The Financial Services Authority has pledged to clamp down on illegal activities within the City and has more than doubled its criminal prosecution team.

Testifying at the treasury select committee, chief executive Hector Sants, described the level of market abuse as ‘unacceptable’.

The FSA has been criticised for taking a softer approach to policing London’s markets than other regulators, such as the US Securities and Exchange Commission.

Callum McCarthy, the chairman of the FSA, told the same hearing: 'The City of London does not take market abuse seriously enough.'

Sally Dewar, head of the wholesale markets division, told the Financial Times the FSA had boosted its criminal prosecutor team to 30 people from 12 to take a tougher line on enforcement.

'There is a strong pipeline coming in both civil and criminal cases,' she said. 'We’ve taken a conscious decision to focus more on criminal cases.'

Dewar acknowledged successful prosecutions had proved hard to achieve but said 'we feel the need to be bold'.

'As the cases develop, we’ve been pushing ourselves as to whether we can
take more of these cases as criminal cases,' said Dewar.

'What the market needs to recognise is that the burden of proof is extremely high. Some we are going to lose, some of them we are going to win – and we will have to take the rough with the smooth.'

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