This Consultation Paper includes proposed changes to the FCA’s Decision Procedure and Penalties Manual and Enforcement Guide.
Why are we consulting on this?
On 18 December 2014, HM Treasury published its ‘Review of enforcement decision-making at the financial services regulators’.
The focus of the review was on the transparency, fairness, effectiveness and speed of the FCA’s and the PRA’s enforcement decision-making processes. The HM Treasury review acknowledged that both regulators had delivered strong enforcement action. It made a number of recommendations to the FCA and the PRA with the aim of improving current decision-making processes and arrangements. The FCA and the PRA intend to implement these recommendations.
As the recommendations have been made across the full lifecycle of an enforcement case, and vary in nature, the regulators will use a variety of tools to implement them. This paper sets out the regulators’ response to some of the recommendations and proposals for implementation.
On 19 November 2015, the PRA and the FCA published two reports:
- a joint report into the failure of HBOS plc
- Andrew Green QC’s report into the FSA’s enforcement actions following the failure of HBOS (‘the Green Report’)
The Green Report made four recommendations, three of which are relevant to the Treasury review recommendations. They cover:
- pre-referral decision-making
- ongoing dialogue between enforcement and supervision during an investigation
- informing the subject of an investigation about the matters under investigation
This Consultation Paper incorporates the PRA and FCA’s proposals for implementing recommendations 2 and 3 in Chapters 3 and 4. Chapter 2 explains the PRA and FCA’s implementation of recommendation 1 at an operational level.
This paper also proposes to provide a framework and incentive for partly contested cases. This proposal allows enforcement proceedings to be resolved when an individual or firm agrees all relevant facts and the breaches which arise from those facts, but wishes to contest the appropriate regulatory outcome before the Regulatory Decisions Committee.
Who is this paper aimed at?
This consultation will be of interest to all firms and individuals involved in providing financial services. It will be of particular interest to all firms and individuals (and their professional advisers) that are, or expect to be, subject to FCA and/or PRA enforcement action. It may also be of general interest as it builds on our existing statements about our use of enforcement powers.
This consultation does not directly affect consumers. However, as these proposals concern the transparency of the FCA’s approach to enforcement decision-making and its enforcement process, they may be of general interest to consumers and the organisations that represent them.
What are the next steps?
Please send us your comments by 14 July 2016 by using our online response form. You can also email [email protected] or write to: Law and Policy Team, Enforcement and Market Oversight Division, Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
We will publish feedback on responses and issue a Policy Statement once we have reviewed your comments.
Want to find out more?
For more information see: