Those facing penalties will lose the opportunity for a 20% or 10% reduction from 1 March.

But they will still be able to get a 30% decrease if they settle at stage 1.

Currently, settlement can be reached at any stage of an investigation, but the discount scheme provides for graduated reductions depending on the stage at which settlement is reached.

The changes being made are to axe stage 2 and 3 discounts.

• Stage 1 definition: Offers a 30% reduction if settlement is reached between “the start of an investigation and the point at which the FCA has a sufficient understanding of the nature and the gravity of the breach to make a reasonable assessment of the appropriate penalty, has communicated our assessment to the person under investigation, and has allowed a reasonable opportunity to reach agreement about the amount of the penalty”.

The regulators are also introducing a process for partly contested cases. This will allow a person under investigation to agree certain elements of a case (whether penalty, facts, liability or a combination of these issues) and contest the other elements before the Regulatory Decisions Committee.

They will still have the ability to obtain a discount on the penalty that will reflect the extent that issues have been agreed. The FCA is providing a mechanism for those under investigation to proceed more directly and quickly to the Upper Tribunal, providing external adjudication that is wholly independent of the FCA.

The changes are part of measures to “enhance enforcement decision-making processes” and are “aimed at strengthening the transparency”.

They come after a consultation period.

Mark Steward, director of enforcement and market oversight at the FCA, said: “It is essential that our enforcement decision-making processes command public confidence and operate both efficiently and fairly. The changes set out in today’s Policy Statement are designed to achieve just that and reflect the views of stakeholders who responded to our consultation.”