Companies guilty of the biggest financial offences could be fined as much as £50 million after the Financial Services Authority (FSA) today announced a step change in the size of penalties it wants to mete out.

The City regulator said some fines could treble in size as it seeks to address concerns that penalties thus far have not proved much of a deterrent in improving company behaviour.

It also announced proposals for a minimum fine of £100,000 for individuals found guilty of market abuse offences such as insider dealing. Up to 40 per cent of an individual's salary and benefits could be taken, it said.

Fines would amount to 20 per cent of turnover from the relevant product or business area over the period of the offences, the FSA said.

Margaret Cole, director of enforcement at the FSA, said, "By hitting companies and individuals in the pocket where it hurts, the fines will be a stark warning to others on what they can expect to pay for flouting our rules."

The biggest fine to date was a £17 million penatly paid by Shell in 2004 after it misled shareholders over the size of its oil and gas reserves. Citigroup was fined £13.9 million in 2005 after manipulating the government bond market.

The FSA is inviting responses to its proposals. The new policy would apply to breaches of its rules committed after February 2010.

In scandals like the widespread mis-selling of payment protection insurance, many banks are thought to have made far more in profit by flouting the rules than they stood to lose from the modest fines.

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