresholds

Under the current framework, the FCA may reduce a penalty where payment would cause an individual serious financial hardship (SFH), assessed by reference to whether their income and capital would fall below specified thresholds if the penalty were paid over a reasonable period.

At present, those thresholds are set at:

• net annual income below £14,000; and
• capital below £16,000.

These figures were introduced in 2013. The FCA now proposes to increase them to:

• £21,000 for income; and
• £24,000 for capital,

Again, the FCA has indicated that these changes are intended to reflect inflation (using CPIH). As with the market abuse threshold, the FCA proposes to introduce automatic indexation, with reviews every two years (from 1 May) and adjustments rounded to the nearest £1,000.

Again, the FCA has indicated that these changes are intended to reflect inflation (using CPIH). As with the market abuse threshold, the FCA proposes to introduce automatic indexation, with reviews every two years (from 1 May) and adjustments rounded to the nearest £1,000.

The FCA has proposed a number of clarifications:

• it will continue to consider representations regarding the impact of selling a property (including on other occupants), but without limiting this to cases where the impact is "exceptionally severe"; and
• the disgorgement element of a penalty (i.e. the removal of any financial benefit obtained through misconduct) will not be reduced on grounds of serious financial hardship.

5. Changes to settlement decision-making

In addition, the consultation addresses aspects of the FCA's internal decision‑making processes.

Currently, settlement decisions must be taken by two "settlement decision‑makers" (SDMs):

• one at director (or acting director) level or above; and
• one at least at head of department level.

At least one SDM must be from outside the Enforcement and Market Oversight Division (EMO), and neither should have been directly involved in establishing the underlying evidence.

In practice, the FCA considers that this structure does not always allow for sufficient technical expertise in cases referred from EMO. It therefore proposes to amend the current requirements so that, in such cases, one SDM may be drawn from EMO, enabling greater involvement of subject‑matter experts.

6. Cryptoasset market abuse - amendments

Finally, following the publication of the Cryptoasset Regulations (which will come into force on 25 October 2027), the FCA proposes to amend DEPP to make clear that its penalty framework applies equally to cryptoasset market abuse.

Furthermore, the FCA proposes to introduce three new powers in the context of transitional provisions under the cryptoasset regulatory regime. These powers are designed to facilitate the orderly wind‑down of firms that do not obtain the necessary Part 4A FSMA permissions to carry out regulated activities.

Under the transitional framework:

• certain parties may benefit from a temporary exemption allowing them to continue limited cryptoasset activities to perform pre‑existing contracts;
• that exemption may be varied, conditioned or cancelled by the FCA; and
• the FCA may issue a public censure in specified circumstances.

These powers will be exercised by FCA staff under executive procedures.

Next steps

The consultation paper is open until 10 August 2026. Final changes will be implemented following the FCA's consideration of responses.