Dear friend,
The news that the UK’s financial regulator, the FSA is going to fine GenRe’s UK subsidiary over a million pounds for well-documented finite troubles is no surprise. After all, the SEC and everyone else has been hauling GenRe over the coals for this for over a year now.
But what I find interesting is that the FSA offers a prompt-payers discount of 30%.
Just like a parking fine or a speeding ticket, it seems quick settlers merit money off.
But surely this is wrong? What the FSA is punishing is serious accounting malpractice — there should be no discounts available – fines should be punitive and non-negotiable.
If something is a capital offence, you should be hung for it.
Can you imagine the judge saying this? "You have been found by a jury of your peers to be guilty of the gravest of offences and so you shall be taken from this place to be hung by the neck until dead, may God have mercy on your soul. Pause.
"But since you were quick to admit guilt, you qualify for the happy hour discount. I think we'll just give a bit of a scare with the blindfold, rough you up a bit and and let you go!"
Another unfortunate and unintended consequence of the way this punishment is structured is that it could end up looking like a revenue-raising exercise for the UK Treasury.
Everyone hates parking fines and often legitimately see them as a “stealth tax” on ordinary people. If we allow FSA fines or punishments meted out by other regulators to be construed in such a cynical fashion, we will be doing our industry a major disservice.
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See you later.