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EG 12.1 1The FCA’s general approach

EG 12.1.1

1The FCA has powers under sections 401 and 402 of the Act to prosecute a range of criminal offences in England, Wales and Northern Ireland. The FCA may also prosecute criminal offences where to do so would be consistent with meeting any of its statutory objectives.

EG 12.1.2

1The FCA's general policy is to pursue through the criminal justice system all those cases where criminal prosecution is appropriate. When it decides whether to bring criminal proceedings in England, Wales or Northern Ireland, or to refer the matter to another prosecuting authority in England, Wales or Northern Ireland (see paragraph 12.4.1), it will apply the basic principles set out in the Code for Crown Prosecutors.14 When considering whether to prosecute a breach of the Money Laundering Regulations, the FCA will also have regard to whether the person concerned has followed the Guidance for the UK financial sector issued by the Joint Money Laundering Steering Group.

14 http://www.cps.gov.uk/publications/code_for_crown_prosecutors/

EG 12.1.3

1The FCA's approach when deciding whether to commence criminal proceedings for misleading statements and practices offences and insider dealing offences, where the FCA also has power to impose a sanction for market abuse, is discussed further in paragraphs 12.3.1 to 12.3.4.

Commencing criminal proceedings

EG 12.1.4

1In cases where criminal proceedings have commenced or will be commenced, the FCA may consider whether also to take civil or regulatory action (for example where this is appropriate for the protection of consumers) and how such action should be pursued. That action might include: applying to court for an injunction; applying to court for a restitution order; variation and/or cancellation of permission; and prohibition of individuals. The factors the FCA may take into account when deciding whether to take such action, where criminal proceedings are in contemplation, include, but are not limited to the following:

  1. (1)

    whether, in the FCA's opinion, the taking of civil or regulatory action might unfairly prejudice the prosecution, or proposed prosecution, of criminal offences;

  2. (2)

    whether, in the FCA's opinion, the taking of civil or regulatory action might unfairly prejudice the defendants in the criminal proceedings in the conduct of their defence; and

  3. (3)

    whether it is appropriate to take civil or regulatory action, having regard to the scope of the criminal proceedings and the powers available to the criminal courts.

EG 12.1.5

1Subject to 12.4C, a decision to commence criminal proceedings will be made by the RDC Chairman or, in an urgent case and if the Chairman is not available, by an RDC Deputy Chairman. In an exceptionally urgent case the matter will be decided by the director of Enforcement or, in his or her absence, another member of the FCA's executive of at least director of division level.

EG 12.1.6

1An exceptionally urgent case in these circumstances is one where the FCA staff believe that a decision to begin proceedings

  1. (1)

    should be taken before it is possible to follow the procedure described in paragraph 12.1.5; and

  2. (2)

    it is necessary to protect the interests of consumers or potential consumers.

EG 12.1.7

1Decisions about whether to initiate criminal proceedings under the Building Societies Act 1986, the Friendly Societies Acts 1974 and 1992, the Credit Unions Act 1979, the Industrial and Provident Societies Act 1965 and the Friendly and Industrial and Provident Societies Act 1968 may either be taken by the procedure described in paragraph 12.1.5 above or under executive procedures. The less serious the offence or its impact and the less complex the issues raised, the more likely that the FCA will take the decision to prosecute under executive procedures.

EG 12.2 2FCA cautions

EG 12.2.1

2In some cases, the FCA may decide to issue a formal caution rather than to prosecute an offender. In these cases the FCA will follow the Home Office Guidance on the cautioning of offenders, currently contained in the Home Office Circular 16/2008.

EG 12.2.2

2Where the FCA decides to administer a formal caution, a record of the caution will be kept by the FCA and on the Police National Computer. The FCA will not publish the caution, but it will be available to parties with access to the Police National Computer. The issue of a caution may influence the FCA and other prosecutors in their decision whether or not to prosecute the offender if they offend again. A1 caution given by the FCA will form part of the person's1 regulatory record for the purposes of DEPP 6.2.1 G (3). If relevant, the FCA will take the caution into account in deciding whether to take1 action for subsequent1 misconduct by the1person. The FCA may also take a caution into account when considering a person's honesty, integrity and reputation and their1 fitness or propriety to perform controlled or other functions in relation to regulated activities (see FIT 2.1.3G).

EG 12.3 2Criminal prosecutions in cases of market abuse

EG 12.3.1

2In some cases there will be instances of market misconduct that may arguably involve a breach of the criminal law as well as market abuse1. When the FCA decides whether to commence criminal proceedings rather than impose a sanction for market abuse in relation to that misconduct, it will apply the basic principles set out in the Code for Crown Prosecutors. When deciding whether to prosecute market misconduct which also falls within the definition of market abuse, application of these basic principles may involve consideration of some of the factors set out in EG 12.3.21.

EG 12.3.2

2The factors which the FCA may consider when deciding whether to commence a criminal prosecution for market misconduct rather than impose a sanction for market abuse include, but are not limited to, the following:

  1. (1)

    the seriousness of the misconduct: if the misconduct is serious and prosecution is likely to result in a significant sentence, criminal prosecution may be more likely to be appropriate;

  2. (2)

    whether there are victims who have suffered loss as a result of the misconduct: where there are no victims a criminal prosecution is less likely to be appropriate;

  3. (3)

    the extent and nature of the loss suffered: where the misconduct has resulted in substantial loss and/or loss has been suffered by a substantial number of victims, criminal prosecution may be more likely to be appropriate;

  4. (4)

    the effect of the misconduct on the market: where the misconduct has resulted in significant distortion or disruption to the market and/or has significantly damaged market confidence, a criminal prosecution may be more likely to be appropriate;

  5. (5)

    the extent of any profits accrued or loss avoided as a result of the misconduct: where substantial profits have accrued or loss avoided as a result of the misconduct, criminal prosecution may be more likely to be appropriate;

  6. (6)

    whether there are grounds for believing that the misconduct is likely to be continued or repeated: if it appears that the misconduct may be continued or repeated and the imposition of a financial penalty is unlikely to deter further misconduct, a criminal prosecution may be more appropriate than a financial penalty;

  7. (7)

    whether the person has previously been cautioned or convicted in relation to market misconduct or has been subject to civil or regulatory action in respect of market misconduct;

  8. (8)

    the extent to which redress has been provided to those who have suffered loss as a result of the misconduct and/or whether steps have been taken to remedy any failures in systems or controls which gave rise to the misconduct: where such steps are taken promptly and voluntarily, criminal prosecution may not be appropriate; however, potential defendants will not avoid prosecution simply because they are able to pay compensation;

  9. (9)

    the effect that a criminal prosecution may have on the prospects of securing redress for those who have suffered loss: where a criminal prosecution will have adverse effects on the solvency of a firm or individual in circumstances where loss has been suffered by consumers, the FCA may decide that criminal proceedings are not appropriate;

  10. (10)

    whether the person is being or has been voluntarily cooperative with the FCA in taking corrective measures; however, potential defendants will not avoid prosecution merely by fulfilling a statutory duty to take those measures;

  11. (11)

    whether an individual's misconduct involves dishonesty or an abuse of a position of authority or trust;

  12. (12)

    where the misconduct in question was carried out by a group, and a particular individual has played a leading role in the commission of the misconduct: in these circumstances, criminal prosecution may be appropriate in relation to that individual;

  13. (12A)

    where the misconduct in question was carried out by two or more individuals acting together and one of the individuals provides information and gives full assistance in the FCA's prosecution of the other(s), the FCA will take this co-operation into account when deciding whether to prosecute the individual who has assisted the FCA or bring market abuse proceedings against him;

  14. (13)

    the personal circumstances of an individual may be relevant to a decision whether to commence a criminal prosecution.

EG 12.3.3

2The importance attached by the FCA to these factors will vary from case to case and the factors are not necessarily cumulative or exhaustive.

EG 12.3.4

2It is the FCA's policy not to impose a sanction for market abuse where a person is being prosecuted for market misconduct or has been finally convicted or acquitted of market misconduct (following the exhaustion of all appeal processes) in a criminal prosecution arising from substantially the same allegations. Similarly, it is the FCA's policy not to commence a prosecution for market misconduct where the FCA has brought or is seeking to bring disciplinary proceedings for market abuse arising from substantially the same allegations.

EG 12.4 1Liaison with other prosecuting authorities

EG 12.4.1

1The FCA has agreed guidelines that establish a framework for liaison and cooperation in cases where one or more other authority (such as the Crown Prosecution Service or Serious Fraud Office) has an interest in prosecuting any aspect of a matter that the FCA is considering for investigation, investigating or considering prosecuting. These guidelines are set out in annex 2 to this guide. The FCA is also a signatory to the Prosecutors’ Convention and the Investigators’ Convention.