The Financial Services Authority has announced plans to increase fines for mis-selling financial services by up to 300%.

The FSA says it is responding to evidence that businesses fined for mis-selling are failing to sufficiently improve their standards and operations. This seems to particularly apply to the Payment Protection Insurance scandal where improvements and the resolution of claims seem to be grinding ever so slowly.

Under the new proposals penalties will be based on up to 20% of the company’s revenue from the product category concerned involved in the mis-selling or, in the case of an individual, up to 40% of their annual salary and bonuses.

The record fine for mis-selling Payment Protection Insurance was £7 million which was levied last year on Alliance & Leicester. Alliance & Leicester subsequently got tangled up in the credit crunch and it now owned by Santander, the huge Spanish based banking group.