The Financial Services Authority (FSA) has announced it is to impose stricter fines on companies found guilty of financial wrongdoing.

It will introduce a more transparent framework for calculating penalties, which could see some fines increase three times in size.

"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," noted Margaret Cole, director of enforcement at the FSA.

She added that the changes in policy would make a real difference to consumers and their behaviour towards the financial services sector.

Market abuse claims will see penalties of at least £100,000, while those found guilty of carrying out non-market abuse claims will find themselves subject to a fine of 40 per cent of their salary and benefits.

Recently, the chairman of the FSA said that radical changes were needed for banking regulations to help maintain financial stability.

Lord Turner, chairman of the FSA, made his plea at the British Bankers’ Association conference, where he called for a change in the style of supervision.