FCA fines methodology

Category: Compliance & AML · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed June 2026

Definition

The FCA fines methodology is the five-step DEPP 6 calculation for arriving at a financial penalty. The methodology is designed to be transparent, consistent and proportionate, with the penalty calibrated to the seriousness of the breach, the financial benefit derived, the firm’s circumstances and the need for deterrence.

Legal / Regulatory basis

FCA Handbook, DEPP 6 (with DEPP 6.5A specifically for firms and DEPP 6.5B for individuals). FSMA section 206 (firm financial penalties) and section 66 (individual financial penalties).

How it works in practice

Step 1 — disgorgement: any financial benefit derived directly from the breach. Step 2 — seriousness: a percentage of relevant revenue (typically 0%, 5%, 10%, 15% or 20% in five seriousness levels for firms; a notional starting figure for individuals). Step 3 — mitigation and aggravation: an adjustment up or down for factors specific to the case (cooperation, prior history, self-reporting, scale of harm, internal control failings, etc.). Step 4 — deterrence: an upward adjustment where the deterrent effect of the penalty would otherwise be insufficient (typically rare). Step 5 — settlement discount: up to 30% reduction for full early settlement at stage 1 of the FCA’s settlement process.

Common variations

For market abuse penalties under section 123 FSMA the methodology has variations in DEPP 6.5C and DEPP 6.5D. For penalties on individuals the starting figures and percentages are different from firms. The Tribunal can substitute its own penalty assessment.

Example

A firm with relevant revenue of £20m, a level 4 seriousness assessment (15%) before mitigation, with aggravating factors (no self-report, significant customer harm, but good cooperation thereafter), might face: Step 1 disgorgement say £0.5m; Step 2 £3m (15% of £20m); Step 3 +5% for aggravation = £3.15m; Step 4 no adjustment; Step 5 30% settlement discount = £2.555m financial penalty. The disgorgement element is treated separately.

See also

• DEPP — Decision Procedure and Penalties manual
• EG — Enforcement Guide
• Final Notice
• Decision Notice
• FCA enforcement investigation

References

FCA Handbook, DEPP 6. Financial Services and Markets Act 2000, sections 66, 123, 206.

Last reviewed

By Apex Insurance Brokers on 2026-06-11.

This entry is part of the Apex Insurance Wiki. Last reviewed by Apex Insurance Brokers on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.