TAKING ACTION AGAINST FIRMS THAT DO NOT MEET OUR STANDARDS

Enforcement will play a key role in supporting the FCA’s desire to identify potential problems at an earlier stage, and take steps to avert them.

We will take action, including enforcement action, where we consider that particular aspects of a firm’s business model or culture – such as its product selection, training and recruitment or remuneration practices – are likely to harm consumers. We will also place more emphasis, at an earlier stage, on securing redress where consumers have suffered harm.

This new approach has already begun and has led to the FSA successfully taking faster action in cases of suspicious market activity as a result of closer cooperation between the Enforcement and Market Monitoring teams. We will seek to replicate this in other areas, for example by supporting the new Policy Risk and Research team to work across the business to ensure our Enforcement team is in a position to investigate on the basis of the latest market intelligence.

While we will continue to rely on our enforcement work to help deliver clean markets and combat market abuse, we will aim to help combat fraud in the financial sector by working closely with other law enforcement agencies.

To do all of this, we will use the full range of our enforcement powers, which include the ability to fine, suspend, prohibit, seek injunctions, order compensation to be paid and bring criminal prosecutions.

How we will work with the PRA

Before taking action against dual-regulated firms, we will consult with the PRA. If an issue is relevant to both of us, we will decide whether it is best for us to pursue a joint investigation, or for one of us to act on our own, keeping the other informed along the way. In limited circumstances, we may each lead separate but coordinated investigations.

Being more transparent in our enforcement process

We will also seek to be more transparent about our work and we will publicise, to the extent that it is legally possible, cases where we have intervened but formal action has not been taken.

One of our new powers means we can publicly announce that we have begun disciplinary action against a firm or individual (see Chapter 1).

Decision making

The Financial Services and Markets Act 2000 will require the FCA to publish the procedure that it proposes to follow when giving supervisory, warning and decision notices. The Regulatory Decisions Committee (RDC) currently makes decisions on contested enforcement and certain supervisory and authorisation matters on behalf of the FSA. The RDC is a non-executive committee of the FSA Board, with a chairman and other members from the financial services industry and other professions. Many other FSA statutory decisions are taken by senior FSA executives, including decisions to settle enforcement cases. In contested cases, afirm or individual has the right to refer a matter to the independent Upper Tribunal.

The FCA will retain the FSA’s current allocation of decision making between the RDC and senior executive. Any decision to change the current procedures will be a matter for the future FCA Board following a public consultation.

Financial crime

Stopping firms being used to facilitate financial crime will continue to be a priority. We will focus on the types of firms that are most vulnerable to abuse by criminals (whether because of their size, customer base, product lines or corporate culture).

The work to tackle financial crime influences many of the FSA’s activities – such as deciding who is allowed to own and run a financial firm, what questions are asked of firms, and how or whether to publish those that fall short.