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Aifa wants RDC role in deciding early warnings

Aifa says the FSA’s independent appeals committee should be given the power to decide whether ongoing enforcement investigations should be publicised under the new regulatory structure.

The FSA’s regulatory decisions committee hears appeals against enforcement and authorisation issues and supervisory decisions. It is made up of external committee members from the industry who report to the FSA board.

A Treasury consultation paper on the new regulatory structure, published in February, set out Government plans to allow the Financial Conduct Authority to publicise warning notices against firms and individuals before they have presented and argued their case.

Aifa policy director Andrew Strange says the committee should be the body that adjudicates on whether a warning notice can be published or not.

He says: “There should be better use of the RDC in the early publication of warning notices before any investigation has ended. Publishing notices at an early stage can do a huge amount of damage and if the FSA is found to be wrong there is no way to reverse that. This is an issue that Aifa will be lobbying on in future.”

Currently, enforcement action can only be processed after a 28-day period in which firms or individuals can appeal against decisions against them.

Money Marketing reported in February that out of the 114 enforcement cases concluded by the FSA in 2009/10, nearly a third were dropped after the warning notice stage.

Law firm Dundas & Wilson partner Patrick Brandt says: “I doubt the new regulator will want to go further than giving firms and individuals the right to be consulted before publishing a warning notice.

“But at the very least we would like to see a provision which makes it clear that publication should only happen when there is a clear risk to the investing public.”

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