Entire Section

  • RPP 6-5 RPP 6-5 Financial Penalties Imposed on a Firm

    • Step 1: Disgorgement

      • RPP 6-5-1

        The DFSA will seek to deprive a firm of the economic benefits derived directly or indirectly from a contravention (which may include the profit made or loss avoided) where it is practicable to quantify this. The DFSA will ordinarily also charge interest on the benefit from the date when the contravention occurred until the date of the final decision. Interest will be charged at a minimum rate of 1% over the three months Emirates Interbank Offer Rate (“EIBOR”), or at such other rate as the DFSA considers appropriate having regard to the prevailing market lending rates, at the time the contravention occurred. The maximum rate that will be charged is 12%.

        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition
        Amended by Notice of Updates (Made 11th February 2020). February 2020 Edition

    • Step 2: The seriousness of the contravention

      • RPP 6-5-2

        The DFSA will determine a financial penalty figure that reflects the seriousness of the contravention. In determining such a figure, the DFSA will take into account various factors, which will usually fall into the following four categories:

        (a) factors relating to the impact of a contravention;
        (b) factors relating to the nature of a contravention;
        (c) factors tending to show whether a contravention was deliberate; and
        (d) factors tending to show whether a contravention was reckless.
        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-3

        Factors relating to the impact of a contravention committed by a firm include:

        (a) the level of benefit gained or loss avoided, or intended to be gained or avoided, by the firm from the contravention, either directly or indirectly;
        (b) the loss or risk of loss, as a whole, caused to consumers, investors or other market users in general;
        (c) the loss or risk of loss caused to individual consumers, investors or other market users;
        (d) whether the contravention had an effect on particularly vulnerable people, whether intentionally or otherwise;
        (e) the inconvenience or distress caused to consumers; and
        (f) whether the contravention had an adverse effect on markets and, if so, how serious that effect was. This may include having regard to whether the orderliness of, or confidence in, the markets in question has been damaged or put at risk.
        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended by Notice of Updates (Made 14th July 2013). July 2013 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-4

        Factors relating to the nature of a contravention by a firm include:

        (a) the nature of the Laws or Rules contravened;
        (b) the frequency of the contravention;
        (c) whether the contravention revealed serious or systemic weaknesses in the firm's procedures or in the management systems or internal controls relating to all or part of the firm's business;
        (d) whether the firm's senior management were aware of the contravention;
        (e) the nature and extent of any financial crime facilitated, occasioned or otherwise attributable to the contravention;
        (f) the scope for any potential financial crime to be facilitated, occasioned or otherwise occur as a result of the contravention;
        (g) whether the firm failed to conduct its business with integrity; and
        (h) whether the firm, in committing the contravention, took any steps to comply with Laws and Rules, and the adequacy of those steps.
        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-5

        Factors tending to show the contravention was deliberate include:

        (a) the contravention was intentional, in that the firm's senior management, or a responsible individual, intended, could reasonably have foreseen, or foresaw that the likely or actual consequences of their actions or inaction would result in a contravention;
        (b) the firm's senior management, or a responsible individual, knew that their actions were not in accordance with the firm's internal procedures;
        (c) the firm's senior management, or a responsible individual, sought to conceal their misconduct;
        (d) the firm's senior management, or a responsible individual, committed the contravention in such a way as to avoid or reduce the risk that the contravention would be discovered;
        (e) the firm's senior management, or a responsible individual, were influenced to commit the contravention by the belief that it would be difficult to detect; and
        (f) the contravention was repeated.
        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-6

        Factors tending to show the contravention was reckless include:

        (a) the firm's senior management, or a responsible individual, appreciated that there was a risk that their actions or inaction could result in a contravention and failed adequately to mitigate that risk; and
        (b) the firm's senior management, or a responsible individual, were aware that there was a risk that their actions or inaction could result in a contravention but failed to check if they were acting in accordance with the firm's internal procedures.
        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

    • Step 3: Mitigating and aggravating factors

      • RPP 6-5-7

        The DFSA may increase or decrease the amount of the financial penalty arrived at after Step 2 (excluding any amount to be disgorged as set out in Step 1), to take into account factors which aggravate or mitigate the contravention. Any such adjustments will be made by way of a percentage adjustment to the figure determined at Step 2.

        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-8

        The following list of factors may have the effect of aggravating or mitigating the contravention:

        (a) the conduct of the firm in bringing (or failing to bring) quickly, effectively and completely the contravention to the DFSA's attention (or the attention of other regulatory authorities, where relevant);
        (b) the degree of cooperation the firm showed during the investigation of the contravention by the DFSA, or any other regulatory authority allowed to share information with the DFSA;
        (c) where the firm's senior management were aware of the contravention or of the potential for a contravention, whether they took any steps to stop the contravention, and when these steps were taken;
        (d) the nature, timeliness and adequacy of the firm's responses to any supervisory interventions by the DFSA and any remedial actions proposed or required by DFSA's supervisors;
        (e) whether the firm has arranged its resources in such a way as to allow or avoid disgorgement and/or payment of a financial penalty;
        (f) whether the firm had previously been told about the DFSA's concerns in relation to the issue, either by means of a private warning or in supervisory correspondence;
        (g) whether the firm had previously undertaken not to perform a particular act or engage in particular behaviour;
        (h) whether the firm concerned has complied with any requirements or rulings of another regulatory authority relating to the contravention;
        (i) the previous disciplinary record and general compliance history of the firm;
        (j) action taken against the firm by other domestic or international regulatory authorities that is relevant to the contravention in question;
        (k) whether DFSA guidance or other published materials had al raised relevant concerns, and the nature and accessibility of such materials; and
        (l) whether the DFSA publicly called for an improvement in standards in relation to the behaviour constituting the contravention or similar behaviour before or during the occurrence of the contravention.
        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-11 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

    • Step 4: Adjustment for deterrence

      • RPP 6-5-9

        If the DFSA considers the figure arrived at after Step 3 is insufficient to deter the firm who committed the contravention, or others, from committing further or similar contraventions then the DFSA may increase the financial penalty. Circumstances where the DFSA may do this include:

        (a) where the DFSA considers the absolute value of the financial penalty too small in relation to the contravention to meet its objective of credible deterrence;
        (b) where previous DFSA action in respect of similar contraventions has failed to improve industry standards. This may include similar contraventions relating to different products (for example, action for mis-selling or claims handling failures in respect of 'x' product may be relevant to a case for mis-selling or claims handling failures in respect of 'y' product);
        (c) where the DFSA considers it is likely that similar contraventions will be committed by the firm or by other firms in the future in the absence of such an increase to the financial penalty; and
        (d) where the DFSA considers that the likelihood of the detection of such a contravention is low.
        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

    • Step 5: Settlement discount

      • RPP 6-5-10

        Section 6-8 provides that the amount of the financial penalty which might otherwise have been payable will be reduced to reflect the fact that the firm concerned reached an agreement with the DFSA. The settlement discount does not apply to the disgorgement of any benefit calculated at Step 1.

        Derived from Notice of Updates (Made 20th December 2012). December 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition
        Amended by Notice of Updates (Made 11th February 2020). February 2020 Edition

    • [Deleted]

      • RPP 6-5-12 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-13 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-14 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-15 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-16 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

    • [Deleted]

      • RPP 6-5-17 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-18 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-19 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition

      • RPP 6-5-20 [Deleted]

        Deleted (Made 21st August 2014). August 2014 Edition