Handbook Changes

Unlike its title (‘Decision Procedure and Penalties manual and Enforcement Guide review 2010’) CP10/23 is a short Consultation Paper concerning some handbook changes brought about by the Financial Services Act 2010.

The FSA will have the power to publish decision notices as well as final notices. Under the present regime an enforcement case consists of a warning notice, followed by a decision notice and then a final notice.

The decision notice informs the person that they have the right to refer the matter to the Tribunal. If that right is exercised this will (assuming that the Tribunal decides that the FSA should take action against the person) delay the issuance of the decision notice. As such there could be a considerable gap between the time that the FSA started its investigation and being able to publish the details; currently the FSA is only able to publish details of a final notice.

Those at the wrong end of the FSA will also find that a rule has been brought in to prevent a firm (save for a sole trader) paying a financial penalty imposed by the FSA on a present or former employee, director or partner of the firm or an affiliated company.

As you will know, the FSA operates a discount scheme of up to 30% off financial penalties for early settlement (see DEPP 6.7.3 for details). The FSA will now extend the discount scheme to the length of a period of suspension or restriction that it may impose e.g. should the FSA decide that a 10 month suspension of a firm was appropriate, early settlement would result in a 30% discount with the suspension period being reduced to 7 months.

The CP also confirms removal of the FSA’s public awareness objective (the Consumer Financial Education Body will be responsible for taking forward consumer education work), replacing it with financial stability (in conjunction with the Treasury and the Bank of England). For the record, the FSA’s other 3 regulatory objectives are market confidence; the protection of consumers; and the reduction of financial crime.

The consultation period ends 14 December.

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