The FSA board says the process for using of the Financial Conduct Authority’s new power to publish early warning notices should be “fair” and “proportionate”.
Under the Financial Services Act 2012, the FCA has been given the power to publish early warning notices when it starts to investigate a firm or individual for enforcement action.
In the FSA’s December board minutes, published today, the regulator says there is no obligation in statute over how the FCA should use the power.
It says it will consult on the new powers and decide the detail of the process at its next board meeting.
The minutes state: “The board discussed several factors that might be taken into account when determining the appropriate policy, including how to judge fairness (and whether it was possible or desirable to articulate these in detail given the huge range of circumstances that would be covered), issues of transparency and consumer protection and the balance of fairness and proportionality between individuals and between individuals and firms if an individual’s livelihood was at stake.”
The independent panels were supportive of the proposals, but the Financial Services Consumer Panel raised concerns that it could create barriers to the FCA using the power.
The Regulatory Decisions Committee chairman called for as much detail as possible in how the new rules will work.
During the Act’s passage through parliament a number of Conservative and Labour peers raised concerns about the unchecked use of early warning notices.
In response, the Government made two concessions to create a statutory role for an FCA appeals body. It also created a reserve power for the Treasury to scrap early warning notices if it is no longer in the public interest.