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Govt pledges ‘independent’ process for early warning notices

Lord Sassoon
Lord Sassoon, House of Lords

The Government has amended the Financial Services Bill to create more “independence” in the decision making process for early warning notices.

Speaking in a House of Lords debate yesterday, commercial secretary Lord Sassoon said he expects the regulatory decisions committee to decide on whether to impose a warning notice and whether to publish it.

Tory peers Lord Flight, Lord Deben and Lord Hodgson had previously raised concerns about the fairness of the early warning notice process, set to be introduced as part of the Government’s regulatory reforms.

Sassoon said he recognised the FCA had the ability to act as “judge, jury and executioner” when imposing early warning notices and so he has created a more robust process.

He said: “The amendment is intended to deliver a degree of independence in the decision making process and mirrors the decision to issue a warning notice or decision notice. I hope that this addresses some concerns expressed.

“Where possible the same procedure should be used to decide on the issuance and disclosure of a warning notice. It would mean, for example, for the FCA the Government expects the RDC to take both these decisions.”

Flight welcomed the amendment for creating a “fair process” at the FCA.

The FCA is not legally obliged to keep the RDC and there have been concerns that it could be scrapped. Sassoon tried to alleviate these concerns by strongly backing the RDC, although he fell short of giving it statutory backing.

Labour peer Baroness Dianne Hayter said: “The Government is still failing to ensure the continuance of the RDC through statutory backing. We hear from the minister that the current FSA supports the RDC but that does not apply to the future. I hope the Government doesn’t rue the day in failed to ensure the RDC’s existence and independence.”

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