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FSA sets out when early warning notices will be published

FSA Letters 480

The FSA has set out how the Financial Conduct Authority will decide whether it is fair to publish an early warning notice about a firm or individual who is subject to an ongoing enforcement investigation.

The FSA has today published a consultation paper on the FCA’s policy for publishing warning notices. The publication stage of possible regulatory action was brought forward in 2010 from when an enforcement case was concluded to the decision notice stage, after the firm or individual has had an opportunity to respond to the warning notice.

Under the new regulatory structure, the FCA will have powers to publish at the earlier warning notice stage.

The power will only apply to disciplinary procedures such as proposals to fine, suspend or censure a firm or individual, and will not apply to plans to ban an individual or withdraw or cancel permissions.

Decisions to publish a warning notice will be taken by the Regulatory Decisions Committee, which acts as an independent body and as the first part of the regulator’s appeals process.

The consultation sets out the FCA will not publish a warning notice if it would be unfair to the person whom the regulator is looking to take action against; prejudicial to the interests of consumers; or detrimental to the stability of the financial system.

The FSA proposes the FCA will publish that it is taking action, but will not specify the level of any proposed fine.

Those who want to argue against publication on the grounds of unfairness would have to prove publication could materially affect their health, result in a disproportionate loss of income or livelihood, prejudice criminal proceedings to which they are a party or give rise to some other equal degree of harm.

The FSA says: “The principal purpose of the power is to promote early transparency of enforcement proceedings. Its introduction marks a real departure from the previous regulatory regime and is a bold move towards more transparent and open regulation.

“Both the financial services industry and consumers will be able to understand the types of behaviour the FCA considers acceptable at an earlier stage, which in turn will strengthen the FCA’s continuing enforcement strategy of credible deterrence.”

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Comments

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  1. Good to see the new regulator is prepared to carry on with the time honoured FSA kangaroo court, guilty until proven innocent stance, unless we say otherwise.

    Good job FCA, keep up the good work.

    Oh, one thought! What happens when you ruin someones life, destroy their livelihood, ruin their reputation and send them into bankruptcy in error?

    As the same people running the FSA now are being transferred over to the FCA with their inherited ability to screw up and make a mess of things, how are advisers and firms able to defend against such actions, which will not only impact on individuals lives, but those of their staff and the clients perception of their advisers?

    What mechanism is in place to protect the innocent from the ineptitude of the regulator and its staff ?

    Answer – none!

    I know, how about sacking the inept and useless, now that would be an improvement to the regulator, all we have seen to date is that these people end up with better jobs, large payouts and in one case a knighthood.

    You could not really make it up could you?

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