OFSI Enforcement Process Reforms

OFSI will publish a detailed case assessment matrix clarifying how it evaluates both severity (from lower level administrative breaches to the most serious, systemic failings) and conduct (mitigating, neutral, aggravating). This framework gives firms far greater foresight on how OFSI determines a baseline penalty, including what behaviours increase or reduce risk—such as internal controls, openness, senior management involvement and remediation.

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The long standing voluntary disclosure model is replaced with a single, simplified discount capped at 30%. The change reflects OFSI’s intention to prevent overly reduced penalties in serious cases while still encouraging early engagement. OFSI has also shifted scrutiny towards the quality and timeliness of disclosure—meaning incomplete or delayed notifications may not attract the full benefit and may in some cases be treated neutrally or aggravatingly.

A new settlement mechanism allows firms to resolve cases more quickly by accepting OFSI’s findings, agreeing not to contest the penalty, and waiving Ministerial Review and appeal rights. This offers a 20% discount applied to the penalty baseline. OFSI has clarified that: (i) settlement discussions will run concurrently with the Notice of Intention process to avoid procedural delay; (ii) some circumvention related conduct may still be eligible; and (iii) settlements will not be anonymised, reinforcing deterrence and transparency.

Under the EAS, firms can provide OFSI with a comprehensive early narrative and evidence bundle explaining the breach, root causes and remedial steps. In return, OFSI may apply a standalone discount of up to 20%. Unlike the former regime, EAS, settlement and voluntary disclosure discounts can now apply concurrently — creating a possible combined reduction of up to 70%. OFSI notes that the EAS will not be appropriate in all cases, but it will materially accelerate investigations where used effectively.

OFSI’s EAS closely mirrors the structure of the Prudential Regulation Authority’s own Early Account Scheme, which offers discounts of up to 50%. This alignment reflects a broader regulatory shift towards earlier, fuller engagement and faster case resolution—likely driven by the increasing volume and complexity of enforcement activity across the UK regulatory landscape.

OFSI will introduce fixed penalties for lower level information, reporting and licensing related offences, typically where there is no underlying prohibited transaction. These will sit at £5,000 or £10,000 depending on the nature of the failure. Representation windows are shortened to 15 days to reflect lower complexity. All fixed penalties will be published, and OFSI retains discretion to apply a lower penalty or issue no penalty where appropriate, including where firms self identify and remediate process gaps.

OFSI will seek legislative approval to double statutory maximum penalties from £1m to £2m and increase the “value based” cap from 50% to 100% of the breach value. OFSI has confirmed it will not pursue turnover based penalties nor breach by breach multiplier models, citing proportionality and administrative clarity. These increases are aimed squarely at reinforcing deterrence in high severity cases—particularly repeated failings, poor governance or wilful breach.