Yudu - Journey to the FCA

THE CREATION OF THE FCA

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How the financial promotions power will work

1. We will ‘give a direction’ to an authorised firm to remove its own financial promotion or one it approves on behalf of an unauthorised firm, setting out our reasons for banning it.

2. Firms can make representations to us if they think we are making the wrong decision.

3. We will decide whether to confirm, amend or revoke our direction. If it is confirmed, we will publish it, along with a copy of the promotion and the reasons behind our decision.

Publicising enforcement action

One of the new powers allows us to publicly announce that we have begun disciplinary action against a firm or individual. We will be able to publish details of a ‘warning notice’ proposing disciplinary action, to signal the start of formal enforcement proceedings. We will have to consult the recipient of the warning notice before publishing.

By being more open and transparent about our enforcement process, we will help consumers better understand the action we are taking on their behalf, and bring potential problems to their attention earlier. It also makes it clear to firms, and the market, as to what we consider to be unacceptable behaviour.

New powers on recognised investment exchanges, sponsors and primary information providers

We will gain new powers to help our regulation of markets, relating to recognised investment exchanges(6) (RIEs), sponsors(7) information providers (8) and primary (PIPs). These will, in general, provide the same supervisory and sanctioning powers that exist in relation to investment firms. We will consult on our approach to these powers before Day One.

This will allow us to be much clearer with the industry from Day One about what we expect, in a way that was not possible under existing legislation.

For RIEs, the changes will ensure we can react more effectively and respond to the complex and challenging environment that we, and exchanges, now face; we will also act faster to address compliance failures.

For sponsors, the Bill updates and extends the current powers by providing a more flexible set of tools, such as extending the power to impose financial penalties and suspend sponsors. This change reflects the importance of sponsors to the UK listing regime and the limited nature of what is currently available to the FSA to oversee them effectively and proportionately.

The Bill gives us similar powers in relation to PIPs, and places our regulation on a statutory footing, while increasing the limitation period for imposing penalties for rule breaches from two to three years.(9)

Super-complaints

Certain consumer organisations will be able to make what are known as ‘super-complaints’. The aim is to provide consumer bodies with a way of raising competition and consumer issues with us, and is modelled on a similar process that already operates with the Office of Fair Trading.

6 A body authorised to operate an exchange for the trading of securities and derivatives in the UK, for example the London Stock Exchange.

7 Sponsors are advisers that must be approved by us to provide certain services to issuers of securities.

8 Primary information providers act as intermediaries passing regulated information from issuers to the secondary information providers, which then provide it to the public.

9 This will bring it into line with the limitation period elsewhere in the Financial Services and MarketsAct.

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Foreword by John Griffith-Jones

Introduction by Martin Wheatley: Our vision for the Financial Conduct Authority

Chapter 1: The creation of the FCA: Spotlight on some of our new powers

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Chapter 2: Protecting the perimeter

Chapter 3: Ensuring firms continue to meet our standards

Chapter 4: Taking action against firms that do not meet our standards

Chapter 5: Building our understanding of the markets

Chapter 6: Maintaining effective relationships

Chapter 7: Accountability, transparency and measuring our success

Annex A: Specific questions for consultation

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