The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have jointly announced a series of changes to the way they will conduct enforcement activity in the future.
The changes include:
• A commitment to providing more information to firms who are subject to formal investigation as to why they are under investigation
• A promise to provide more updates to firms during the investigation
• An undertaking that the Enforcement and Supervision teams at the appropriate regulator will liaise closely during the process of an investigation
• The publication of more detailed guidance on the process to be followed when the FCA and PRA conduct a joint investigation into a firm
• A system whereby a firm can ‘partly contest’ an FCA enforcement decision, agreeing to some elements of the regulator’s case against them whilst also contesting other parts of the decision with the Regulatory Decisions Committee. The level of discount the firm receives on any fine will reflect the extent to which they agreed with the FCA’s case against them
• The abolition of 20% discounts on fines for settling at Stage 2, or 10% discounts for settling at Stage 3 of the enforcement process. Firms wishing to obtain any form of discount must now settle at Stage 1, where the discount will remain at 30%
• A new system allowing firms to refer enforcement decisions directly to the Tribunal, without first making representations to the FCA’s decision maker
All the changes will be in force by March 1 2017, while some of these provisions have already been enacted.
The FCA says it will also try to publish details on its website of cases where a firm’s co-operation with an investigation has prevented the need for any formal enforcement action. It has also undertaken to maintain anonymity for the firms subject to investigation, save for “exceptional circumstances”.
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 PS are designed to achieve just that and reflect the views of stakeholders who responded to our consultation.”
Miles Bake, Head of Legal, Regulatory Action Division of the PRA, said:
“The PRA’s enforcement processes must be clear, transparent and reasonable. This Policy Statement outlines a number of concrete steps the PRA is taking to ensure that we implement the recommendations from the HMT Enforcement Review and the Report of Andrew Green QC.”
Mr Blake’s comments refer both to the Treasury’s review of the regulators’ enforcement practices, and to the Green Report into the way the FCA handled the collapse of HBOS. This announcement from the two regulators must therefore be seen as a response to those two inquiries. Andrew Green’s report said that in the case of HBOS, “the decision-making process adopted by the FSA was materially flawed.”
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.