1 DEPP 6A sets out the FSA's statement of policy with respect to the imposition of suspensions or restrictions, and the period for which those suspensions or restrictions are to have effect, under the Act, as required by sections 69(1) and 210(1) of the Act.

For the purposes of DEPP 6A, "suspension" refers both to the suspension of any permission which an authorised person has to carry on a regulated activity (under section 206A of the Act), and the suspension of any approval of the performance by an approved person of any function to which the approval relates (under section 66 of the Act); and "restriction" refers both to limitations or other restrictions in relation to the carrying on of a regulated activity by an authorised person (under section 206A of the Act), and to limitations or other restrictions in relation to the performance by an approved person of any function to which any approval relates (under section 66 of the Act).

The power to impose a suspension or a restriction is a disciplinary measure which the FSA may use in addition to, or instead of, imposing a financial penalty or issuing a public censure. The principal purpose of imposing a suspension or a restriction is to promote high standards of regulatory and/or market conduct by deterring persons who have committed breaches from committing further breaches, helping to deter other persons from committing similar breaches, and demonstrating generally the benefits of compliant behaviour. Suspensions and restrictions are therefore tools that the FSA may employ to help it to achieve its regulatory objectives. Examples of restrictions that we may impose include:

1. (1)

   we may limit an authorised person's carrying on of a regulated activity so that they can only sell certain products or provide certain services;

2. (2)

   we may restrict an approved person's performance of their controlled functions so that they can only give advice to consumers or deal in certain products if they are appropriately supervised.

As the power to impose a suspension or a restriction is a disciplinary measure, where the FSA considers it necessary to take action, for example, to protect consumers from an authorised person, the FSA will seek to cancel or vary the authorised person'spermissions. If the FSA has concerns with a person's fitness to be approved, and considers it necessary to take action, the FSA will seek to prohibit the approved person or withdraw its approval.

The FSA will consider the full circumstances of each case and determine whether it is appropriate to impose a suspension or restriction. The FSA will usually make this decision at the same time as it determines whether or not to impose a financial penalty or a public censure.

The FSA will take into account relevant factors in deciding whether it is appropriate to impose a suspension or restriction. These may include factors listed in DEPP 6.2. There may also be other factors, not listed in DEPP 6.2, that are relevant.

The FSA will consider it appropriate to impose a suspension or restriction where it believes that such action will be a more effective and persuasive deterrent than the imposition of a financial penalty alone. This is likely to be the case where the FSA considers that direct and visible action in relation to a particular breach is necessary. Examples of circumstances where the FSA may consider it appropriate to impose a suspension or restriction include:

1. (1)

   where the FSA (or any previous regulator) has taken any previous disciplinary action resulting in adverse findings against the person;

2. (2)

   where the FSA has previously taken action in respect of similar breaches and has failed to improve industry standards;

3. (3)

   where the person has failed properly to carry out an agreed redress package or other agreed remedial measures;

4. (4)

   where the misconduct appears to be widespread across a number of individuals across a particular business area (suggesting a poor compliance culture);

5. (5)

   where the person's competitive position in the market has improved as a result of the breach;

6. (6)

   if, in accordance with DEPP 6.5D, the FSA considers that a proposed penalty would cause the subject of enforcement action serious financial hardship and that it is appropriate to reduce the proposed penalty.

The FSA expects usually to suspend or restrict a person from carrying out activities directly linked to the breach. However, in certain circumstances the FSA may also suspend or restrict a person from carrying out activities that are not directly linked to the breach, for example, where an authorised person's relevant business area no longer exists or has been restructured.

The FSA will consider all the relevant circumstances of a case when it determines the length of the period of suspension or restriction (if any) that is appropriate for the breach concerned, and is also a sufficient deterrent. Set out below is a list of factors that may be relevant for this purpose. The list is not exhaustive: not all of these factors may be applicable in a particular case, and there may be other factors, not listed, that are relevant.

The following factors may be relevant to determining the appropriate length of the period of suspension or restriction to be imposed on a person under the Act:

1. (1)

   Deterrence

   When determining the appropriate length of the period of suspension or restriction, the FSA will have regard to the principal purpose for which it imposes sanctions, namely to promote high standards of regulatory and/or market conduct by deterring persons who have committed breaches from committing further breaches and helping to deter other persons from committing similar breaches, as well as demonstrating generally the benefits of compliant business.

2. (2)

   The seriousness of the breach

   The FSA will have regard to the seriousness of the breach. In assessing this, it will consider the impact and nature of the breach, and whether it was committed deliberately or recklessly. Where the breach was committed by an authorised person, relevant factors may include those listed in DEPP 6.5A.2 G (6) to (9). Where the breach was committed by an approved person, relevant factors may include those listed in DEPP 6.5B.2 G (8) to (11). There may also be other factors, not listed in these sections, that are relevant.

3. (3)

   Aggravating and mitigating factors

   The FSA will have regard to factors that may aggravate or mitigate a breach. Where the breach was committed by an authorised person, relevant factors may include those listed in DEPP 6.5A.3 G (2). Where the breach was committed by an approved person, relevant factors may include those listed in DEPP 6.5B.3 G (2). There may also be other factors, not listed in these sections, that are relevant.

4. (4)

   The impact of suspension or restriction on the person in breach

   The following considerations may be relevant to the assessment of the impact of suspension or restriction on an authorised person:

   1. (a)

      the authorised person's expected lost revenue and profits from not being able to carry out the suspended or restricted activity;

   2. (b)

      the cost of any measures the authorised person must undertake to comply with the suspension or restriction;

   3. (c)

      potential economic costs, for example, the payment of salaries to employees who will not work during the period of suspension or restriction or the payment of compensation to consumers who will suffer loss as a result of the suspension or restriction;

   4. (d)

      the effect on other areas of the authorised person's business; and

   5. (e)

      whether the suspension or restriction would cause the authorised person serious financial hardship.

   6. The following considerations may be relevant to the assessment of the impact of suspension or condition

      restriction on an approved person:

   7. (f)

      the approved person's expected lost earnings from not being able to carry out the suspended or restricted activity; and

   8. (g)

      whether the suspension or restriction would cause the approved person serious financial hardship.

5. (5)

   The impact of suspension or restriction on persons other than the person in breach

   The following considerations may be relevant to the assessment of the impact of suspension or restriction on persons other than the person in breach:

   1. (a)

      the extent to which consumers may suffer loss or inconvenience as a result of the suspension or restriction. For example, if it is difficult for consumers to switch to a competitor, a longer period of suspension or restriction is likely to have more impact; and

   2. (b)

      the impact of the suspension or restriction on markets.

The FSA may delay the commencement of the period of suspension or restriction. In deciding whether this is appropriate, the FSA will take into account all the circumstances of a case. Considerations that may be relevant in respect of an authorised person include:

1. (1)

   the impact of the suspension or restriction on consumers;

2. (2)

   any practical measures the authorised person needs to take before the period of suspension or restriction begins, for example, changes to its systems and controls to enable it to stop or limit the activity in question;

3. (3)

   the impact of the suspension or restriction on other costs incurred by the authorised person, for example, cancelling suppliers or suspending employees.

1The FSA and the person on whom a suspension or restriction is to be imposed may seek to agree the length of the period of suspension or restriction and other terms. In recognition of the benefits of such agreements, DEPP 6.7 provides that the length of a period of suspension or restriction which might otherwise have been imposed will be reduced to reflect the stage at which the FSA and the person concerned reached an agreement.

The deterrent effect and impact on a person of a suspension or restriction, by itself or in combination with a financial penalty, may be greater than where only a financial penalty is imposed. The FSA will consider the overall impact and deterrent effect of the sanctions it imposes when determining the level of penalty and the length of suspension or restriction.

The FSA expects usually to take the following approach in respect of the interaction between a suspension or restriction and a financial penalty or public censure:

1. (1)

   The FSA will determine which sanction, or combination of sanctions, is appropriate for the breach.

2. (2)

   If the FSA, following the approach set out in DEPP 6.2, considers it appropriate to impose a financial penalty, it will calculate the appropriate level of the financial penalty, following the approach set out in DEPP 6.5 to DEPP 6.5D.

3. (3)

   If the FSA, following the approach set out in DEPP 6A.2, considers it appropriate to impose a suspension or restriction, it will calculate the appropriate length of the period of suspension or restriction, following the approach set out in DEPP 6A.3 .

4. (4)

   Where the FSA considers it appropriate to impose both a financial penalty and a suspension or restriction, it will decide whether the combined impact on the person is likely to be disproportionate in respect to the breach and the deterrent effect of the sanctions.

5. (5)

   If the FSA considers the combined impact on the person is likely to be disproportionate, it will decide whether to reduce the period of suspension or restriction, the amount of the financial penalty or both, so that the combined impact of the sanctions is proportionate in relation to the breach and the deterrent effect of the sanctions. The FSA will decide which sanction to reduce after considering all the circumstances of the case.

6. (6)

   In deciding the final level of the financial penalty and the length of the period of suspension or restriction, the FSA will also take into account any representations by the person that the combined impact will cause them serious financial hardship. The FSA will take the approach set out in DEPP 6.5D in assessing this.

The FSA may depart from the approach set out in DEPP 6A.4.2 G. For example, the FSA may at the outset consider that a financial penalty is the only appropriate sanction for a breach but, having determined the appropriate level of financial penalty, may consider it appropriate to reduce the amount of the financial penalty for serious financial hardship reasons. In such a situation, the FSA may consider it appropriate to impose a suspension or restriction even if the FSA at the outset did not consider such a sanction to be appropriate. The FSA will take into account whether the person would suffer serious financial hardship in deciding the length of the period of suspension or restriction, and may decide not to impose a suspension or restriction if it considers such action would result in serious financial hardship.