fsa enforcement ian mason head of department wholesale group enforcement division june 2005 l.
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FSA Enforcement Ian Mason Head of Department, Wholesale Group Enforcement Division June 2005. Enforcement in the FSA context. FSA is not Enforcement led Small proportion (12%) of total budget Selective risk-based approach. Risk-based enforcement: selection of cases for investigation.

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enforcement in the fsa context
Enforcement in the FSA context
  • FSA is not Enforcement led
  • Small proportion (12%) of total budget
  • Selective risk-based approach
risk based enforcement selection of cases for investigation
Risk-based enforcement: selection of cases for investigation
  • Risk means risk to FSA’s four statutory objectives
    • Market confidence
    • Public understanding
    • Protection of consumers
    • Financial crime
  • Risk based approach operates at two main levels
    • Strategic planning and resourcing
    • Individual case resourcing
fsa enforcement division
FSA Enforcement Division
  • About 250 staff
  • Forensic investigators, lawyers and support staff
  • Wholesale and Retail Groups
  • Reports directly to CEO
  • Currently about 150 cases open
fsa enforcement key priorities
FSA Enforcement – key priorities
  • Senior management responsibility
  • Market abuse and insider dealing
  • Breaches of the Listing Rules
  • Conflicts of interest
  • Mis-selling, complaints handling
  • Financial promotions, financial resources
  • Perimeter cases
investigatory powers
Investigatory Powers
  • FSMA part IX, sections 165–177
  • Powers to require information
  • Appointment and powers of investigators – s167 and 168
  • Skilled persons
  • Search warrants

Enforcement: An Overview of the process

Urgent Action

FSA decide to use



planning, control


urgent civil


enforcement tools





investigations: gathering information and



of a skilled



of third

deciding to take


further action

Regulatory Decisions

handling specific issues



Financial Services and


proceedings and

Markets Tribunal


orders against

debt avoidance

civil proceedings







criminal proceedings


rdc tribunal process
RDC / Tribunal Process
  • Warning Notice
  • Written & Oral Representations
  • Decision Notice
  • Referral to Tribunal
  • Final Notice
  • Publicity
  • Settlement / mediation available throughout
  • Factors include
    • Seriousness
    • Deliberate or reckless behaviour
    • Financial resources
    • Conduct after contravention
    • Disciplinary record and compliance history
2004 outcomes
2004 Outcomes
  • 76 cases through RDC
  • 38 references to Tribunal
  • 4 Tribunal decisions
  • 11 Tribunal cases struck out / withdrawn
  • 101 Final Notices
  • Over £21 million in fines
  • Over 280 international requests
international co operation information sharing
International Co-operation & Information Sharing
  • International co-operation between regulators – crucial in the context of regulating an increasingly global market
  • Advance warning of problems through pro-active sharing of intelligence
  • Assistance with investigations involving cross-border elements e.g. obtaining documents and testimony
requests for assistance
Requests for Assistance

Incoming Requests

  • What do incoming overseas requests relate to?
    • Transaction data
    • Good standing information
    • Regulatory information from FSA’s files
    • The exercise of statutory powers e.g. “sitting in”
    • MLAT requests
fsa s power to co operate statutory provisions
FSA’s power to co-operate – statutory provisions
  • Section 354: General duty to co-operate
    • The FSA must take such steps as it considers appropriate to co-operate with other persons … who have functions
      • similar to those of the FSA; or
      • in relation to the prevention and detection of crime
  • Section 169: Assistance to overseas regulators
    • Information gathering and document production (section 165)
    • Appointing investigators (section 168(3))
    • A direction permitting a representative of an overseas regulator to attend and take part in interviews (section 169(7))
    • Powers are backed by contempt sanctions (section 177)
considerations in giving assistance
Considerations in giving assistance
  • Reciprocity of assistance
  • Whether the assertion of jurisdiction has a close parallel in the UK
  • Seriousness of the case and its importance to persons in the UK
  • Whether in the public interest
  • Contribution to cost
  • Such considerations do not apply if we consider that the exercise of investigative powers isnecessary to comply with a Community obligation
disclosing information to ors
Disclosing Information to ORs
  • Sections 348 and 349: a general prohibition on disclosure of “confidential information” which
    • relates to the business or other affairs of any person
    • is received by the FSA in discharge of its functions
    • is not available in the public domain
    • is not summary information
  • Treasury Regulations provide “gateways” enabling disclosure
  • Improper disclosure constitutes a criminal offence
considerations in disclosing information to non eea regulators
Considerations in disclosing informationto non-EEA regulators
  • Where “Directive information” is to be disclosed to a non-EEA regulator there must be a “co-operation agreement”
  • Information must be subject to guarantees of equivalent confidentiality protection
    • Overseas regulator’s self-certification that equivalence can be met
    • FSA’s consideration of relevant factors including overseas regulator’s self-certification, consideration of legislation in relevant jurisdiction and our knowledge of the applicable regime
  • If it concerns personal data, considerations under the Data Protection Act will also apply
requests for assistance what should requests contain
Requests for assistanceWhat should requests contain?
  • Description of underlying facts
  • Connection with your jurisdiction & suspected breaches of your legislation
  • Responsibility for enforcing that legislation
  • Information/assistance that you require
  • Information useful in identifying relevant persons and documents
  • How that information/assistance will assist your enforcement functions
  • Intended use
  • Time within which assistance required
  • Preferred form in which information is required
  • Related requests and other UK bodies contacted
  • Special precautions (sensitivity/confidentiality)
  • Contact information