Entire Section

  • RPP 6-6 RPP 6-6 Financial Penalties Imposed on an Individual

    • Step 1: Disgorgement

      • RPP 6-6-1

        The DFSA will seek to deprive an individual of the economic benefits derived directly or indirectly from the contravention (which may include the profit made or loss avoided) where it is possible 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 “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, up to a maximum of 12%.

        Inserted (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 6-6-2

        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 the contravention;
        (b) factors relating to the nature of the contravention;
        (c) factors tending to show whether the contravention was deliberate; and
        (d) factors tending to show whether the contravention was reckless.
        Inserted (Made 21st August 2014). August 2014 Edition

      • RPP 6-6-3

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

        (a) the level of benefit gained or loss avoided, or intended to be gained or avoided, by the individual 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.
        Inserted (Made 21st August 2014). August 2014 Edition

      • RPP 6-6-4

        Factors relating to the nature of a contravention by an individual include:

        (a) the nature of the Laws or Rules contravened;
        (b) the frequency of the contravention;
        (c) the nature and extent of any financial crime facilitated, occasioned or otherwise attributable to the contravention;
        (d) the scope for any potential financial crime to be facilitated, occasioned or otherwise occur as a result of the contravention;
        (e) whether the individual failed to act with integrity;
        (f) whether the individual abused a position of trust;
        (g) whether the individual committed a contravention of any professional code of conduct;
        (h) whether the individual caused or encouraged other individuals to commit contraventions;
        (i) whether the individual held a prominent position within the industry;
        (j) whether the individual is an experienced industry professional;
        (k) whether the individual held a senior position with the firm;
        (l) the extent of the responsibility of the individual for the product or business areas affected by the contravention, and for the particular matter that was the subject of the contravention;
        (m) whether the individual acted under duress; and
        (n) whether the individual took any steps to comply with DFSA rules, and the adequacy of those steps.
        Inserted (Made 21st August 2014). August 2014 Edition

      • RPP 6-6-5

        Factors tending to show the contravention was deliberate include:

        (a) the contravention was intentional, in that the individual intended, could reasonably have foreseen or foresaw that the likely or actual consequences of his actions or inaction would result in a contravention;
        (b) the individual intended to benefit financially from the contravention, either directly or indirectly;
        (c) the individual knew that his actions were not in accordance with his firm's internal procedures;
        (d) the individual sought to conceal his misconduct;
        (e) the individual committed the contravention in such a way as to avoid or reduce the risk that the contravention would be discovered;
        (f) the individual was influenced to commit the contravention by the belief that it would be difficult to detect;
        (g) the individual knowingly took decisions relating to the contravention beyond his field of competence; and
        (h) the individual's actions were repeated.
        Inserted (Made 21st August 2014). August 2014 Edition

      • RPP 6-6-6

        Factors tending to show the contravention was reckless include:

        (a) the individual appreciated there was a risk that his actions or inaction could result in a contravention and failed adequately to mitigate that risk; and
        (b) the individual was aware there was a risk that his actions or inaction could result in a contravention but failed to check if he was acting in accordance with internal procedures.
        Inserted (Made 21st August 2014). August 2014 Edition

    • Step 3: Mitigating and aggravating factors

      • RPP 6-6-7

        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.

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

      • RPP 6-6-8

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

        (a) the conduct of the individual 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 individual showed during the investigation of the contravention by the DFSA, or any other regulatory authority allowed to share information with the DFSA;
        (c) whether the individual took any steps to stop the contravention, and when these steps were taken;
        (d) any remedial steps taken since the contravention was identified, including whether these were taken on the individual's own initiative or that of the DFSA or another regulatory authority;
        (e) whether the individual has arranged his resources in such a way as to allow or avoid disgorgement and/or payment of a financial penalty;
        (f) whether the individual 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 individual had previously undertaken not to perform a particular act or engage in particular behaviour;
        (h) whether the individual 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 individual;
        (j) action taken against the individual 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;
        (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; and
        (m) whether the individual agreed to undertake training subsequent to the contravention.
        Inserted (Made 21st August 2014). August 2014 Edition

    • Step 4: Adjustment for deterrence

      • RPP 6-6-9

        If the DFSA considers the figure arrived at after Step 3 is insufficient to deter the individual 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 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;
        (c) where the DFSA considers it is likely that similar contraventions will be committed by the individual or by other individuals in the future; and
        (d) where the DFSA considers that the likelihood of the detection of such a contravention is low.
        Inserted (Made 21st August 2014). August 2014 Edition

    • Step 5: Settlement discount

      • RPP 6-6-10

        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 individual concerned reached an agreement with the DFSA. The settlement discount does not apply to the disgorgement of any benefit calculated at Step 1.

        Inserted (Made 21st August 2014). August 2014 Edition
        Amended by Notice of Updates (Made 11th February 2020). February 2020 Edition