FSA gets new enforcement powers
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The FSA is implementing new enforcement rules introduced by the Financial Services Act 2010 that allow the regulator to suspend or restrict authorised and approved persons and impose financial penalties on people that perform controlled functions without approval.
The final rules are set out in its paper, implementing aspects of the Financial Services Act 2010, published today.
Where an authorised person has breached FSA rules or regulatory requirements, the new powers allow the FSA to suspend any permissions the person has to carry out a regulated activity, or impose restrictions on that activity, for a maximum of 12 months.
For approved persons the FSA can suspend someone from performing one or more controlled functions, or impose restrictions, for a maximum of two years.
The FSA says it believes it is reasonable to use its suspension powers against authorised or approved persons “whenever it is appropriate to do so”, and not just in situations that are deemed to be the most serious.
The regulator says if it deems that both a financial penalty and a suspension is appropriate, it will consider reducing one or both of the sanctions if the combined effect is disproportionate.
At the end of a suspension period, the suspended person would not have to re-apply for authorisation or approval. The FSA says their pre-suspension permissions or approvals would automatically resume.
The regulator says some respondents to the consultation argued that where an individual performs a controlled function without approval, it may be more appropriate to take action against the firm, rather than the individual. The FSA says it will take this into account when deciding whether to take action against an individual.
The new rules also give the FSA the power to impose financial penalties on people who breach short selling prohibition or disclosure rules.
The Act gives the FSA the power to require disclosure of information about short selling and prohibit short selling in specified cases, require information or documents to be produced to determine whether short selling rules have been contravened and impose penalties or issue censures in the event a person has contravened short selling rules.
The FSA has decided to include short selling provisions in the new FINMAR sourcebook and they will be carried forward “substantively unchanged” from the existing short selling provisions.
But the regulator has narrowed the scope of the rights issue disclosure obligation, which means that the disclosure regime would be restricted to UK companies and companies for which a UK prescribed market is the main trading venue for their securities.
The FSA has also taken on new information-gathering powers. The regulator has the power to request information or documents from firms that may be relevant to UK financial stability.
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Readers' comments (14)
Brian Harrison | 23 Jul 2010 12:59 pm
So now the FSA has the power to take away advisers income without trial of appeal.
Talk about a police state and discrimination toward a specific class of citizen. What ever happened to equal rights. It seems the FSB is above it all.
They wonder why young graduates dont want to join Financial Services. Come on these people are educated and I assume they are not stupid. Why anybody invite being regulated by the FSA?
Give financial advisers some civil rights.
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Anonymous | 23 Jul 2010 1:11 pm
Does this mean that journalists who give advice in their newspapers or other media portals, accountants, solicitors or others can be fined for giving "financial advice"?
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Anonymous | 23 Jul 2010 1:32 pm
More powers without us having recourse to the law?
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Anonymous | 23 Jul 2010 1:54 pm
It sounds to me like we would be better off in a court of law!! at least that way we would be innocent until proven guilty.
Sounds like the FSA will find you guilty until proven innocent.
this is FUNDAMENTALLY WRONG!!!
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Anonymous | 23 Jul 2010 1:56 pm
FSA is short for
"FORGET SALES ADVISERS"
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Jim H | 23 Jul 2010 2:11 pm
....and as the powers of the FSA grew stronger, a black shadow was cast over the land of Mordor, and although the Fellowsip of the Coalition led by King Cameron made many a promise to slay the FSA, all of middle earth will soon blanketed with the shadowy,irreversable evil....
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Rod | 23 Jul 2010 2:25 pm
More proof that we the IFA, live in a Communist society with no human rights, or access to the laws of the land.
Politicians are no longer running the country they are delegating their responsibility to unelected, over paid people who are not responsible for their actions or accountable.
Will the last old style IFA without a degree in financial services, turn the lights off when they leave the country, the whole retail distribution will fall to the banks to give SALES ADVICE.
(STILL LOOK ON THE BRIGHT SIDE) the banks can then earn a fortune and re-pay the tax payer for bailing them out.
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Anonymous | 23 Jul 2010 2:29 pm
Lord help us all.More Gestapo stuff. I have done this as Anonymous given that in the last War resistance fighters did not make themselves known to the enemy.I personally feel that I am at War with the FSA and 'careless talk costs livelihoods'!!!
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GXR | 23 Jul 2010 2:56 pm
I think this is awful. How has a country like ours come to this? I think that all IFAs/ independent brokers should lobby their MPs to repeal this act. How so much power can be given to one organisation is beyond me. I don't have a problem with corrupt/ bad IFAs being suspended, it's a good thing. But for one organisation to decide who is and isn't fit with what seems like no oversight is shocking. What do AIFA have to say???
This will also affect product providers/ Banks too. Not the big ones of course, you know, the ones that are going to be exempt from RDR...
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Dave C | 23 Jul 2010 3:00 pm
It seems to me that the FSA are following the strategy adopted by the previous government. In other words, being seen to be doing something, regardless of whether their actions are well thought out, or the effect or outcome of these actions.
I used to see maybe one or two articles each week that related to the FSA's activity - nowadays there are two or three per day!
Wouldn't it be nice if just once they went after the real cowboys who we've all been delighted to bail out?
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