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UK regulator predicts harsher rules for industry execs

The UK's Financial Conduct Authority (FCA) is weighing up stiffer penalties for senior insurance executives who act irresponsibly, the regulator's chairman John Griffith-Jones has warned.

Speaking at the Association of British Insurers conference last week, Griffith-Jones said the watchdog was considering new sanctions for errant industry decision-makers, similar to those outlined by last month by the parliamentary commission on banking standards.

He said the rules would "not make a huge amount of difference" for the average employee, "but should if you are a senior executive".

However, Griffith-Jones said he did not believe introducing a criminal offence of reckless misconduct for CEOs - the main recommendation of the banking standards commission - would be as effective as hoped if extended to the insurance sector.

Nevertheless, he described the banking commission's Tyrie report - named after commission chairman Andrew Tyrie MP - as a "handbook for good governance", and said the bulk of its proposals were "high on the agenda going forward" for the FCA.

"Where the regulator is not willing or able or confident enough to blame guilty executives, that needs to change," Griffith-Jones said.

But he added that he did not think bad business judgements counted as criminal acts, and that a criminal offence of recklessness "won't catch many people".

Under the Financial Services and Markets Act, financial firms that lie to the regulator can be fined or banned, but cannot be prosecuted.

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