1. Introduction

1. Introduction

The Enforcement Annual Performance Account is our annual assessment of whether we are operating fairly and effectively in investigating suspected misconduct and in bringing criminal, civil and administrative proceedings where it is appropriate to do so.

While this report summarises some of the key outcomes that have been achieved over the last year – and there are several notable results – the measure of how fair and effective we are must depend not just on outcomes but on how those outcomes are achieved. It is essential that this includes thorough investigation, involving the pursuit of all relevant lines of inquiry, the fair discovery of relevant facts, the proper assessment of evidence according to law and, finally, efficient decision-making with both the merits of the case and the public interest in mind. 

This year, in our paper CP16/10, we consulted on our responses to the Treasury’s Report on enforcement decision-making (published in December 2014) and to the publication of the HBOS Report, notably Mr Andrew Green QC’s findings in relation to enforcement decision-making by the then Financial Services Authority. 

We have also gone further with an additional consultation proposal to make administrative decision-making more transparent to affected parties and provide avenues for parties to contest penalty decisions where all the facts are agreed without losing a commensurate discount for early resolution. 

We have also presented two additional options for narrowing the issues in dispute.

This is an important proposal that underscores our commitment to ensure our enforcement decision-making process is more transparent for firms and individuals, providing  more incentive for firms and individuals to narrow the dispute in contested cases without losing the chance of a ‘fair crack of the whip’ in relation to penalty. At the same time, the agreed statements of fact and liability will be published when we publish decision notices and final notices, and the Regulatory Decisions Committee would give a reasoned decision on penalty in such cases, making public more information and ensuring the outcome and the penalty is more transparent to the industry and the wider community.

We are also doing more internally, undertaking a review of our current operating model with a view to make our investigation work sharper, more thorough and more efficient: in effect, enabling us to make better decisions sooner.

This report continues to provide a statistical overview of our performance for those who are interested in the numbers. For others, the key point is the widening spectrum of our work from unauthorised investment frauds, where we secured eight convictions totalling 32 years and nine months’ imprisonment to the first court-imposed civil penalties for market manipulation, significant fines for poor controls in the conduct of foreign exchange business, LIBOR and EURIBOR manipulation and a range of cases dealing with consumer credit, mis-selling issues, client money breaches, listing rules breaches and many others.

The litigation over third party rights was one of this year’s notable themes. The Court of Appeal’s decision [1] has been applied by the Upper Tribunal on several occasions now.[2] We await a further appeal on this issue before the Supreme Court in October 2016, the result of which will be reported in next year’s Enforcement Annual Performance Account.

We welcome your feedback which can be emailed to [email protected].

[1] Financial Conduct Authority v Macris [2015] EWCA Civ 490

[2] Christian Bittar v FCA [2015] UKUT 602 (TCC), Christopher Ashton v FCA [2016] UKUT 0005 (TCC) and Joerg Vogt v FCA [2016] UKUT 0103 (TCC)