FCA penalty-policy proposals: targeted changes in CP26/19

At a Glance

The FCA's CP26/19 consultation on penalty and decision-making policies proposes a small set of targeted changes to the Decision Procedure and Penalties Manual. It closes on 10 August 2026. The proposals cover serious market-abuse penalties, deterrence for wealthier individuals, relevant income, serious financial hardship, settlement decision-makers and consequential changes for cryptoasset market abuse.

The most important publication discipline is simple: the new figures and processes are not yet in force merely because the consultation has been published. The FCA will review responses, decide whether to proceed and update DEPP if it makes the changes. Any internal paper should therefore show the current policy, the proposed amendment and the operational consequence as three separate fields.

This Is Not a General Rewrite of Enforcement Policy

DEPP explains how the FCA makes enforcement decisions and calculates financial penalties through a five-step process that takes account of seriousness, deterrence and mitigating factors. CP26/19 does not replace that architecture. It is a narrower maintenance exercise intended to update thresholds, align policy wording with Tribunal decisions and reflect new cryptoasset powers.

The FCA says the consultation is principally relevant to individuals subject to enforcement action, individuals involved in market abuse, legal and compliance professionals, enforcement specialists, industry bodies and advisers. That audience is narrower than every authorised firm's board. A firm may still choose to brief relevant senior managers, but CP26/19 should not be turned into a generic claim that all firms need an immediate control-remediation programme.

What the FCA Is Proposing

A higher minimum for the most serious individual market-abuse cases

For market abuse by individuals assessed at seriousness level 4 or 5, the FCA proposes increasing the minimum disciplinary element from £100,000 to £150,000. It says the current figure was introduced in 2010 and has not since been revised. The proposed policy would continue to sit within the wider penalty framework, including the potential effect of proportionality, mitigation, settlement and serious financial hardship.

Clearer deterrence policy for wealthier individuals

The FCA proposes aligning sections of DEPP to make clear that it may increase a penalty for deterrent effect after considering the individual's income and assets. This is a clarification of penalty policy, not a new obligation for firms to calculate hypothetical employee fines. For advisers and respondents, the practical task is to identify where existing guidance, case strategy or explanatory material assumes a narrower relevant-income analysis.

Relevant income and deferred remuneration

CP26/19 proposes clarifying how deferred bonuses, pay and shares are treated when relevant income is calculated, reflecting recent Tribunal decisions. The source should be used precisely: it concerns the FCA's penalty calculation for individuals. It does not by itself change a firm's remuneration arrangements or create a separate monitoring rule for deferred awards.

Updated serious-financial-hardship thresholds

The FCA's current starting point is that serious financial hardship is likely only where paying a penalty over a reasonable period would reduce net annual income below £14,000 and capital below £16,000. CP26/19 proposes raising those figures to £21,000 and £24,000. It also proposes automatic CPIH-based adjustments every two years, first on 1 May 2028, rounded to the nearest £1,000.

Decision-making flexibility and cryptoasset amendments

The consultation would allow greater flexibility over who makes settlement decisions in some cases. It also includes consequential DEPP amendments intended to extend the penalty framework to cryptoasset market abuse under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026. These changes remain proposals and should not be described as an operative enforcement outcome before the FCA completes the process.

The Inflation Mechanism Needs Its Own Control

CP26/19 proposes that the £150,000 serious-market-abuse minimum would adjust automatically every two years using CPIH, first on 1 May 2028, rounded to the nearest £10,000. The hardship thresholds would follow the same two-year cycle but be rounded to the nearest £1,000. The FCA also proposes publishing the adjusted figures on its website.

For legal and compliance reference material, a static copy of the consultation figures will eventually become unreliable if the mechanism is made. MEMA's view is that any internal case guide should record the effective date and source of the figure it uses. This is a MEMA document-control recommendation, while the threshold remains a proposal rather than a current obligation.

What a Proportionate Firm Response Looks Like

A firm with active enforcement matters, market-abuse exposure or internal guidance for individuals may need a focused legal and compliance review. The paper should identify which proposed change is relevant, whether it affects advice or process, and whether the point should be raised in a consultation response. Firms without that exposure may need only horizon-scanning and a trigger to revisit their material if final DEPP changes are made.

The consultation does not justify repricing a firm's entire risk profile from the £100,000 to £150,000 proposal. It does not assess the design or effectiveness of a firm's market-conduct controls. Those controls should continue to be assessed against current obligations and actual risk. For related market-conduct context, see our analysis of trade-surveillance evidence and governance.

Decisions Before the Consultation Closes

MEMA Assessment

CP26/19 is useful precisely because it is narrow. It shows how an established policy can drift as inflation, case law and legislation change. The quality test for firms is not the volume of commentary produced but whether a relevant controlled document or live matter can be traced to the correct version of DEPP and the correct effective threshold.

A concise decision record should therefore separate present policy, proposed change, affected process, consultation response, final-rule trigger and accountable owner. That makes the article commercially useful without implying that the FCA has prescribed a new board pack or that a consultation has already changed the law.

Source Evidence

Disclaimer

This article is for general information only and does not constitute legal or regulatory advice. Enforcement, market-abuse, hardship and cryptoasset questions should be assessed against the current law, the applicable DEPP provisions and the facts of the matter.

How MEMA Can Help

MEMA can help firms maintain a source-led regulatory-change record, identify genuinely affected controls and keep consultation proposals separate from current obligations. Our financial crime and market-conduct support can be scoped to the firm's activities and evidence.

If CP26/19 affects a live policy, process or response decision, book a consultation with MEMA to define the review without turning a targeted change into a generic remediation programme.