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Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

EG 19.1 1Introduction

EG 19.1.1 RP

1This chapter describes many of the powers that the FCA has to enforce requirements imposed under legislation other than the Act. The chapter is ordered chronologically, ending with the most recent legislation. Where powers under different pieces of legislation are broadly the same, or apply to the same class of person, we have set out the relevant statements of policy in one section to avoid duplication.

EG 19.1.2 RP

1Where conduct may amount to a breach of more than one enactment, the FCA may need to consider which enforcement powers to use and whether to use powers from one or more of the Acts. Which power or powers are appropriate will vary according to the circumstances of the case. However, where appropriate, we have tried to adopt procedures in respect of our use of powers under legislation other than the Act which are akin to those used under the Act. We expect, for example, to provide the subject of an investigation with confirmation of the reasons for the investigation and the legislative provisions under which it is conducted unless notification would be likely to prejudice the investigation or otherwise result in it being frustrated.

EG 19.2 Friendly Societies Act 1974 (FSA74), Friendly Societies Act 1992 (FSA92), Co-operative and Community Benefit Societies Act 2014 (CCBSA14) and Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 (CCBSA(NI)69)

EG 19.2.1 RP

1The FCA has certain functions in relation to what are described as “registrant-only” mutual societies including registered societies or registered friendly societies.2 These societies are not regulated or supervised under the Act. Instead, they are subject to the provisions of2 FSA74, FSA92, CCBSA14 and CCBSA(NI)693 which require them to register with the FCA and fulfil certain other obligations, such as the requirement to submit annual returns.

2
EG 19.2.1A

3The Financial Services Act 2012 (Mutual Societies) Order 2018 is effective from 6 April 2018 and transfers the Northern Ireland registration function to the FCA. The FCA will be therefore registering Northern Ireland’s industrial and provident or co-operative and community benefit societies respectively under the CCBSA(NI)69 as modified by the Credit Unions and Co-operative and Community Benefit Societies Act (Northern Ireland) 2016 and the Financial Services Act 2012 (Mutual Societies) Order 2018.

EG 19.2.2

[deleted]2

1
EG 19.2.3 RP

1The FCA's enforcement activities in respect of registrant-only societies focus on prosecuting societies that fail to submit annual returns. As registrant-only societies are not subject to the rules imposed by the Act and by the FCA Handbook, the requirement that they submit annual returns provides an important check that the interests and investments of members, potential members, creditors and other interested parties are being safeguarded. The power to prosecute registrant-only societies who fail to meet this requirement is therefore an important tool and one which the FCA is committed to using in appropriate cases.

EG 19.2.4

[deleted]2

1
EG 19.2.5 RP

1The FCA may also use its power to petition for the society’s winding up where it has prosecuted a society but the society continues to fail to submit the outstanding annual returns or defaults on submitting further returns.

EG 19.2.6 RP

1The decision whether to initiate criminal and other proceedings under these Acts will be taken in accordance with the procedure described in EG 12.1.7. Under these Acts,3 a society may appeal certain decisions of the FCA relating to the refusal, cancellation or suspension of a society’s registration to the High Court or, in Scotland, the Court of Session. 3Distinguishing features of the procedure for giving statutory notices under the FSA92, including available rights of reference to the Tribunal, are set out in DEPP 2.5.18G.

2 2
EG 19.2.7 RP

1Further information about the FCA's powers under these Acts3 can be found on the FCA's website.

[Note:https://www.fca.org.uk/firms/mutual-societies]3

2

EG 19.3 Credit Unions Act 1979 (CUA79) and Credit Unions (Northern Ireland) Order 1985 (CU(NI)O85)

EG 19.3.1 RP

The CUA79 and CU(NI)O85 enable certain2 societies in Great Britain and Northern Ireland to be registered under CCBSA14 and CU(NI)O85 respectively. CUA79 and CU(NI)O85 also make2 provisions in respect of these societies. They give2 the FCA certain powers in addition to the powers that it has under the Act in respect of those credit unions which are authorised persons. The FCA's powers under CUA79, CCBSA14 and CU(NI)O852 include the power to:

1
  1. (1)

    require the production of books, accounts and other documents in the exercise of certain functions;2

  2. (2)

    appoint an investigator or to call a special meeting of the credit union;2

  3. (3)

    cancel the registration of the credit union; and2

  4. (4)

    petition the High Court to wind up the credit union in particular circumstances.2

EG 19.3.1A

2The Financial Services Act 2012 (Mutual Societies) Order 2018 is effective from 6 April 2018 and transfers the Northern Ireland registration function to the FCA. The FCA will be therefore registering Northern Ireland’s credit unions under the CU(NI)O85 as modified by the Credit Unions and Co-operative and Community benefit Societies Act (Northern Ireland) 2016 and the Financial Services Act 2012 (Mutual Societies) Order 2018.

EG 19.3.2 RP

1The FCA will use these powers in a manner consistent with its approach to using the same powers under the Act. Where the FCA decides to cancel or suspend a credit union’s registration,2 the credit union may appeal that decision to the High Court or, in Scotland, the Court of Session.

EG 19.3.3 RP

The CUA79 under CCBSA14 and CU(NI)O85 also extend2 to credit unions some criminal offences.2 The FCA will act in accordance with EG 12 when prosecuting these offences.

1
EG 19.3.4

1[deleted]

EG 19.3.5

1[deleted]

EG 19.5 1 Regulation of Investigatory Powers Act 2000 (RIPA)

EG 19.5.1 RP

1RIPA provides methods of surveillance and information gathering to help the FCA in the prevention and detection of crime. RIPA ensures that, where these methods are used, an individual's rights to privacy under Article 8 of the European Convention of Human Rights are considered and protected.

EG 19.5.2 RP

1Under RIPA the FCA is able to:

  • acquire data relating to communications;
  • carry out covert surveillance;
  • make use of covert human intelligence sources (CHIS); and
  • access electronic data protected by encryption or passwords.

EG 19.5.3 RP

1The FCA is not able to obtain warrants to intercept communications during the course of transmission.

EG 19.5.4 RP

1The FCA is only able to exercise powers available to it under Parts I and II of RIPA where it is necessary for the purpose of preventing or detecting crime. All RIPA authorisations for the acquisition of communications data, the carrying out of directed surveillance and the use of CHIS must be approved by a Head of Department in the Enforcement Division. Authorisation will only be given where the authorising officer believes that the proposed action is necessary and proportionate in the specific circumstances set out in the application. Consideration will be given to any actual or potential infringement of the privacy of individuals who are not the subjects of the investigation or operation (collateral intrusion) and to the steps taken to avoid or minimise any such intrusion. When considering whether the proposed action is necessary and proportionate the following non-exhaustive list of factors is likely to be relevant:

  • the seriousness of the offence;
  • the amount of material that might be gathered;
  • the nature of the material that might be gathered;
  • whether there are other less intrusive ways of obtaining the same result;
  • whether the proposed activity is likely to satisfy the objective; and
  • where surveillance is proposed, the location of the surveillance operation.

Encryption

EG 19.5.5 RP

1Under Part III RIPA the FCA is able to require a person who holds “protected” electronic information (that is, information which is encrypted) to put that information into an intelligible form and, where the person has a key to the encrypted information, to require the person to disclose the key so that the data may be put into an intelligible form. The FCA may impose such a requirement where it is necessary for the purpose of preventing or detecting crime or where it is necessary for the purpose of securing the effective exercise or proper performance by the FCA of its statutory powers or statutory duties. In order to serve a notice under Part III RIPA, the FCA must obtain written permission from an appropriate judicial authority. The FCA does not anticipate using powers under Part III very often as it expects firms and individuals to provide information in intelligible format pursuant to requirements to provide information under the Act.

Home Office Codes of Practice

EG 19.5.6 RP

1In exercising powers under RIPA the FCA has regard to the relevant RIPA codes of practice. The Codes are available on the Home Office website: https://www.gov.uk/government/collections/ripa-codes2.

Complaints and Oversight

EG 19.5.7 RP

1RIPA provides for the appointment of Commissioners to oversee the compliance of designated authorities with RIPA requirements, and the establishment of a tribunal with jurisdiction to consider and determine, amongst other things, complaints and referrals about the way in which the FCA and other public bodies use their RIPA powers.

EG 19.6 1 Regulated Activities Order 2001 (RAO)

EG 19.6.1 RP

1The RAO sets out those activities which are regulated for the purposes of the Act. Part V of the RAO also requires the FCA to maintain a register of all those people who are not authorised by the FCA but who carry on insurance distribution2 activities. Under article 95 RAO, the FCA has the power to remove from the register an appointed representative who carries on insurance distribution2 activities if it considers that he is not fit and proper. The FCA will give the person a warning notice informing him that it proposes to remove his registration and a decision notice if the decision to remove his registration is taken. The decisions to give a warning notice or a decision notice will be taken by the RDC following the procedures set out in DEPP 3.2 or, where appropriate, DEPP 3.3. A person who receives a decision notice under article 95 RAO may refer the matter to the Tribunal.

EG 19.7 1The Open-Ended Investment Companies Regulations 2001

EG 19.7.1 RP

1The OEIC Regulations set out requirements relating to the way in which collective investment may be carried on by open-ended investment companies. Under the OEIC Regulations, the FCA has the power, amongst other things, to:

  • revoke an open-ended investment company’s authorisation in several situations, including where the firm breaches relevant requirements or provides us with false or misleading information (regulation 23);

  • give, vary and revoke certain directions, including that the affairs of the company be wound up (regulations 25 and 28);

  • apply to court for an order that a depositary or director of a company be removed and replaced (regulation 26);

  • appoint one or more competent persons to investigate and report on the affairs of the company and specified others (regulation 30).

EG 19.7.2 RP

1Factors that the FCA may take into account when it decides whether to use one or more of these powers include, but are not limited to, factors which are broadly similar to those in EG 14.1.1 in the context of AUTs or ACSs. However, the relevant conduct will be that of the ICVC, the director or directors of the ICVC and its depositary. Another difference is that the FCA is also able to take disciplinary action against the ICVC itself since the ICVC will be an authorised person. When choosing which powers to use, the FCA will adopt an approach which is broadly similar to that described in EG 14.2 to 14.5.

EG 19.7.3 RP

1The FCA will give a company a warning notice if it proposes to revoke the company’s authorisation and a decision notice if the decision to revoke the company’s authorisation is subsequently taken. The decisions to give a warning notice or a decision notice will be taken by the RDC following the procedures set out in DEPP 3.2 or, where appropriate, DEPP 3.3. A person who receives a decision notice under the OEIC Regulations may refer the matter to the Tribunal.

EG 19.7.4 RP

1Under the OEIC Regulations, the FCA may also use its disqualification powers against auditors who fail to comply with a duty imposed on them under FCArules. The procedure which the FCA will follow when exercising its disqualification powers is set out in EG 15.

EG 19.8 Electronic Commerce Directive (Financial Services and Markets) Regulations 2002 [deleted]21

2

EG 19.9 Electronic commerce activity directions: the FCA’s policy [deleted]21

2

Decision making

Publicity

EG 19.10 1 Enterprise Act 2002

EG 19.10.1 RP

1The FCA, together with several other UK authorities, has powers under Part 8 of the Enterprise Act to enforce breaches of consumer protection law. Where a breach has been committed, the FCA will liaise with other authorities, particularly the Competition and Markets Authority (the CMA), to determine which authority is best placed to take enforcement action. The FCA would generally expect to be the most appropriate authority to deal with breaches by authorised firms in relation to regulated activities.

EG 19.10.2 RP

1The Enterprise Act identifies two types of breach which trigger the Part 8 enforcement powers. These are referred to as:

  1. (1)

    “domestic infringements”, which are breaches of particular UK enactments or of contractual or tortious duties, in each case if they occur in the course of a business and in relation to goods or services supplied or sought to be supplied:

    1. (a)

      to or for a person in the UK; or

    2. (b)

      by a person with a place of business in the UK; and

  2. (2)

    “Schedule 13 infringements”2, which are breaches of the legislation listed in Schedule 13 to the Enterprise Act2.

In both cases the breach must, to trigger those powers, harm the collective interests of consumers.

EG 19.10.3 RP

[deleted]2

1
EG 19.10.4 RP

1The FCA has powers under Part 8 of the Enterprise Act both as a “designated enforcer” in relation to domestic and Schedule 132 infringements and as a “Schedule 132 enforcer” which gives the FCA and other Schedule 132 enforcers additional powers in relation to Schedule 132 infringements under the CRA2.

The FCA’s powers as a designated enforcer

EG 19.10.5 RP

1As a designated enforcer, the FCA has the power to apply to the courts for an enforcement order which requires a person who has committed a domestic or Schedule 132 infringement or, as to the latter, is likely to commit such an infringement:

  1. (1)

    not to engage, including through a company and, as to a domestic infringement, whether or not in the course of business, in the conduct which constituted, or is likely to constitute, the infringement;

  2. (2)

    to publish the order and/or a corrective statement;

  3. (3)

    to offer compensation or other redress, including the right to terminate relevant contracts, to affected consumers;

  4. (4)

    where such consumers cannot be practically identified, to take measures in the collective interests of consumers;

  5. (5)

    to take measures intended to prevent or reduce the risk of the relevant conduct occurring or being repeated; and/or

  6. (6)

    to take measures intended to enable consumers to choose more effectively between persons supplying or seeking to supply goods or services;

although it should be noted that the remedies listed under (3) to (6) inclusive are only applicable to conduct taking place or likely to occur after the relevant provisions of the CRA came into force.

EG 19.10.6 RP

1The FCA may also apply, if necessary without notice, for interim enforcement orders where immediate temporary prohibition of the relevant conduct is expedient pending full consideration by the court. Such interim orders can also be sought pre-emptively in relation to Schedule 132 infringements, but again only preventing conduct in the course of business.

EG 19.10.7 RP

1The FCA’s investigative powers in support of its Enterprise Act enforcement powers are set out in Schedule 5 to the CRA. The FCA can, under Schedule 5, require any person to provide it with information which will enable it to (i) exercise or consider exercising its functions as an enforcer; or (ii) determine whether a person is complying with an enforcement order, an interim enforcement order or an undertaking given as described below. If the FCA requires a person to provide it with information, it must give him a notice setting out the information that it requires and specifying the relevant enforcement function and/or any such purpose.

EG 19.10.8 RP

1Before the FCA may apply for an enforcement order, including an interim enforcement order, it must:

  1. (1)

    give notice to the CMA of its intention to apply for an enforcement order; and

  2. (2)

    unless the application relates to breach of an undertaking given to the court (other than one to provide information), consult the person against whom the enforcement order would be made.

EG 19.10.9 RP

1The periods for notification and consultation is (both of which can be waived by the CMA) are:

  1. (1)

    14 days before an application for an enforcement order is made unless, just as to consultation, the person to be consulted is a member of or represented by a body operating an approved consumer code, in which case the period is 28 days; or

  2. (2)

    7 days in the case of an application for an interim enforcement order, unless the application relates to breach of an undertaking given to the court, in which case the CMA must be notified but not necessarily in advance.

EG 19.10.10 RP

1The aim of consultation is to ensure that any action taken is necessary and proportionate, and to ensure that businesses are given a reasonable opportunity to put things right before the courts become involved. The consultation period starts when the person receives the FCA's request for consultation and runs whether or not that person agrees to be consulted and/or is available for consultation.

EG 19.10.11 RP

1The Enterprise Act also makes provision for enforcers and courts to accept undertakings from persons who have committed breaches or, in respect of Schedule 132 infringements, are considered likely to do so. The undertaking confirms that the person will not, amongst other things, commence, continue or repeat the conduct which constituted or, as to a Schedule 132 infringement, would constitute the breach, although, as above, such a pre-emptive prohibition will only apply to conduct in the course of business. The undertaking may also confirm that the person will compensate consumers and/or take the other measures described in paragraph 19.10.5, above. There is a general expectation that, if a breach of applicable legislation or of a relevant duty is committed, or if a Schedule 132 infringement is likely to be committed, enforcers will seek an undertaking from the person in question before applying to court for an enforcement order.

EG 19.10.12 RP

1The FCA may take steps to publish the undertakings it receives, and may apply to the court for an enforcement order if a person fails to comply with an undertaking that he has given.

The FCA’s powers as a Schedule 13 enforcer

EG 19.10.13 RP

1In addition to its powers as a designated enforcer under the Enterprise Act, the FCA also has powers, in its capacity as a “Schedule 132 enforcer” under the CRA2 and, therefore, only in respect of Schedule 132 infringements, to enter commercial premises with or without a warrant. The FCA must give at least two working days’ notice of its intention to enter such premises without a warrant unless that is not reasonably practicable. If the FCA cannot give a notice in advance, it must produce the notice on the day the premises are entered.

Use of enforcement powers under Enterprise Act

EG 19.10.14 RP

1The FCA anticipates that its powers under the Act will be adequate to address the majority of breaches which it would also be able to enforce under the Enterprise Act and that there will therefore be limited cases in which it would seek to use its powers as an Enterprise Act enforcer. Where the FCA does use its powers under the Enterprise Act, it will have regard to the enforcement guidelines which are published on the CMA’s website.23

23 www.gov.uk/governmentorganisations

EG 19.10.15 RP

[deleted]2

1

Proceeds of Crime Act 2002 (POCA)

EG 19.10.16 RP

1 POCA provides the legislative framework for the confiscation from criminals of the proceeds of their crime. Under POCA, the FCA can apply to the Crown Court for a restraint order when it is investigating or prosecuting criminal cases. A restraint order prevents the person(s) named in the order from dealing with the assets it covers for the duration of the order.

EG 19.10.17 RP

1The FCA may apply for such an order where a criminal investigation has been started or where proceedings have started but not concluded; in either case there must be reasonable cause to believe that the defendant has benefited from criminal conduct. In this context, a person benefits from criminal conduct if he obtains property or a pecuniary advantage as a result of or in connection with conduct that would be an offence if it took place in England or Wales, regardless of whether he also obtains it in some other connection. The court is required to exercise its powers with a view to securing that the value of realisable assets is not diminished.

EG 19.10.18 RP

1Once an order is made, the applicant or anyone affected by the order can apply to the court for it to be varied or discharged. The court must discharge the order if the condition for granting it is no longer satisfied, that is, if the criminal investigation has not led to criminal proceedings being started within a reasonable time or the criminal proceedings have concluded.

EG 19.10.19 RP

1A restraint order may apply to any realisable property held by the specified person whether or not described in the order, or to any such property transferred to him after the order is made. The order may contain exceptions for reasonable living and business expenses, but not for legal expenses relating to the offences from which he is suspected to have benefited for the order to be made.

EG 19.10.20 RP

1The order can apply to assets wherever they are held, and anyone breaching the order would be guilty of contempt of court in this country. The FCA may request that the court make ancillary orders requiring the person to disclose his assets and/or to repatriate assets held overseas.

EG 19.10.21 RP

1 POCA also contains various powers of investigation which the FCA may use in specified circumstances. However, where these powers overlap with powers under the Act, the FCA will in most cases consider it more appropriate to rely on its investigation powers under the Act.

Credit Institutions (reorganisation and Winding Up) Regulations 2004

EG 19.10.22

1[deleted]

EG 19.10.23

1[deleted]

EG 19.10.24

1[deleted]

EG 19.11 1 Financial Services (Distance Marketing) Regulations 2004

EG 19.11.1 RP

1These Regulations gave2 effect to the Distance Marketing Directive.24 Under the Regulations, the FCA can enforce breaches of the Regulations concerning “specified contracts”. Specified contracts are certain contracts for the provision of financial services which are made at a distance and do not require the simultaneous physical presence of the parties to the contract.

24 Directive 2002/65/EC

EG 19.11.2 RP

1The FCA may apply to the courts for an injunction or interim injunction against a person who appears to it to be responsible for a breach of the Regulations. The FCA may also accept undertakings from the person who committed the breach that he will comply with the Regulations. The FCA must publish details of any applications it makes for injunctions; the terms of any orders that the court subsequently makes; and the terms of any undertakings given to it or to the court.

EG 19.11.3 RP

1The FCA may also prosecute offences under the Regulations which relate to specified contracts. It will generally be appropriate for the FCA to seek to resolve the breach by obtaining an undertaking before it applies for an injunction or initiates a prosecution. Where a failure by a firm to meet the requirements of the Regulations also amounts to a breach of the FCA'srules, the FCA will consider all the circumstances of the case when deciding whether to take action for a breach of its rules or under the Regulations. This will include, amongst other things, having regard to appropriate factors set out in DEPP 6 and the considerations in EG 12.

EG 19.12 2 Financial Conglomerates and Other Financial Groups Regulations 2004

EG 19.12.1 RP

2These Regulations implemented3 in part the Financial Conglomerates Directive,25 which imposed3 certain procedural requirements on the FCA as a competent authority under the Directive. These Regulations also made3 specific provision about the exercise of certain supervisory powers in relation to financial conglomerates.

25 Directive 2002/87/EC

EG 19.12.2 RP

2The FCA's powers to vary a firm’s Part 4A permission or to impose requirements under sections 55J and 55L of the Act were3 extended under these Regulations. The FCA is able to use these powers where it is desirable to do so for the purpose of:

EG 19.12.3 RP

2The duty imposed by section 55B(3) (The threshold conditions) of the Act does not prevent the FCA from exercising its own-initiative power for these purposes. But subject to that, when exercising this power under the Regulations, the FCA will do so in a manner consistent with its approach generally to variation under the Act.

EG 19.13 1The Consumer Protection Co-operation Regulation [deleted]2

2

EG 19.14 The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 1

EG 19.14.1 RP

1The FCA has investigation and sanctioning powers in relation to both criminal and civil breaches of the Money Laundering Regulations. The Money Laundering Regulations impose requirements including, amongst other things, obligations to apply customer due diligence measures and conduct ongoing monitoring of business relationships on designated types of business.

EG 19.14.2 RP

1The FCA is responsible for monitoring and enforcing compliance with the Money Laundering Regulations2 not only by authorised firms who are within the Money Laundering Regulations’ scope, but also by what the Regulations describe as “Annex I financial institutions”, and cryptoasset exchange providers and custodian wallet providers4. These are businesses which are not otherwise authorised by us but which carry out certain of the activities which were3 listed in Annex I of the Banking Consolidation Directive28, then in Annex I of the Capital Requirements Directive, the relevant text of which is set out in Schedule 2 of the Money Laundering Regulations3. The activities include lending (e.g. forfaiters and trade financiers), financial leasing, and safe custody services. Annex I financial institutions are required to register with the FCA.

28 Money2 service businesses are also outside the definition of “Annex I financial institution”, which is set out in Regulation 55(2) of the Money Laundering Regulations2.

[Note: Directive 2013/36/EU]3

EG 19.14.2A RP

2The FCA is also responsible for monitoring and enforcing compliance with the Funds Transfer Regulation by payment service providers specified under regulation 62(1) of the Money Laundering Regulations.

[Note: Regulation (EU) No 2015/847 on information accompanying transfer of funds as amended by the Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018 (SI 2019/253)]3

EG 19.14.3 RP

1The Money Laundering Regulations add to the range of options available to the FCA for dealing with anti-money laundering and anti-terrorist financing 2 failures. These options include2:

In addition to the powers available under the Money Laundering Regulations, the FCA will have the power to take regulatory action against authorised firms for failures which breach the FCA’s rules and requirements (for example, under Principle 3, SYSC 3.2.6R or SYSC 6.1.1R).2

EG 19.14.4 RP

1This means that there will be situations in which the FCA has powers to investigate and take action under both the Act and the Money Laundering Regulations. The FCA will consider all the circumstances of the case when deciding what action to take and, if it is appropriate to notify the subject about the investigation, will in doing so inform them about the basis upon which the investigation is being conducted and what powers it is using. The FCA will adopt the approach outlined in EG 12 when prosecuting Money Laundering Regulations offences. In the majority of cases where both the Regulations and the FCArules apply and regulatory action, as opposed to criminal proceedings, is appropriate, the FCA generally expects to continue to discipline authorised firms under the Act.

EG 19.14.4A

4The FCA also has powers under regulation 74C to impose a direction on a cryptoasset business to:

The FCA may impose a direction requiring or prohibiting the taking of specified action. Cryptoasset businesses can also apply for a direction to be imposed, varied or rescinded.

EG 19.14.5 RP

1The Money Laundering Regulations also provide investigation powers that the FCA can use when investigating whether breaches2 have taken place. These powers include:

  • • the power to require information from, and attendance of, relevant persons, payment service providers2 and connected persons (regulation 662 ); and
  • • powers of entry and inspection without or under warrant (regulations 69 and 702).

The use of these powers will be limited to those cases in which the FCA is exercising functions under the Money Laundering Regulations. In addition, the FCA may use its powers to require information or attendance at the request of foreign authorities2.

EG 19.14.6 RP

1The FCA will adopt a risk-based approach to its enforcement under2 the Money Laundering Regulations. Failures in anti-money laundering or counter-terrorist financing2 controls will not automatically result in disciplinary sanctions, although enforcement action is more likely where a firm has not taken adequate steps to identify its2 risks or put in place appropriate controls to mitigate those risks, and failed to take steps to ensure that controls are being effectively implemented.

EG 19.14.7 RP

1However, the Money Laundering Regulations say little about the way in which investigation and sanctioning powers should be used, so the FCA has decided to adopt enforcement and decision making procedures which are broadly akin to those under the Act. Key features of the FCA's approach are described in EG 19.152.

EG 19.15 1The conduct of investigations under the Money Laundering Regulations

EG 19.15.1 RP

1The FCA will notify the subject of the investigation that it has appointed officers to carry out an investigation under the Money Laundering Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA's policy in civil investigations is to use powers to compel information in the same way as it would in the course of an investigation under the Act.

EG 19.15.1A

3Where the FCA considers it appropriate to do so, it will exercise its powers under regulation 74C of the Money Laundering Regulations, to impose a direction on a cryptoasset business to ensure requirements of the Money Laundering Regulations are met. The FCA will exercise this power where:

  1. (1)

    it has serious concerns about the cryptoasset business’ compliance with the Money Laundering Regulations;

  2. (2)

    it is concerned that a failure of the cryptoasset business to take the desired steps may result in a breach of the Money Laundering Regulations;

  3. (3)

    the imposition of a direction reflects the importance the FCA attaches to the need for the cryptoasset business to address its concerns;

  4. (4)

    the imposition of a direction may assist the cryptoasset business to take steps which would otherwise be difficult because of legal obligations owed to third parties.

EG 19.15.1B

3The FCA will also exercise its powers to:

  1. (1)

    vary a direction; or

  2. (2)

    cancel a direction,

where it considers it appropriate to do so.

EG 19.15.1C

3Examples of circumstances in which the FCA will consider imposing a direction on a cryptoasset business because it has serious concerns about a cryptoasset business, or about the way its business is being or has been conducted include where the cryptoasset business appears to be failing, or appears likely to fail, to comply with requirements under the Money Laundering Regulations, because:

  1. (1)

    it appears to have consistently failed to comply with requirements of the Money Laundering Regulations and in doing so, it may have put itself at risk of being used for the purposes of money laundering or terrorist financing;

  2. (2)

    its personnel do not appear to have adequate skills and experience to carry on cryptoasset business; or

  3. (3)

    it appears to have breached requirements imposed on it by or under the Money Laundering Regulations, for example in respect of disclosure requirements about the applicability of the jurisdiction of the Financial Ombudsman Service to its cryptoasset business and whether it is subject to FSCS protection.

EG 19.15.1D

3The FCA may impose a direction so that it takes effect immediately or on a specified date if it reasonably considers it necessary to do so, having regard to the ground on which it is exercising this power.

EG 19.15.1E

3The FCA will consider imposing a direction as a matter of urgency where:

  1. (1)

    the information available to it indicates serious concerns about the cryptoasset business that need to be addressed immediately; and

  2. (2)

    circumstances indicate that it is appropriate to impose a direction immediately to require and/or prohibit certain actions by the cryptoasset business to ensure the cryptoasset business addresses these concerns.

EG 19.15.1F

3The FCA will consider the full circumstances of each case when it decides whether an urgent imposition of a direction is appropriate. The following is a non-exhaustive list of factors the FCA may consider:

  1. (1)

    The extent of any loss, or risk of loss, or other adverse effect on consumers caused by the failure to adhere to the Money Laundering Regulations. The more serious the loss or potential loss or other adverse effect, the more likely it is that the urgent imposition of a direction will be appropriate, to protect the consumers’ interests.

  2. (2)

    The extent to which customer assets appear to be at risk due to the failure to comply with the Money Laundering Regulations. Urgent imposition of a direction may be appropriate where the information available to the FCA suggests that customer assets held by, or to the order of, the cryptoasset business may be at risk.

  3. (3)

    The nature and extent of any false or inaccurate information provided by the cryptoasset business. Whether false or inaccurate information warrants the urgent imposition of a direction will depend on matters such as:

    1. (a)

      the impact of the information on the FCA’s view of the cryptoasset business’s compliance with the requirements of the Money Laundering Regulations, or the likelihood that the cryptoasset business may be being used in connection with financial crime;

    2. (b)

      whether the information appears to have been provided in an attempt knowingly to mislead the FCA, rather than through inadvertence;

    3. (c)

      whether the matters to which false or inaccurate information relates indicate there is a risk to customer assets or to the other interests of the cryptoasset business’ actual or potential customers.

  4. (4)

    The seriousness of any suspected breach of the requirements of the Money Laundering Regulations and the steps that need to be taken to correct that breach.

  5. (5)

    The financial resources of the cryptoasset business. Serious concerns may arise where there is a likelihood of the cryptoasset business’ assets being dissipated without the FCA’s intervention.

  6. (6)

    The risk that the cryptoasset business may be used or has been used to facilitate financial crime, especially money laundering and terrorist financing. The information available to the FCA, including information supplied by other law enforcement agencies may suggest the cryptoasset business is being used for, or is itself involved in financial crime. Where this appears to be the case, and the cryptoasset business appears to be failing to comply with requirements of the Money Laundering Regulations or has put its customers’ interests at risk, the FCA’s urgent imposition of a direction may be appropriate.

  7. (7)

    The risk that the cryptoasset business’ conduct or business presents to the UK financial system and to confidence in the UK financial system.

  8. (8)

    The cryptoasset business’ conduct. The FCA will take into account:

    1. (a)

      whether the cryptoasset business identified the issue (and if so whether this was by chance or as a result of the cryptoasset business’ normal controls and monitoring);

    2. (b)

      whether the cryptoasset business brought this issue promptly to the FCA’s attention;

    3. (c)

      the cryptoasset business’ past history, management ethos and compliance culture;

    4. (d)

      steps that the cryptoasset business has taken or is taking to address the issue.

  9. (9)

    The impact that the imposition of a direction will have on the cryptoasset business’ business and on its customers. The FCA will need to be satisfied that the impact of any use of the direction power is likely to be proportionate to the concerns being addressed, in the context of the overall aim of achieving its statutory objectives.

EG 19.15.1G

3Examples of directions that the FCA may consider imposing in support of its enforcement function are: a direction not to take on new business; a direction that prohibits the disposal of, or other dealing with, any of the cryptoasset business’ assets (whether in the United Kingdom or elsewhere) or restricts those disposals or dealings; and a direction that all or any of the cryptoasset business’ assets, or all or any assets belonging to consumers but held by the cryptoasset business to its order, must be transferred to a trustee approved by the FCA.

EG 19.15.2 RP

1When the FCA proposes or decides to censure a person,2 impose a penalty on a person, suspend, cancel or restrict an authorisation or registration or impose a prohibition on a person2 under the Money Laundering Regulations, it must give the person a warning notice or a decision notice2.

EG 19.15.3

[deleted]2

1
EG 19.15.4

[deleted]2

1
EG 19.15.5 RP

1When imposing or determining the level of a financial penalty under regulation 76 of the Money Laundering Regulations2, the FCA's policy includes having regard, where relevant, to relevant factors in DEPP 6.2.1G and DEPP 6.5 to DEPP 6.5D. The FCA may not impose a penalty where there are reasonable grounds for it to be satisfied that the subject of the proposed action took all reasonable steps and exercised all due diligence to ensure that the relevant requirement of the Money Laundering Regulations would be met. In deciding whether a person has failed to comply with a requirement of the Money Laundering Regulations, the FCA must consider whether he or she2 followed any relevant guidance which was issued by a European Supervisory Authority in accordance with articles 17, 18.4 or 48.10 of the Fourth Money Laundering Directive, with article 25 of the Funds Transfer Regulation, or with any relevant guidance which was issued at the time by2 a supervisory authority or other appropriate body, including the2 Joint Money Laundering Steering Group2.

EG 19.15.5A RP

2When cancelling, suspending or restricting an authorisation or limitation under regulation 77 of the Money Laundering Regulations or determining the duration of any such suspension or restriction, and when imposing or determining the duration of a prohibition under regulation 78 of the Money Laundering Regulations, the FCA’s policy includes having regard, where relevant, to relevant factors in DEPP 6A.

EG 19.15.6 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Money Laundering Regulations or the Funds Transfer Regulation2 to assist it to exercise its functions under the Money Laundering Regulations2 in the most efficient and economic way. The settlement discount scheme set out in DEPP 6.7 applies to penalties, suspensions, restrictions and temporary prohibitions2 imposed under regulations 76, 77 and 78 of2 the Money Laundering Regulations.

EG 19.15.7 RP

1The FCA will apply the approach to publicity that it has outlined in EG 6, read in the light of applicable publicity provisions in regulation 84 of the Money Laundering Regulations2.

EG 19.17 1 Regulated Covered Bonds Regulations 2008

EG 19.17.1 RP

1The RCB Regulations provide a framework for issuing covered bonds in the UK. Covered bonds issued under the RCB Regulations are subject to strict quality controls and both bonds and issuers must be registered with the FCA. The RCB Regulations give the FCA powers to enforce these Regulations. Where a person has failed, or is likely to fail, to comply with any obligation under the RCB Regulations, the FCA may make a direction that the person take steps to ensure compliance with the Regulations or it may make a direction for the winding up of the owner of the asset pool. The FCA may also remove an issuer from the register if it fails to comply with the Regulations. In addition, the FCA may apply to court for an order restraining a person from committing a breach of the Regulations or requiring the person to take steps to remedy the breach. The RCB Regulations also give the FCA the power to impose a financial penalty on a person for a breach of the Regulations.

EG 19.17.2 RP

1The FCA may use the information gathering powers set out in section 165 of the Act when monitoring and enforcing compliance with the RCB Regulations, and may appoint skilled persons as provided in section 166 of the Act.

EG 19.17.3 RP

1The FCA's approach to the use of its enforcement powers, and its statement of policy in relation to imposing and determining financial penalties under the RCB Regulations, are set out in RCB 4.2. The FCA's penalty policy includes having regard, where relevant, DEPP 6.5 to DEPP 6.5D and such other specific matters as the likely impact of the penalty on the interests of investors in the relevant bonds. The FCA's statement of procedure in relation to giving warning notices or decision notices under the RCB Regulations is set out in RCB 6. It confirms that the RDC will be the decision maker in relation to the imposition of financial penalties under the RCB Regulations, following the procedure outlined in DEPP 3.2 or, where appropriate, DEPP 3.3 and that decision notices given under the Regulations may be referred to the Tribunal.

EG 19.17.4 RP

1The FCA may agree to settle cases in which it proposes to impose a financial penalty under the RCB Regulations if the right regulatory outcome can be achieved. The settlement discount scheme set out in DEPP 6.7 applies to penalties imposed under the RCB Regulations. See DEPP 5 and EG 5 for further information about the settlement process.

EG 19.18 1 Counter-Terrorism Act 2008

EG 19.18.1 RP

1The FCA has investigation and sanctioning powers in relation to both criminal and civil breaches of the Counter Terrorism Act 2008 (“the Counter Terrorism Act”). The Counter Terrorism Act allows the Treasury to issue directions imposing requirements on relevant persons in relation to transactions or business relationships with designated persons of a particular country. Relevant persons may be required to take the following action:

  • apply enhanced customer due diligence measures;
  • apply enhanced ongoing monitoring of any business relationship with a designated person;
  • systematically report details of transactions and business relationships with designated persons; or
  • limit or cease business with a designated person.

EG 19.18.2 RP

1The FCA is responsible for monitoring and enforcing compliance with requirements imposed by the Treasury under the Counter Terrorism Act by ‘credit institutions’ that are authorised persons and by ‘financial institutions’ (except money service businesses that are not authorised persons and consumer credit financial institutions). ‘Credit institutions’ and ‘financial institutions’ are defined in Part 2 of Schedule 7 to the Counter Terrorism Act.

EG 19.18.3 RP

1The investigation and sanctioning powers given to the FCA by the Counter Terrorism Act are similar to those given to the FCA by the Money Laundering Regulations. The FCA's approach to using its powers under the Counter Terrorism Act will be consistent with its approach to using its powers under the Money Laundering Regulations, described in paragraphs 19.15.1 to 19.15.7 above.

EG 19.19 1 Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008

EG 19.19.1 RP

1The Lloyd’s Accounting Regulations implemented2 the Audit and Accounts Directives in relation to the Lloyd’s insurance market. They aimed2 to increase the transparency of the accounts published by Lloyd’s syndicates by imposing requirements in relation to the preparation and disclosure of the accounts. The Regulations give the FCA the power to institute criminal proceedings for an offence committed under the Regulations.

EG 19.19.2

1Our policy in relation to the prosecution of criminal offences and the circumstances in which we would expect to commence criminal proceedings is set out in EG 12.

EG 19.20 1 Payment Services Regulations 2017

EG 19.20.1 RP

1The FCA has investigation and sanctioning powers in relation to both criminal and civil breaches of the Payment Services Regulations. The Payment Services Regulations impose requirements including, amongst other things, obligations on payment service providers to provide users with a range of information and various provisions regulating the rights and obligations of payment service users and providers.

EG 19.20.2 RP

1The FCA's approach to enforcing the Payment Services Regulations will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance, and where appropriate, to remedy the harm caused by the non-compliance.

EG 19.20.3 RP

1The regulatory powers which the Payment Services Regulations provide to the FCA include:

  • the power to require information;
  • powers of entry and inspection;
  • power of public censure;
  • the power to impose financial penalties;
  • the power to prosecute or fine unauthorised providers; and
  • the power to vary an authorisation on its own initiative.

EG 19.20.4 RP

[deleted]3

1 2
EG 19.20.5 RP

1The Payment Services Regulations, for the most part, mirror the FCA's investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those it has under the Act. Key features of the FCA's approach are described below.

EG 19.21 1The conduct of investigations under the Payment Services Regulations

EG 19.21.1 RP

1The Payment Services Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Payment Services Regulations.

EG 19.21.2 RP

1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the Payment Services Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA's policy in civil investigations under the Payment Services Regulations is to use powers to compel information in the same way as it would in the course of an investigation under the Act.

EG 19.21.3 RP

[deleted]3

2

EG 19.22 1Decision making under the Payment Services Regulations

EG 19.22.1 RP

1The RDC is the FCA's decision maker for some of the decisions under the Payment Services Regulations as set out in DEPP 2 Annex 1G. This builds a layer of separation into the process to help ensure not only that decisions are fair but that they are seen to be fair. The RDC will make its decisions following the procedure set out in DEPP 3.2 or, where appropriate, DEPP 3.3 and 3.4. DEPP 3.4 applies for urgent notices under regulations 12(6), 12(9), and 12(10)(b) (including as applied by regulations 15 and 19)2.

EG 19.22.2

1For decisions made by executive procedures the procedures to be followed will be those described in DEPP 4.

EG 19.22.3 RP

1The Payment Service Regulations do not require the FCA to have published procedures to launch criminal prosecutions. However, in these situations the FCA expects that it will normally follow its decision-making procedures for the equivalent decisions under the Act.

EG 19.22.4 RP

1The Payment Service Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.

EG 19.22.5 RP

1Certain FCA decisions (for example the cancellation of an authorisation or the imposition of a financial penalty) may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the Payment Services Regulations

EG 19.22.6 RP

1When imposing a financial penalty the FCA's policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA's policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.

EG 19.22.7 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Payment Services Regulations to assist it to exercise its functions under the Regulations in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

Statement of policy in section 169(7) interviews (as implemented by the Payment Services Regulations)

EG 19.22.8 RP

1The Payment Services Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Payment Services Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.23 1 Electronic Money Regulations 2011

EG 19.23.1 RP

1The FCA has investigation and sanctioning powers in relation to both criminal and civil breaches of the Electronic Money Regulations. The Electronic Money Regulations impose requirements including, amongst other things, various provisions regulating the rights and obligations of electronic money institutions.

EG 19.23.2 RP

[deleted]2

1
EG 19.23.3 RP

1The FCA's approach to enforcing the Electronic Money Regulations will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the electronic money issuer or relevant person who is the subject of its action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance, and where appropriate, to remedy the harm caused by the non-compliance.

EG 19.23.4 RP

1The Electronic Money Regulations, for the most part, mirror the FCA's investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those it has under the Act. Key features of the FCA's approach are described below.

The conduct of investigations under the Electronic Money Regulations

EG 19.23.5 RP

1The Electronic Money Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Electronic Money Regulations.

EG 19.23.6 RP

1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the Electronic Money Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA's policy in civil investigations under the Electronic Money Regulations is to use powers to compel information in the same way as it would in the course of an investigation under the Act.

Decision making under the Electronic Money Regulations

EG 19.23.7 RP

1The RDC is the FCA's decision maker for some of the decisions under the Electronic Money Regulations as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure set out in DEPP 3.2 or, where appropriate, DEPP 3.3 and 3.4. DEPP 3.4 applies for urgent notices under regulation 11(6), (9) and (10)(b) (including as applied by regulation 15).

EG 19.23.8

1For decisions made by executive procedures the procedures to be followed will be those described in DEPP 4.

EG 19.23.9 RP

1The Electronic Money Regulations do not require the FCA to have published procedures to commence criminal prosecutions. However, in these situations the FCA expects that it will normally follow its decision-making procedures for the equivalent decisions under the Act.

EG 19.23.10 RP

1The Electronic Money Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to material as set out in section 394 of the Act in certain cases.

EG 19.23.11 RP

1Certain FCA decisions (for example the cancellation of an authorisation or the imposition of a financial penalty) may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the Electronic Money Regulations

EG 19.23.12 RP

1When determining whether to take action to impose a penalty the FCA's policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of a financial penalty the FCA's policy includes having regard to relevant principles and factors in DEPP 6.5 to 6.5D.

EG 19.23.13 RP

1When determining whether to suspend the authorisation or, as the case may be, the registration of an electronic money institution or limit or otherwise restrict the carrying on of electronic money issuance or payments services business by an electronic money issuer the FCA's policy will have regard to the relevant factors in DEPP 6A.

EG 19.23.14 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Electronic Money Regulations to assist it to exercise its functions under the Regulations in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

Statement of policy in section 169(7) interviews (as implemented by the Electronic Money Regulations)

EG 19.23.15 RP

1The Electronic Money Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Electronic Money Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.24 1Cross-Border Payments in Euro Regulations 2010 [deleted]2

[deleted]2

EG 19.25 2 3 Recognised Auction Platforms Regulations 20114

3
EG 19.25.1 RP

4The FCA’s policy for using the powers given to it by the RAP Regulations is set out in REC. This includes, for example, its policy in relation to the power to impose a financial penalty on or censure a RAP (REC 2A.4) and its policy in relation to the power to give directions to a RAP (REC 4.6).

EG 19.26 1OTC Derivatives, Central Counterparties and Trade Repositories Regulations 2013

EG 19.26.1 RP

1The FCA has information gathering and sanctioning powers under the Act which are applicable to breaches of EMIR requirements by authorised persons or recognised bodies. The OTC derivatives, CCPs and trade repositories regulation adds to the powers available to the FCA for dealing with breaches of EMIR requirements and sets out information gathering and sanctioning powers enabling the FCA to investigate and take action for breaches of the EMIR requirements by non- authorised counterparties and for certain breaches of the OTC derivatives, CCPs and trade repositories regulation by authorised persons. Such powers under the OTC derivatives, CCPs and trade repositories regulation or the Act do not extend to breaches of article 11(3) and (4) of EMIR by PRA-authorised financial counterparties. The FCA has additional powers in relation to trade repositories under the Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (see EG 19.40). 2

Information gathering powers

EG 19.26.2 RP

1The FCA may require a non-authorised counterparty that is subject to obligations under EMIR to provide specified information or specified documents so that it can verify whether the non-authorised counterparty has complied with EMIR. The FCA also has the power to require a person to provide specified information or specified documents so that it can verify whether the person is subject to EMIR. The FCA may require the above information to be provided in such form, or to be verified or authenticated in such manner, as is reasonably required in connection with the exercise of the FCA's functions under EMIR.

Sanctioning powers

EG 19.26.3 RP
  1. (1)

    1The FCA has the power to publish a statement or impose a financial penalty of such amount as it considers appropriate on:

    1. (a)

      a financial counterparty who is not an authorised person, a non- financial counterparty or any other person who has breached an EMIR requirement or regulation 7 or 8 of the OTC derivatives, CCPs and trade repositories regulation;

    2. (b)

      a financial counterparty who is an authorised person who has breached regulation 8 of the OTC derivatives, CCPs and trade repositories regulation.

  2. (2)

    Where the FCA exercises its power to impose a financial penalty under the OTC derivatives, CCPs and trade repositories regulation or the Act for breaches in relation to EMIR a penalty, it must publish a statement to that effect unless such disclosure would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.

[Note: article 12(2) of EMIR and regulation 9(3) of the OTC derivatives, CCPs and trade repositories regulation]

EG 19.26.4 RP

1As the power to impose penalties for contravention of an EMIR requirement or regulations 7 or 8 of the OTC derivatives, CCPs and trade repositories regulation mirrors similar powers to that the FCA has under the Act, the FCA will adopt procedures and policies in relation to the use of those powers akin to those it has adopted under the Act, subject to EG 19.26.3(2).

EG 19.26.5 RP

1The FCA will use the sanctioning powers where it is appropriate to do so and with regard to the relevant factors listed in DEPP 6.2.1G and DEPP 6.4. In determining the appropriate level of financial penalty, the FCA will have regard to the principles set out in DEPP 6.5, DEPP 6.5A, DEPP 6.5B, DEPP 6.5D and DEPP 6.7.

EG 19.26.6 RP

1Where the FCA proposes or decides to take action to publish a statement or impose a financial penalty referred to in EG 19.26.3, it will give the person concerned a warning notice or a decision notice respectively. In the case of a public statement, the warning notice or decision notice will also set out the terms of the statement. In the case of a financial penalty, the warning notice or decision notice will also state the amount of the penalty. On receiving a warning notice, the person concerned has a right to make representations regarding the FCA's proposed decision. A person that receives a decision notice may refer the matter to the Tribunal.

EG 19.26.7 RP

1If it is proposing to publish a statement or impose a penalty under the OTC derivatives, CCPs and trade repositories regulation, the FCA's decision maker will be the RDC. The RDC will make its decisions following the procedure set out in DEPP 3.2 or where appropriate, DEPP 3.3.

EG 19.26.8 RP

1 Sections 393 and 394 of the Act apply to notices referred to in this section. See DEPP 2.4 (Third party rights and access to FCA material).

EG 19.26.9 RP

1In relation to the notices in this section, the FCA will, subject to EG 19.26.3(2), apply the approach to publicity that is outlined in EG 6.

EG 19.26.10 RP

1In relation to authorised persons and recognised bodies which are subject to obligations under EMIR, other information gathering powers and sanctions may also be applicable under the Act.

EG 19.27 2 Alternative Investment Fund Managers Regulations 2013

EG 19.27.1 RP

2The AIFMD UK regulation transposed4AIFMD1 and made4 the necessary changes to UK legislation in relation to the implementation of the4EuSEF regulation, the EuVECA regulation, the ELTIF regulation and the Money Market Funds regulation3. It1 provided4 new and updated powers in relation1 to both existing and new managers of AIFs, whether authorised or registered.

EG 19.27.2 RP

2The AIFMD UK regulation includes information gathering and sanctioning powers that enable the FCA to investigate and take action for breaches of the regulations and onshored regulations4. Specific standalone powers are in the AIFMD UK regulation for unauthorised AIFMs, by applying relevant sections of the Act. Amendments to the Act, including those made under the Financial Services and Markets Act (Qualifying Provisions) Order 2013 (as amended by the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (SI 2019/632))4, extend certain FCA powers (e.g. disciplinary powers, injunctions and restitution) so that they apply to contraventions of requirements of the AIFMD UK regulation and to contraventions of onshored regulations4.

Information gathering and investigation powers

EG 19.27.3 RP

2The FCA has decided that its approach to enforcing the AIFMD UK regulation requirements will mirror its general approach to enforcing the Act in EG 2. Therefore, the FCA will apply the same procedures and policies under the Act for appointing investigators and requiring information for breaches of the AIFMD UK regulation.

EG 19.27.4 RP

2The 4powers under the AIFMD UK regulation include powers of direction and the power to revoke the registration of small registered UK AIFMs (including a SEF manager or a RVECA manager.4

3
EG 19.27.5 RP

2The FCA will respect the principle of proportionality when taking action against SEF managers or RVECA managers4 for breaches identified in articles 22 and 21 of the SEF regulation or RVECA regulation4, respectively. The FCA may take action to ensure compliance with the regulations or prohibit the use of the designation of SEF manager or RVECA manager4 and revoke registration of such managers. The prohibition route is more likely to apply to serious breaches of the onshored regulations4 such as in situations where:

  • • registration has been obtained through false statements or any other irregular means; or

Decision making under the AIFMD UK regulation

EG 19.27.6 RP

2The RDC is the FCA's decision maker for some decisions under the AIFMD UK regulation, as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure in DEPP 3.2 or, where appropriate, DEPP 3.3 and 3.4. For decisions made by executive procedures, the procedures to be followed are in DEPP 4.

EG 19.27.7 RP

2The AIFMD UK regulation does not require the FCA to publish procedures to commence criminal prosecutions. However, the FCA will normally follow its equivalent decision- making procedures for similar decisions under the Act.

EG 19.27.8 RP

2The AIFMD UK regulation applies the procedural provisions of Part and Part 26 of the Act for matters that can be referred to the Tribunal and to warning and decision notices under the regulations as it applies to referrals and notices under the Act. The AIFMD UK regulation also applies sections 205 and 206 of the Act to unauthorised AIFMs and, accordingly, the FCA will give third party rights (section 393 of the Act) and access to material (section 394 of the Act).

Imposition of penalties under the AIFMD UK regulation

EG 19.27.9 RP

2When determining whether to take action to impose a penalty under the AIFMD UK regulation, the FCA's policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA's policy includes having regard to relevant principles and factors in DEPP 6.5 to 6.5A, DEPP 6.5B, DEPP 6.5D and DEPP 6.7.

EG 19.27.10 RP

2As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the AIFMD UK regulation to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA's settlement process and the settlement discount scheme.

EG 19.27.11 RP

2The FCA will apply the approach to publicity that is outlined in EG 6.

Statement of Policy in section 169(7) interviews (as applied by the AIFMD UK regulation)

EG 19.27.12 RP

2Regulation 71(2) of the AIFMD UK regulation applies section 169 of the Act in respect of unauthorised AIFMs, which requires the FCA to have a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. The FCA will follow the procedures described in DEPP 7.

EG 19.28 1 Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013

EG 19.28.1 RP

1The Referral Fees Regulations give the FCA investigation and sanctioning powers in relation to the contravention of the rules against referral fees contained in sections 56 to 60 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (the LASPO Act), as well as the contravention of requirements imposed by, or under, the Referral Fees Regulations.

EG 19.28.2 RP

1The FCA's approach to taking enforcement action under the Referral Fees Regulations will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

EG 19.28.3 RP

1The Referral Fees Regulations, for the most part, mirror the FCA's investigative and sanctioning powers under the Act. The FCA has adopted procedures and policies for the use of those powers that are akin to those it has under the Act. Key features of the FCA's approach are described below.

Information gathering and investigation powers

EG 19.28.4 RP

1The Referral Fees Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating contraventions of the relevant provisions of the LASPO Act or the Referral Fees Regulations.

EG 19.28.5 RP

1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the Referral Fees Regulations and the reasons for the appointment, unless notification is likely to result in the investigation being frustrated. In most cases, the FCA expects to carry out a scoping visit early on in the enforcement process. The FCA's policy in civil investigations under the Referral Fees Regulations is to use powers to compel information, in the same way as it would in the course of an investigation under the Act.

Decision making under the Referral Fees Regulations

EG 19.28.6 RP

1The RDC is the FCA's decision maker for decisions which require warning notices or decision notices to be given under the Referral Fees Regulations, as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure set out in DEPP 3.2 or, where appropriate, DEPP 3.3.

EG 19.28.7 RP

1The Referral Fees Regulations do not require the FCA to publish procedures to commence criminal prosecutions. However, the FCA will normally follow its equivalent decision-making procedures for similar decisions under the Act, as set out in EG 12.

EG 19.28.8 RP

1The Referral Fees Regulations do not require the FCA to publish procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow its equivalent decision-making procedures for similar decisions under the Act, as set out in EG 10 and EG 11.

EG 19.28.9 RP

1The Referral Fees Regulations apply sections 393 and 394 of the Act to warning notices and decision notices given under the Referral Fees Regulations and so require the FCA to give third party rights and to give access to material.

EG 19.28.10 RP

1The Referral Fees Regulations apply the procedural provisions of Part 9 of the Act, as modified by the Referral Fees Regulations, in respect of matters that can be referred to the Tribunal. Referral to the Tribunal in respect of decision notices given under regulation 26(1) of the Referral Fees Regulations are treated as disciplinary referrals for the purpose of section 133 of the Act.

Public censures, imposition of penalties and the impositions of suspensions or restrictions under the Referral Fees Regulations

EG 19.28.11 RP

1When determining whether to take action to impose a penalty or to issue a public censure under the Referral Fees Regulations, the FCA's policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA's policy includes having regard to the relevant principles and factors in DEPP 6.5 to 6.5B, DEPP 6.5D and DEPP 6.7.

EG 19.28.12 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Referral Fees Regulations to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA's settlement process and the settlement discount scheme.

EG 19.28.13 RP

1When determining whether to take action to impose a suspension or restriction under the Referral Fees Regulations, the FCA's policy includes having regard to the relevant factors in DEPP 6A.2 and 6A.4. When determining the length of the period of suspension or restriction, the FCA's policy includes having regard to the relevant principles and factors in DEPP 6A.3. However, the FCA does not have the power to suspend an authorised person’spermission under the Referral Fees Regulations.

EG 19.28.14 RP

1The FCA will apply the approach to publicity that is outlined in EG 6.

EG 19.29 1 Immigration Act 2014 (Bank Account) Regulations 2014

EG 19.29.1 RP

1The Immigration Regulations (as amended by the Immigration Act 2014 (Current Accounts) (Excluded Accounts and Notification Requirements) Regulations 2016)2 give the FCA investigation and sanctioning powers in relation to the contravention of sections 40, 40A, 40B and 40G2 of the Immigration Act 2014 (as amended by the Immigration Act 2016)2 (the Immigration Act), as well as the contravention of requirements imposed by, or under, the Immigration Regulations.

EG 19.29.2 RP

1The FCA's approach to taking enforcement action under the Immigration Regulations will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

EG 19.29.3 RP

1The Immigration Regulations, for the most part, mirror the FCA's investigative and sanctioning powers under the Act. The FCA has adopted procedures and policies for the use of those powers that are akin to those it has under the Act. Key features of the FCA's approach are described below.

Information gathering and investigation powers

EG 19.29.4 RP

1The Immigration Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating contraventions of the relevant provisions of the Immigration Act or the Immigration Regulations.

EG 19.29.5 RP

1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the Immigration Regulations and the reasons for the appointment, unless notification is likely to result in the investigation being frustrated. In most cases, the FCA expects to carry out a scoping visit early on in the enforcement process. The FCA's policy in civil investigations under the Immigration Regulations is to use powers to compel information, in the same way as it would in the course of an investigation under the Act.

Decision making under the Immigration Regulations

EG 19.29.6 RP

1The RDC is the FCA’s decision maker for decisions which require warning notices or decision notices to be given under the Immigration Regulations, as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure set out in DEPP 3.2 or, where appropriate, DEPP 3.3.

EG 19.29.7 RP

1The Immigration Regulations do not require the FCA to publish procedures to commence criminal prosecutions. However, the FCA will normally follow its equivalent decision-making procedures for similar decisions under the Act, as set out in EG 12.

EG 19.29.8 RP

1The Immigration Regulations apply sections 393 and 394 of the Act to warning notices and decision notices given under the Immigration Regulations and so require the FCA to give third party rights and to give access to material.

EG 19.29.9 RP

1The Immigration Regulations apply the procedural provisions of Part 9 of the Act, as modified by the Immigration Regulations, in respect of matters that can be referred to the Tribunal. Referral to the Tribunal in respect of decision notices given under regulation 25(1) of the Immigration Regulations are treated as disciplinary referrals for the purpose of section 133 of the Act.

Public censures, imposition of penalties and the impositions of suspensions or restrictions under the Immigration Regulations

EG 19.29.10 RP

1When determining whether to take action to impose a penalty or to issue a public censure under the Immigration Regulations, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6.5 to DEPP 6.5B, DEPP 6.5D and DEPP 6.7.

EG 19.29.11 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Immigration Regulations to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.

EG 19.29.12 RP

1When determining whether to take action to impose a suspension or restriction under the Immigration Regulations, the FCA's policy includes having regard to the relevant factors in DEPP 6A.2 and 6A.4. When determining the length of the period of suspension or restriction, the FCA's policy includes having regard to the relevant principles and factors in DEPP 6A.3.

EG 19.29.13 RP

1The FCA will apply the approach to publicity that is outlined in EG 6.

EG 19.30 The Mortgage Credit Directive Order21

EG 19.30.1 RP

1 The Mortgage Credit Directive (MCD) allowed3 for an exemption not to apply the MCD to buy-to-let lending if there was3 in place an appropriate framework for the regulation of these mortgages. The Mortgage Credit Directive Order 2015 (MCDO) is the vehicle through which the framework for “consumer buy-to-let” (CBTL) mortgages was3 established in order to comply with the MCD.

EG 19.30.2 RP

1The MCDO requires that a firm acting as a lender, intermediary or carrying out advisory services in relation to CBTL from 21 March 2016 must be registered by the FCA to do so. It provides for the FCA to determine applications to be registered, as well as powers to suspend or revoke registration.

EG 19.30.3 RP

1It also imposes obligations on registered firms to comply with conduct requirements set out in the Schedule to the MCDO, retain relevant information and to deal with the FCA in an open and co-operative manner. The FCA also has the power to give directions to a registered firm to secure compliance with the requirements set out in the Schedule. In addition, the FCA has investigation and sanctioning powers in relation to the framework.

EG 19.30.4 RP

1The FCA's approach to taking enforcement action under the MCDO will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

EG 19.30.5 RP

1The MCDO, for the most part, applies or mirrors the FCA's investigative and sanctioning powers under the Act. The FCA has adopted procedures and policies for the use of those powers that are akin to those it has under the Act. Key features of the FCA's approach are described below.

1Information gathering and investigation powers

EG 19.30.6 RP

1Article 23 of the MCDO applies many of the provisions of the Act in relation to the FCA’s investigation and information-gathering powers in respect of a registered firm. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating contraventions of the MCDO.

EG 19.30.7 RP

1For example, the FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the MCDO and the reasons for the appointment, unless notification is likely to result in the investigation being frustrated. In most cases, the FCA expects to carry out a scoping visit early on in the enforcement process. The FCA's policy in regulatory investigations under the MCDO is to use powers to compel information, in the same way as it would in the course of an investigation under the Act.

1Decision making under the MCDO

EG 19.30.8 RP

1The RDC is the FCA’s decision maker for some decisions which require warning notices or decision notices to be given under the MCDO as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure set out in DEPP 3.2 or, where appropriate, DEPP 3.3, and DEPP 3.4 applies for urgent notices under article 16(1)(a).

EG 19.30.9 RP

1For decisions made by executive procedures, the procedure to be followed will be those described in DEPP 4.

EG 19.30.10 RP

1Article 18(3) applies sections 393 and 394 of the Act to warning notices and decision notices given under the MCDO and so require the FCA to give third party rights and to give access to material as set out under the Act. Article 24(1) applies the procedural provisions of Part 9 of the Act, in respect of matters that can be referred to the Tribunal, and article 24(2) applies Part 26 of the Act to warning and decision notices given under the MCDO.

1Public censures, imposition of penalties and the impositions of suspensions under the MCDO

EG 19.30.11 RP

1 When determining whether to take action to impose a penalty or to issue a public censure under the MCDO, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6.5, DEPP 6.5A, DEPP 6.5D and DEPP 6.7.

EG 19.30.12 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the MCDO to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.

EG 19.30.13 RP

1When determining whether to take action to impose a suspension under the MCDO, the FCA’s policy includes having regard to the relevant factors in DEPP 6A.2 and 6A.4. When determining the length of the period of suspension, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6A.3.

EG 19.30.14 RP

1The FCA will apply the approach to publicity that is outlined in EG 6.

EG 19.31 The Small and Medium Sized Business (Credit Information) Regulations21

EG 19.31.1 RP

1The Small and Medium Sized Business (Credit Information) Regulations were made under the Small Business, Enterprise and Employment Act. The Small and Medium Sized Business (Credit Information) Regulations impose a duty on designated banks to provide information about their small and medium sized business customers (with the consent of those businesses) to designated credit reference agencies. The Treasury is the body that has the power to designate a bank or credit reference agency and may revoke such a designation.

EG 19.31.2 RP

1As the provision of credit data on companies is not a regulated activity under the Act, the Regulations create a separate monitoring and enforcement regime but apply, or make provision corresponding to, certain aspects of the Act. The FCA's approach to taking enforcement action under the Regulations will reflect its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers.

1Information gathering and investigation powers

EG 19.31.3 RP

1Regulation 26 of the Small and Medium Sized Business (Credit Information) Regulations applies many of the provisions of the Act regarding the FCA’s investigation and information-gathering powers to designated banks and designated credit reference agencies. The effect is to apply the same procedures under the Act for appointing investigators and requiring information when investigating any breaches of the Small and Medium Sized Business (Credit Information) Regulations.

EG 19.31.4 RP

1For example, the FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation and the reasons for the appointment. The FCA's policy in regulatory investigations under the Small and Medium Sized Business (Credit Information) Regulations is to use powers to compel information, in the same way as it would in the course of an investigation under the Act.

1Decision making under the Small and Medium Sized Business (Credit Information) Regulations

EG 19.31.5 RP

1The RDC is the FCA’s decision maker for some decisions which require warning notices or decision notices to be given under the Small and Medium Sized Business (Credit Information) Regulations, as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure in DEPP 3.2 or, where appropriate, DEPP 3.3 or DEPP 3.4. For decisions made by executive procedures, the procedure to be followed will be those described in DEPP 4.

EG 19.31.6 RP

1Regulation 46 of the Small and Medium Sized Business (Credit Information) Regulations applies the procedural provisions of Part 9 of the Act, in respect of matters that can be referred to the Tribunal, and regulation 44 of the Small and Medium Sized Business (Credit Information) Regulations applies Part 26 of the Act to warning and decision notices given under the Regulations.

1Public censures, imposition of penalties and the impositions of restrictions under the Small and Medium Sized Business (Credit Information) Regulations

EG 19.31.7 RP

1When determining whether to take action to impose a penalty or to issue a public censure under the Small and Medium Sized Business (Credit Information) Regulations, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6.5, DEPP 6.5A, DEPP 6.5D and DEPP 6.7.

EG 19.31.8 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the Small and Medium Sized Business (Credit Information) Regulations to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.

EG 19.31.9 RP

1When determining whether to take action to impose a restriction under regulation 30 of the Small and Medium Sized Business (Credit Information) Regulations, the FCA’s policy includes having regard to the relevant factors in DEPP 6A.2 and DEPP 6A.4. When determining the length of the period of restriction, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6A.3.

EG 19.31.10 RP

1The FCA will apply the approach to publicity that is outlined in EG 6.

EG 19.32 The Payment Accounts Regulations 2015

EG 19.32.1 RP

1The Payment Accounts Regulations 2015 (“the PARs”) implemented2 the Payment Accounts Directive. They entitle consumers who hold a payment account (such as a current account) to receive certain information about the fees and charges applied to that account. They also entitle consumers to use a switching service which meets certain minimum standards, if they wish to change their payment account to another provider.

EG 19.32.2 RP

The PARs impose various obligations on payment account providers, such as a duty to disclose certain information when offering a packaged account to a consumer (i.e. the costs and fees of the products or services included in the package). They also introduce an obligation to offer a switching service between payment accounts. The PARs also require credit institutions designated by Her Majesty’s Treasury to provide eligible consumers with access to basic banking services.

EG 19.32.3 RP

As the requirements arise under the PARs and not under the Act, the PARs create a separate monitoring and enforcement regime but apply, or make provision corresponding to, certain aspects of the Act.

EG 19.32.4 RP

The FCA's approach to taking enforcement action under the PARs will reflect its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment of subjects under investigation when exercising its enforcement powers.

Information gathering and investigation powers

EG 19.32.5 RP

Part 1 of Schedule 7 to the PARs applies many of the provisions of the Act in relation to the FCA’s investigation and information-gathering powers to the FCA’s functions under the PARs. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating any breaches of the PARs.

EG 19.32.6 RP

For example, the FCA will, if appropriate, notify the subject of the investigation that it has appointed investigators to carry out an investigation and the reasons for the appointment. The FCA's policy in regulatory investigations under the PARs is to use powers to compel information, in the same way as it would in the course of an investigation under the Act.

Decision making under the PARs

EG 19.32.7 RP

The RDC is the FCA’s decision maker for some decisions which require warning notices, decision notices or other written notices to be given under the PARs as set out in DEPP 2 Annex 1 and DEPP 2 Annex 2. The RDC will make its decisions following the procedure set out in DEPP 3.2 or, where appropriate, DEPP 3.3 or DEPP 3.4.

EG 19.32.8 RP

For decisions made by executive procedures, the procedures to be followed will be those described in DEPP 4.

EG 19.32.9 RP

Paragraph 1 of Schedule 7 to the PARs applies the procedural provisions of Part 9 of the Act (with some modifications), in respect of matters that can be referred to the Tribunal, and Paragraph 4 of Schedule 7 to the PARs applies Part 26 of the Act to warning notices and decision notices given under the PARs.

Public censures and the imposition of penalties

EG 19.32.10 RP

When determining whether to take action to impose a penalty or to issue a public censure under the PARs, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6.5, DEPP 6.5A, DEPP 6.5D and DEPP 6.7.

EG 19.32.11 RP

As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the PARs to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.

EG 19.32.12 RP

The FCA will apply the approach to publicity that is outlined in EG 6.

EG 19.33 The Small and Medium Sized Business (Finance Platforms) Regulations 2015

EG 19.33.1 RP

1The Small and Medium Sized Business (Finance Platforms) Regulations were made under the Small Business, Enterprise and Employment Act. The Small and Medium Sized Business (Finance Platforms) Regulations require designated banks to provide specified information about rejected loan applications made by small and medium sized business customers (with their consent) to designated finance platforms which must then provide such information to finance providers on request. The Treasury is the body that has the power to designate a bank or finance platform and may revoke such a designation.

EG 19.33.2 RP

As the provision of credit data on companies is not a regulated activity under the Act, the Regulations create a separate monitoring and enforcement regime but apply, or make provision corresponding to, certain aspects of the Act. The FCA's approach to taking enforcement action under the Regulations will reflect its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers.

Information gathering and investigation powers

EG 19.33.3 RP

Regulation 23 of the Small and Medium Sized Business (Finance Platforms) Regulations applies many of the provisions of the Act in relation to the FCA’s investigation and information-gathering powers in respect of designated banks and designated finance platforms. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating any breaches of the Small and Medium Sized Business (Finance Platforms) Regulations.

EG 19.33.4 RP

For example, the FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation and the reasons for the appointment. The FCA's policy in regulatory investigations under the Regulations is to use powers to compel information, in the same way as it would in the course of an investigation under the Act.

Decision making under the Small and Medium Sized Business (Finance Platforms) Regulations

EG 19.33.5 RP

The RDC is the FCA’s decision maker for some decisions which require warning notices or decision notices to be given under the Small and Medium Sized Business (Finance Platforms) Regulations as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure in DEPP 3.2 or, where appropriate, DEPP 3.3 or DEPP 3.4. For decisions made by executive procedures, the procedure to be followed will be those described in DEPP 4.

EG 19.33.6 RP

Regulation 43 of the Small and Medium Sized Business (Finance Platforms) Regulations applies to the procedural provisions of Part 9 of the Act, in respect of matters that can be referred to the Tribunal, and regulation 41 of the Small and Medium Sized Business (Finance Platforms) Regulations applies to Part 26 of the Act to warning and decision notices given under the Small and Medium Sized Business (Finance Platforms) Regulations.

Public censures, imposition of penalties and the impositions of restrictions under the Small and Medium Sized Business (Finance Platforms) Regulations

EG 19.33.7 RP

When determining whether to take action to impose a penalty or to issue a public censure under the Small and Medium Sized Business (Finance Platforms) Regulations, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6.5, DEPP 6.5A, DEPP 6.5D and DEPP 6.7.

EG 19.33.8 RP

As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the Small and Medium Sized Business (Finance Platforms) Regulations to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.

EG 19.33.9 RP

When determining whether to take action to impose a restriction under regulation 27 of the Small and Medium Sized Business (Finance Platforms) Regulations, the FCA’s policy includes having regard to the relevant factors in DEPP 6A.2 and 6A.4. When determining the length of the period of restriction, the FCA’s policy includes having regard to the relevant principles and factors in DEPP 6A.3.

EG 19.33.10 RP

The FCA will apply the approach to publicity that is outlined in EG 6.

EG 19.34 Markets in Financial Instruments Regulations 2017

EG 19.34.1 RP

1The MiFI Regulations in part implemented2MiFID. The FCA has investigative and enforcement powers in relation to both criminal and non-criminal breaches of the MiFI Regulations (including requirements imposed on persons subject to the MiFI Regulations by MiFIR and any onshored regulation which was an EU regulation2 made under MiFIR or MiFID). The MiFI Regulations impose requirements on:

  1. (1)

    persons holding positions in relevant contracts for commodity derivatives trading on trading venues and for economically equivalent OTC contracts, whether or not the persons are authorised; and

  2. (2)

    exempt investment firms providing services in algorithmic trading, direct electronic access or acting as a general clearing member or in relation to the synchronisation of business clocks.

The MiFI Regulations also give the FCA the powers to investigate and enforce breaches of article 28 of MiFIR and any onshored regulation which was an EU regulation2 made under MiFIR.

EG 19.34.2 RP

1The FCA’s approach to enforcing under the MiFI Regulations, whether the person is authorised or not, will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

EG 19.34.3 RP

1The regulatory powers which the MiFI Regulations provide to the FCA include:

  1. (1)

    the power to require information and appoint investigators;

  2. (2)

    powers of entry and inspection;

  3. (3)

    the power to publicly censure;

  4. (4)

    the power to impose financial penalties;

  5. (5)

    the power to apply for an injunction or restitution order;

  6. (6)

    the power to require restitution;

  7. (7)

    the power to impose limitation, restriction or requirement; and

  8. (8)

    the power to prosecute relevant offences.

EG 19.34.4 RP

1In addition, the MiFI Regulations provide the power to require the removal of persons from the management board of an investment firm, a credit institution or a recognised investment exchange. This is a supervisory power, rather than a disciplinary one, and it may be exercised whenever the FCA deems it necessary for the purpose of any of our functions under MiFID or MiFIR.

EG 19.34.5 RP

1The MiFI Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below.

The conduct of investigations under the MiFI Regulations

EG 19.34.6 RP

1The MiFI Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the MiFI Regulations.

EG 19.34.7 RP

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the MiFI Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the MiFI Regulations is to use powers to compel the provision of information in the same way as we would in the course of an investigation under the Act.

Decision making under the MiFI Regulations

EG 19.34.8 RP

1The decision making procedures for those decisions under the MiFI Regulations requiring the giving of a warning notice, decision notice or a supervisory notice are dealt with in DEPP.

EG 19.34.9 RP

1The MiFI Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 12.

EG 19.34.10 RP

1The MiFI Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

EG 19.34.11 RP

1The MiFI Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.

EG 19.34.12 RP

1Certain FCA decisions (for example a requirement to reduce the size of a position, publication of a statement and the imposition of a penalty) may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the MiFI Regulations

EG 19.34.13 RP

1When determining whether to take action to impose a penalty or to issue a public censure under the MiFI Regulations the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.

EG 19.34.14 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the MiFI Regulations to assist us to exercise our functions under the MiFI Regulations in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

EG 19.34.15 RP

1The FCA will apply the approach to publicity that is outlined in EG 6, read in light of the applicable publicity provisions in section 391D of the Act.

Removal of persons from management boards under the MiFI Regulations

EG 19.34.16 RP

1The power under Part 5 of the MiFI Regulations to remove a person from a management board may be used in respect of an investment firm, a credit institution or a recognised investment exchange.

EG 19.34.17 RP

1This power may be used where the FCA considers that the removal is necessary for the purpose of exercising functions under MiFID or MiFIR. Examples of where this power may be used include, but are not limited to, ensuring that all members of the management body:

  1. (1)

    are of sufficiently good repute;

  2. (2)

    possess sufficient knowledge, skills and experience to perform their duties;

  3. (3)

    commit sufficient time to perform their functions;

  4. (4)

    do not hold too many directorships;

  5. (5)

    act with honesty, integrity and independence of mind; and

  6. (6)

    have no conflicts of interest.

EG 19.34.18 RP

1The FCA will have regard to all relevant circumstances, on a case-by-case basis, taking into account the specific circumstances of the investment firm, credit institution or recognised investment exchange and the member of the management board. The FCA will exercise this power fairly and proportionately.

EG 19.34.19 RP

1It should be noted that, while the FCA will have regard to the range of regulatory tools at its disposal, we are not required to exhaust all other options before imposing the requirement to remove a person from the management board.

EG 19.34.20 RP

1The FCA will take into account all relevant circumstances when considering whether to require the removal to occur immediately or on a specified date.

Statement of policy in section 169(7) (as implemented by the MiFI Regulations)

EG 19.34.21 RP

1The MiFI Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the MiFI Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.35 Data Reporting Services Regulations 2017

EG 19.35.1 RP

1The DRS Regulations implemented2MiFID. The FCA has investigation and enforcement powers in relation to both criminal and non-criminal breaches of the DRS Regulations (including requirements imposed on persons subject to the DRS Regulations by MiFIR and any onshored regulation which was an EU regulation2 made under MiFIR or MiFID). The DRS Regulations impose requirements on data reporting services providers (“DRSPs”) which are entities authorised or verified to provide services of:

  1. (1)

    publishing trade reports (“APA”);

  2. (2)

    reporting details of transactions (“ARM”); and

  3. (3)

    collecting trade reports (“CTP”).

EG 19.35.2 RP

1The FCA’s approach to enforcing the DRS Regulations will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance, and where appropriate, to remedy the harm caused by the non-compliance.

EG 19.35.3 RP

1The regulatory powers which the DRS Regulations provide to the FCA include:

  1. (1)

    the power to require information and appoint investigators;

  2. (2)

    powers of entry and inspection;

  3. (3)

    the power of public censure;

  4. (4)

    the power to impose financial penalties;

  5. (5)

    the power to impose a limitation or other restrictions;

  6. (6)

    the power to apply for an injunction;

  7. (7)

    the power to require restitution; and

  8. (8)

    the power to prosecute unauthorised providers.

EG 19.35.4 RP

1In addition, the DRS Regulations provide the power for the FCA to take criminal or non-criminal action for misleading the FCA.

EG 19.35.5 RP

1The DRS Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below.

The conduct of investigations under the DRS Regulations

EG 19.35.6 RP

1The DRS Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the DRS Regulations.

EG 19.35.7 RP

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the DRS Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the DRS Regulations is to use powers to compel the provision of information in the same way as we would in the course of an investigation under the Act.

Decision making under the DRS Regulations

EG 19.35.8 RP

1The decision making procedures for those decisions under the DRS Regulations requiring the giving of a warning notice, decision notice or a supervisory notice are dealt with in DEPP.

EG 19.35.9 RP

1For decisions made by executive procedures the procedures to be followed will be those described in DEPP 4.

EG 19.35.10 RP

1The DRS Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 12.

EG 19.35.11 RP

1The DRS Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow our decision making procedure for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

EG 19.35.12 RP

1The DRS Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.

EG 19.35.13 RP

1Certain FCA decisions (for example the publication of a statement and the imposition of a penalty) may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the DRS Regulations

EG 19.35.14 RP

1When determining whether to take action to impose a penalty or to issue a public censure under the DRS Regulations the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.

EG 19.35.15 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the DRS Regulations to assist us to exercise our functions under the DRS Regulations in the most efficient and economic way.

[Note: See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.]

EG 19.35.16 RP

1The FCA will apply the approach to publicity that is outlined in EG 6, read in light of applicable publicity provisions in section 391D of the Act.

Statement of policy in section 169(7) (as implemented by the DRS Regulations)

EG 19.35.17 RP

1The DRS Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the DRS Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.36 The Packaged Retail and Insurance-based Investment Products Regulations 2017

EG 19.36.1 RP

1The Packaged Retail and Insurance-based Investment Products Regulations implemented2 the PRIIPs Regulation (before it was brought into UK law)2. The FCA has investigative and enforcement powers in relation to both criminal and civil breaches of the Packaged Retail and Insurance-based Investment Products Regulations, PRIIPs Regulation and any onshored regulation which was an EU regulation2 made under the PRIIPs Regulation. The PRIIPs Regulation imposes requirements on both authorised and unauthorised persons who manufacture, advise on, market or sell a PRIIP.

EG 19.36.2 RP

1The FCA’s approach to enforcing the Packaged Retail and Insurance-based Investment Products Regulations, whether the person is authorised or not, will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance, and where appropriate, to remedy the harm caused by the non-compliance.

EG 19.36.3 RP

1The regulatory powers which the Packaged Retail and Insurance-based Investment Products Regulations provide to the FCA include:

  1. (1)

    the power to appoint investigators and require information;

  2. (2)

    powers of entry and inspection;

  3. (3)

    the power of public censure;

  4. (4)

    the power to impose financial penalties;

  5. (5)

    the power to impose a limitation, restriction or requirement;

  6. (6)

    the power to apply for an injunction or restitution order;

  7. (7)

    the power to require restitution; and

  8. (8)

    the power of prohibition and suspension.

EG 19.36.4 RP

1In addition, the PRIIPs Regulation imposes requirements directly on appointed representatives for, amongst other things, regulated activity which their principal may have accepted responsibility. We would expect to usually take enforcement action against the principal, rather than the appointed representative, in these circumstances.

EG 19.36.5 RP

1The Packaged Retail and Insurance-based Investment Products Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those it has under the Act. Key features of the FCA’s approach are described below.

Conduct of investigations under the Packaged Retail and Insurance-based Investment Products Regulations

EG 19.36.6 RP

1The Packaged Retail and Insurance-based Investment Products Regulations apply to much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Packaged Retail and Insurance-based Investment Products Regulations.

EG 19.36.7 RP

1For example, the FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the Packaged Retail and Insurance-based Investment Products Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in civil investigations under the Packaged Retail and Insurance-based Investment Products Regulations is to use powers to compel information in the same way as it would in the course of an investigation under the Act.

Decision-making under the Packaged Retail and Insurance-based Investment Products Regulations

EG 19.36.8 RP

1The decision making procedure for those decisions under the Packaged Retail and Insurance-based Investment Products Regulations requiring the giving of a warning notice, decision notice or a supervisory notice are dealt with in DEPP.

EG 19.36.9 RP

1The Packaged Retail and Insurance-based Investment Products Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that it will normally follow its decision-making procedures for the equivalent decisions under the Act, as set out in EG 12.

EG 19.36.10 RP

1The Packaged Retail and Insurance-based Investment Products Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow its decision-making procedure for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

EG 19.36.11 RP

1The Packaged Retail and Insurance-based Investment Products Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.

EG 19.36.12 RP

1Certain FCA decisions (for example making an order prohibiting a person from marketing a PRIIP; making an order requiring a person to suspend the marketing of a PRIIP) may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the Packaged Retail and Insurance-based Investment Products Regulations

EG 19.36.13 RP

1When determining whether to take action to impose a penalty or to issue a public censure under the Packaged Retail and Insurance-based Investment Products Regulations the FCA will have regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.

EG 19.36.14 RP

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Packaged Retail and Insurance-based Investment Products Regulations to assist it exercise its functions under the Packaged Retail and Insurance-based Investment Products Regulations in the most efficient and economic way.

[Note: See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.]

EG 19.36.15 RP

1The FCA will apply the approach to publicity that is outlined in EG 6.

Statement of policy in section 169(9) (as implemented by the Packaged Retail and Insurance-based Investment Products Regulations)

EG 19.36.16 RP

1The Packaged Retail and Insurance-based Investment Products Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Packaged Retail and Insurance-based Investment Products Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.37 UK Benchmarks Regulations 2018

EG 19.37.1

1The UK Benchmarks Regulations 2018 in part implemented2 the benchmarks regulation (before it was brought into UK law)2. The FCA has investigative and enforcement powers in relation to both criminal and non-criminal breaches of the UK Benchmarks Regulations 2018 (including requirements imposed on persons subject to the UK Benchmarks Regulations 2018 by the benchmarks regulation and any onshored regulation which was an EU regulation2 made under the benchmarks regulation). Our powers in relation to Miscellaneous BM persons are set in the UK Benchmarks Regulations 2018.

EG 19.37.2

1The FCA’s approach to enforcing the UK Benchmarks Regulations 2018 will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

EG 19.37.3

1The powers which the UK Benchmarks Regulations 2018 provide to the FCA include:

  1. (1)

    the power to require information and appoint investigators;

  2. (2)

    powers of entry and inspection;

  3. (3)

    the power to publicly censure;

  4. (4)

    the power to impose financial penalties;

  5. (5)

    the power to apply for an injunction or restitution order;

  6. (6)

    the power to require restitution;

  7. (7)

    the power to impose and vary requirements; and

  8. (8)

    the power to prosecute relevant offences.

EG 19.37.4

1The UK Benchmarks Regulations 2018, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below and in SUP 15B.5.

The conduct of investigations under the UK Benchmarks Regulations 2018

EG 19.37.5

1The UK Benchmarks Regulations 2018 apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the UK Benchmarks Regulations 2018.

EG 19.37.6

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the UK Benchmarks Regulations 2018 and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the UK Benchmarks Regulations 2018 is to use powers to compel the provision of information in the same way as we would in the course of an investigation under the Act.

Decision making under the UK Benchmarks Regulations 2018

EG 19.37.7

1The decision making procedures for those decisions under the UK Benchmarks Regulations 2018 requiring the giving of a warning notice, decision notice or a supervisory notice are dealt with within DEPP.

EG 19.37.8

1The UK Benchmarks Regulations 2018 do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 12.

EG 19.37.9

1The UK Benchmarks Regulations 2018 do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

EG 19.37.10

1The UK Benchmarks Regulations 2018 require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act as applied by the UK Benchmarks Regulations 2018.

EG 19.37.11

1Certain FCA decisions (for example an imposition of a requirement) may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the UK Benchmarks Regulations 2018

EG 19.37.12

1When determining whether to take action to impose a penalty or to issue a public censure under the UK Benchmarks Regulations 2018 the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.

EG 19.37.13

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the UK Benchmarks Regulations 2018 to assist us to exercise our functions under the UK Benchmarks Regulations 2018 in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

EG 19.37.14

1The FCA will apply the approach to publicity that is outlined in EG 6, read in light of Article 45 of the benchmarks regulation.

Statement of policy in section 169(7) (as applied by the UK Benchmarks Regulations 2018)

EG 19.37.15

1The UK Benchmarks Regulations 2018 apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the UK Benchmarks Regulations 2018 the FCA will follow the procedures described in DEPP 7.

EG 19.37A Proxy Advisors (Shareholders’ Rights) Regulations 2019

EG 19.37A.1

1The Proxy Advisors (Shareholders’ Rights) Regulations in part implement the revised Shareholders Rights Directive (SRD). The FCA has investigative and sanctioning powers in relation to breaches of the Proxy Advisors (Shareholders’ Rights) Regulations.

EG 19.37A.2

1The Proxy Advisors (Shareholders’ Rights) Regulations establish a new regulatory framework for proxy advisors. This framework imposes requirements on proxy advisors that are subject to the Proxy Advisors (Shareholders’ Rights) Regulations, including, amongst other things, to provide a range of information to proxy advisors’ clients and the public with the aim of providing greater transparency. The Regulations will ensure that where proxy advisor services are provided in accordance with or by reference to a Code of Conduct it is made public together with a report on the way it has been applied. They will also ensure that information is made public by which the quality and reliability of the proxy advisor’s services and recommendations can be assessed and the proxy advisor will ensure that conflicts of interests and the management thereof are identified and disclosed appropriately. This framework will help to increase transparency in proxy advisor services and reduce the harm from investors relying on their services including their voting recommendations, without having the necessary information to assess the approach taken.

EG 19.37A.3

1The FCA’s approach to enforcement under the Proxy Advisors (Shareholders’ Rights) Regulations will mirror its general approach to enforcing the Act, as set out in EG 2. The FCA will seek to exercise its enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance, and where appropriate, to remedy the harm caused by the non-compliance.

EG 19.37A.4

1The regulatory powers which the Proxy Advisors (Shareholders’ Rights) Regulations provide to the FCA include:

• the power to require information and appoint investigators;

• powers of entry and inspection;

• power of public censure;

• the power to impose financial penalties;

• the power to apply for an injunction or restitution order;

• the power to require restitution;

• the power to remove a proxy advisor from the public list; and

• the power to prosecute relevant offences.

EG 19.37A.5

1The Proxy Advisors (Shareholders’ Rights) Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those it has under the Act. Key features of the FCA’s approach are described below.

The conduct of investigations under the Proxy Advisors (Shareholders’ Rights) Regulations

EG 19.37A.6

1The Proxy Advisors (Shareholders’ Rights) Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Proxy Advisors (Shareholders’ Rights) Regulations.

EG 19.37A.7

1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy when investigating under the Proxy Advisors (Shareholders’ Rights) Regulations is to use powers to compel information in the same way as it would in the course of an investigation under the Act.

Decision making under the Proxy Advisors (Shareholders’ Rights) Regulations

EG 19.37A.8

1The RDC is the FCA’s decision maker for most of the decisions under the Proxy Advisors (Shareholders’ Rights) Regulations as set out in DEPP 2 Annex 1G. This includes the decision to publish a censure and the decision to impose a financial penalty. For the purposes of the Proxy Advisors (Shareholders’ Rights) Regulations, the FCA will follow the procedure for issuing a warning notice and decision notice as set out in DEPP 2.

EG 19.37A.9

1For decisions made by executive procedures i.e. settlement decisions under Regulation 11 and 12 or proposals or decisions under Regulation 32, the procedures to be followed will be those described in DEPP 4.

EG 19.37A.10

1The Proxy Advisors (Shareholders’ Rights) Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision-making procedures for the equivalent decisions under the Act, as set out in EG 12.

EG 19.37A.11

1The Proxy Advisors (Shareholders’ Rights) Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow its decision-making procedures for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

EG 19.37A.12

1The Proxy Advisors (Shareholders’ Rights) Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.

EG 19.37A.13

1Certain FCA decisions (for example the imposition of a financial penalty) may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the Proxy Advisors (Shareholders’ Rights) Regulations

EG 19.37A.14

1The Proxy Advisors (Shareholders’ Rights) Regulations do not require the FCA to issue a statement of policy with respect to the imposition and amount of penalties under the Proxy Advisors (Shareholders’ Rights) Regulations. However, the FCA has decided to issue a statement of policy for the imposition of a financial penalty under the Regulations. The FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4 in addition to those set out in the Proxy Advisors (Shareholders’ Rights) Regulations, where appropriate. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D in addition to the factors set out in the Proxy Advisors (Shareholders’ Rights) Regulations, where appropriate.

EG 19.37A.15

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the Proxy Advisors (Shareholders’ Rights) Regulations to assist it to exercise its functions under the Regulations in the most efficient and economical way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

Statement of policy in section 169(7) interviews (as applied by the Proxy Advisors (Shareholders’ Rights) Regulations)

EG 19.37A.16

1The Proxy Advisors (Shareholders’ Rights) Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Proxy Advisors (Shareholders’ Rights) Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.38 UK Securitisation Regulations

EG 19.38.1

1The UK Securitisation Regulations implemented2 the Securitisation Regulation (before it was brought into UK law)2. The FCA has investigative and enforcement powers in relation to both criminal and non-criminal breaches of the UK Securitisation Regulations, Securitisation Regulation and any onshored regulation which was an EU regulation2 made under the Securitisation Regulation.

EG 19.38.2

1The Securitisation Regulation and the UK Securitisation Regulations seek to make the securitisation market work more effectively. They aim to address some of the harms to investors identified in these markets following the financial crisis, including the lack of adequate disclosure, and the misalignment between issuers’ and investors’ interests. The new framework consolidates existing requirements and strengthens the legislation on securitisation. The Securitisation Regulation and the UK Securitisation Regulations promote transparency and appropriate due diligence by investors for securitisation investments. They create a framework for simple, transparent and standardised (STS) securitisations. This framework will help to reduce the harm from investors making badly-informed decisions because they fail to understand and appropriately analyse the risks in their securitisation investments.

EG 19.38.3

1The FCA’s approach to enforcement under the UK Securitisation Regulations, whether the person is authorised or not, will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally we will aim to change the behaviour of the person who is the subject of our action in order to:

  1. (1)

    deter future non-compliance by others;

  2. (2)

    eliminate any financial gain or benefit from non-compliance; and

  3. (3)

    remedy the harm caused by the non-compliance.

EG 19.38.4

1The regulatory powers which the UK Securitisation Regulations provide to the FCA include the power:

  1. (1)

    to require information and appoint investigators;

  2. (2)

    of entry and inspection;

  3. (3)

    to publicly censure;

  4. (4)

    to impose financial penalties;

  5. (5)

    to apply for an injunction or restitution order;

  6. (6)

    to require restitution;

    3
  7. (7)

    to impose temporary prohibitions on individuals holding management functions3; and

  8. (8)

    3to impose a suspension, condition, limitation or other restriction.

EG 19.38.5

1In addition, the UK Securitisation Regulations provide the power for the FCA to take criminal or non-criminal action for misleading the FCA.

EG 19.38.6

1The UK Securitisation Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below.

The conduct of investigations under the UK Securitisation Regulations

EG 19.38.7

1The UK Securitisation Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Securitisation Regulation and the UK Securitisation Regulations.

EG 19.38.8

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the UK Securitisation Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the UK Securitisation Regulations is to use powers to compel the provision of information in the same way as we would in the course of an investigation under the Act.

Decision making under the UK Securitisation Regulations

EG 19.38.9

1The decision-making procedures for those decisions under the UK Securitisation Regulations requiring the giving of a warning notice, decision notice or a supervisory notice are dealt with in DEPP.

EG 19.38.10

1The UK Securitisation Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision-making procedures for the equivalent decisions under the Act, as set out in EG 12.

EG 19.38.11

1The UK Securitisation Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow our decision-making procedures for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

EG 19.38.12

1The UK Securitisation Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act as applied by the UK Securitisation Regulations.

EG 19.38.13

1Certain FCA decisions may be referred to the Tribunal by an aggrieved party.

Imposition of penalties under the UK Securitisation Regulations

EG 19.38.14

1When determining whether to take action to impose a penalty or to issue a public censure under the UK Securitisation Regulations the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5B and DEPP 6.5D.

EG 19.38.15

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the UK Securitisation Regulations to assist us to exercise our functions under the UK Securitisation Regulations in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

Imposition of disciplinary prohibitions under the UK Securitisation Regulations

EG 19.38.16

1The FCA may impose under the UK Securitisation Regulations a temporary prohibition in respect of an individual holding an office or position involving responsibility for taking decisions about the management of an originator, sponsor or SSPE. When determining whether to impose a temporary prohibition and what the length of any temporary prohibition would be the FCA will have regard to the factors set out in DEPP 6A.

Statement of policy in section 169(7) (as implemented by the UK Securitisation Regulations)

EG 19.38.17

1The UK Securitisation Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to request from overseas regulators. For the purposes of the UK Securitisation Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.38A Securitisation (Amendment) (EU Exit) Regulations 2019

EG 19.38A.1

1Supervisory and enforcement functions in respect of securitisation repositories under the Securitisation Regulation were transferred from ESMA to the FCA through the Securitisation (Amendment) (EU Exit) Regulations on IP completion day. The Securitisation (Amendment) (EU Exit) Regulations amend the Securitisation Regulation to, amongst other reasons, apply the Trade Repositories (EU Exit) Regulations. In places, these regulations in turn apply provisions of the Act.

EG 19.38A.2

1The FCA’s approach to enforcement under the Securitisation Regulation in relation to securitisation repositories will mirror our general approach to enforcing the Act, as set out in EG. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy harm caused by non-compliance.

EG 19.38A.3

1The regulatory powers which the Securitisation (Amendment) (EU Exit) Regulations provide to the FCA include the power:

  1. (1)

    to require information and appoint investigators;

  2. (2)

    of entry and inspection;

  3. (3)

    to publicly censure;

  4. (4)

    to impose financial penalties; and

  5. (5)

    to apply for an injunction.

Conduct of investigations under the Securitisation Regulation as amended by the Securitisation (Amendment) (EU Exit) Regulations

EG 19.38A.4

1The Securitisation (Amendment) (EU Exit) Regulations and the Trade Repositories (EU Exit) Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Securitisation Regulation.

EG 19.38A.5

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the Securitisation Regulation and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the Securitisation Regulation is to use powers to compel the provision of information in the same way as we would during an investigation under the Act.

Decision making under the Securitisation Regulation as amended by the Securitisation (Amendment) (EU Exit) Regulations

EG 19.38A.6

1The decision-making procedures for those decisions under the Securitisation Regulation requiring the giving of a warning notice, decision notice or supervisory notice are dealt with in DEPP.

EG 19.38A.7

1The Securitisation Regulation requires the FCA to give third party rights as set out in section 393 of the Act, and to give access to certain material as set out in section 394 of the Act as applied by the Securitisation Regulation and the Trade Repositories (EU Exit) Regulations.

Imposition of penalties under the Securitisation Regulation as amended by the Securitisation (Amendment) (EU Exit) Regulations

EG 19.38A.8

1When determining whether to take action to impose a penalty or to issue a public censure under the Securitisation Regulation, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5, DEPP 6.5A, DEPP 6.5B and DEPP 6.5D.

EG 19.38A.9

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the Securitisation Regulation to assist us to exercise our functions under the Securitisation Regulation in the most efficient and economical way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

EG 19.38A.10

1The FCA will apply the approach to publicity that is outlined in EG 6, read in light of regulation 76 of the Trade Repositories (EU Exit) Regulations as applied by article 15 of the Securitisation Regulation.

Statement of policy in section 169(7) interviews (as implemented by the Securitisation (Amendment) (EU Exit) Regulations))

EG 19.38A.11

1The Securitisation (Amendment) (EU Exit) Regulations amend the Securitisation Regulation to apply regulation 75 of the Trade Repositories (EU Exit) Regulations, which in turn applies section 169 of the Act. This requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Securitisation Regulation, the FCA will follow the procedures described in DEPP 7.

EG 19.39 Credit Rating Agencies (CRA) Regulation

EG 19.39.1

1The CRA Regulation aims to enhance the integrity, responsibility, good governance and independence of credit rating activities, contributing to the quality of credit ratings issued in the United Kingdom while achieving high levels of investor protection. The CRA Regulation imposes requirements including, among other things, obligations on credit rating agencies relating to their independence and avoidance of conflicts of interest, their methodologies and disclosures.

EG 19.39.2

1Supervisory and enforcement functions under the CRA Regulation were transferred from ESMA to the FCA through the CRA (EU Exit) Regulations on IP completion day2.

EG 19.39.3

1The FCA’s approach to enforcing under the CRA Regulation will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

Conduct of investigations under the CRA Regulation

EG 19.39.4

1The CRA (EU Exit) Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the CRA Regulation.

EG 19.39.5

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the CRA Regulation and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the CRA Regulation is to use powers to compel the provision of information in the same way as we would during an investigation under the Act.

Decision making under the CRA Regulation

EG 19.39.6

1The decision making procedures for those decisions under the CRA Regulation requiring the giving of a warning notice, decision notice or supervisory notice are dealt with within DEPP.

EG 19.39.7

1The CRA Regulation requires the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act as applied by the CRA Regulation.

Imposition of penalties under the CRA (EU Exit) Regulations

EG 19.39.8

1When determining whether to take action to impose a penalty or to issue a public censure under the CRA (EU Exit) Regulations, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5, DEPP 6.5A, DEPP 6.5B and DEPP 6.5D.

EG 19.39.9

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the CRA Regulation to assist us to exercise our functions under the CRA Regulation in the most efficient and economical way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

EG 19.39.10

1The FCA will apply the approach to publicity that is outlined in EG 6, read in the light of regulation 19 of the CRA (EU Exit) Regulations.

Statement of policy in section 169(7) interviews (as implemented by the CRA (EU Exit) Regulations 2019)

EG 19.39.11

1The CRA (EU Exit) Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the CRA (EU Exit) Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.40 Trade Repositories (EU Exit) Regulations

EG 19.40.1

Supervisory and enforcement functions in respect of trade repositories under EU EMIR were transferred from ESMA to the FCA through the Trade Repositories (EU Exit) Regulations on IP completion day2.

EG 19.40.2

1The FCA’s approach to enforcing under the Trade Repositories (EU Exit) Regulations will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

Conduct of investigations under the Trade Repositories (EU Exit) Regulations

EG 19.40.3

1The Trade Repositories (EU Exit) Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Trade Repositories (EU Exit) Regulations, EMIR and the Trade Repositories (Amendment and Transitional Provision) (EU Exit) Regulations 2018.

EG 19.40.4

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the Trade Repositories (EU Exit) Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the Trade Repositories (EU Exit) Regulations is to use powers to compel the provision of information in the same way as we would during an investigation under the Act.

Decision making under the Trade Repositories (EU Exit) Regulations

EG 19.40.5

1The decision-making procedures for those decisions under the Trade Repositories (EU Exit) Regulations requiring the giving of a warning notice, decision notice or supervisory notice are dealt with within DEPP.

EG 19.40.6

1The Trade Repositories (EU Exit) Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act as applied by the Trade Repositories (EU Exit) Regulations.

Imposition of penalties under the Trade Repositories (EU Exit) Regulations

EG 19.40.7

1When determining whether to take action to impose a penalty or to issue a public censure under the Trade Repositories (EU Exit) Regulations. The FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5, DEPP 6.5A, DEPP 6.5B and DEPP 6.5D.

EG 19.40.8

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the Trade Repositories (EU Exit) Regulations to assist us to exercise our functions under the Trade Repositories (EU Exit) Regulations in the most efficient and economical way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

EG 19.40.9

1The FCA will apply the approach to publicity that is outlined in EG 6, read in the light of regulation 76 of the Trade Repositories (EU Exit) Regulations.

Statement of policy in section 169(7) interviews (as implemented by the Trade Repositories (EU Exit) Regulations)

EG 19.40.10

1The Trade Repositories (EU Exit) Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Trade Repositories (EU Exit) Regulations the FCA will follow the procedures described in DEPP 7.

EG 19.41 Securities Financing Transactions Regulation

EG 19.41.1

1Supervisory and enforcement functions in respect of trade repositories under the Securities Financing Transactions Regulation were transferred from ESMA to the FCA through the SFTR (EU Exit) Regulations on IP completion day2.

EG 19.41.2

1The FCA’s approach to enforcing under the Securities Financing Transactions Regulation and the SFTR (EU Exit) Regulations will mirror our general approach to enforcing the Act, as set out in EG. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.

Conduct of investigations under the Securities Financing Transactions Regulation and the SFTR (EU Exit) Regulations

EG 19.41.3

1The SFTR (EU Exit) Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Securities Financing Transactions Regulation, the SFTR (EU Exit) Regulations and the TRATP Regulations.

EG 19.41.4

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the SFTR (EU Exit) Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the SFTR (EU Exit) Regulations is to use powers to compel the provision of information in the same way as we would during an investigation under the Act.

Decision making under the Securities Financing Transactions Regulation

EG 19.41.5

1The decision-making procedures for those decisions under the Securities Financing Transactions Regulation and SFTR (EU Exit) Regulations requiring the giving of a warning notice, decision notice or supervisory notice are dealt with within DEPP.

EG 19.41.6

1The SFTR (EU Exit) Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act, as applied by the SFTR (EU Exit) Regulations.

Imposition of penalties under SFTR (EU Exit) Regulations

EG 19.41.7

1When determining whether to take action to impose a penalty or to issue a public censure under the SFTR (EU Exit) Regulations, the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5, DEPP 6.5A, DEPP 6.5B and DEPP 6.5D.

EG 19.41.8

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the Securities Financing Transactions Regulation and the SFTR (EU Exit) Regulations to assist us to exercise our functions under the Securities Financing Transactions Regulation and the SFTR (EU Exit) Regulations in the most efficient and economical way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.

EG 19.41.9

1The FCA will apply the approach to publicity that is outlined in EG 6, read in the light of regulation 37 of the SFTR (EU Exit) Regulations.

Statement of policy in section 169(7) interviews (as implemented by the SFTR (EU Exit) Regulations)

EG 19.41.10

1The SFTR (EU Exit) Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the SFTR (EU Exit) Regulations, the FCA will follow the procedures described in DEPP 7.