CRED 15.3 The FSA's approach to the use of its investigation and enforcement powers
There are a number of principles underlying the FSA's approach to the exercise of its investigation and enforcement powers in relation to credit unions1:
- (1)
the effectiveness of the regulatory regime depends to a significant extent on the maintenance of an open and cooperative relationship between the FSA and the management of credit unions1;
- (2)
the FSA will seek to exercise its investigation and enforcement powers in a manner that is transparent, proportionate and consistent with its publicly stated policies; and
- (3)
the FSA will seek to ensure fair treatment when exercising its investigation and enforcement powers. For example, the FSA's decision making process for regulatory enforcement cases generally gives an opportunity for both written and oral representations to be made, and also provides for a facility for mediation in certain disciplinary cases.
The investigation and enforcement powers available to the FSA form part of the regulatory toolkit it will use to meet its regulatory objectives of protecting consumers, promoting public awareness, maintaining confidence in the financial system and reducing financial crime. Where a credit union, or an individual, has failed to comply with the requirements of the Industrial and Provident Societies Act 1965, the Friendly and Industrial and Provident Societies Act 1968, the Credit Unions Act 1979, the Act, the FSA'srules, or other relevant legislation (for example, the Criminal Justice Act 1993 and the Money Laundering Regulations), it may be appropriate to deal with this without the need for formal disciplinary or other enforcement action.1
The proactive supervision and monitoring of credit unions, and an open and cooperative relationship between credit unions and their supervisors, will, in some cases where a contravention has taken place, lead the FSA to decide against taking formal disciplinary action. However, in such cases, the FSA will expect the credit union, or the individual, to act promptly to take the necessary remedial action, agreed with its supervisors, to deal with the FSA's concerns. If the credit union, or the individual, does not do this, the FSA may take investigation or enforcement action in respect of the original contravention.
Where the FSA has concerns about a credit union, or an individual, it will normally discuss its concerns with them before considering the use of its investigation and enforcement powers. However, the FSA may take action without discussing its concerns with a credit union in urgent cases or in cases where the interests of consumers might otherwise be put at risk.1