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Status: You are viewing the version of the handbook as on 2016-06-30.

EG 2.2 3Case selection: Firms and individuals, market abuse cases and listing matters1

EG 2.2.1

3Other than in the area of a firm's failure to satisfy the FCA's Threshold Conditions for authorisation (see paragraph 2.3.1), the selection method for cases involving firms and individuals1, market abuse and listing matters (for example, breaches of the listing, prospectus or disclosure rules) occurs at two main levels:

  1. (1)

    strategic planning; and

  2. (2)

    decisions on individual cases.

EG 2.2.2RP

3The FCA does not have a set of enforcement priorities that are distinct from the priorities of the FCA as a whole. Rather, the FCA consciously uses the enforcement tool to deliver its overall strategic priorities. The areas and issues which the FCA as an organisation regards as priorities at any particular time are therefore key in determining at a strategic level how enforcement resource should be allocated. FCA priorities will influence the use of resources in its supervisory work and as such, make it more likely that the FCA will identify possible breaches in these priority areas. Further, should evidence emerge of potential breaches, these areas are more likely to be supported by enforcement action than non-priority areas.

EG 2.2.3RP

3One way in which the FCA focuses on priority areas is through its thematic work. This work involves the FCA looking at a particular issue or set of issues across a sample of firms. Themes are, in general, selected to enable the FCA to improve its understanding of particular industry areas or to assess the validity of concerns the FCA has about risks those areas may present to the statutory objectives. Thematic work does not start with the presumption that it will ultimately lead to enforcement outcomes. But if the FCA finds significant issues, these may become the subject of enforcement investigations as they would if the FCA had discovered them in any other circumstance. Also, by definition, the fact they are in areas that are of importance to the FCA means, following the FCA's risk-based approach through, that they are proportionately more likely to result in the FCA determining that an enforcement investigation should be carried out than issues in lower priority areas.

EG 2.2.4RP

3This does not mean that the FCA will only take enforcement action in priority strategic areas. There will always be particularly serious cases where enforcement action is necessary, ad hoc cases of particular significance in a markets, consumer protection or financial crime context, or cases that the FCA thinks are necessary to achieve effective deterrence.

EG 2.2.5RP

3The combination of the priority given to certain types of misconduct over others and the FCA's risk-based approach to enforcement means that certain cases will be subject to enforcement action and others not, even where they may be similar in nature or impact. The FCA's choice as to the use of the enforcement tool is therefore a question of how the FCA uses its resources effectively and efficiently and how it ensures that it is an effective regulator.

EG 2.2.6RP

3Before it proceeds with an investigation, the FCA will satisfy itself that there are grounds to investigate under the statutory provisions that give the FCA powers to appoint investigators.

If the statutory test is met, it will decide whether to carry out an investigation after considering all the relevant circumstances. To assist its consideration of cases, the FCA has developed a set of assessment criteria. The current criteria (which are published on the Enforcement section of the FCA web site) are framed as a set of questions. They take account of the FCA's statutory objectives, its strategic/supervision priorities (see above) and other issues such as the response of the firm or individual to the issues being referred. Not all of the criteria will be relevant to every case and there may be other considerations which are not mentioned in the list but which are relevant to a particular case. The FCA's assessment will include considering whether using alternative tools is more appropriate taking into account the overall circumstances of the person or firm concerned and the wider context. Another consideration will be whether the FCA is under a Community obligation to take action on behalf of, or otherwise to provide assistance to, an authority from another EU member state.

Paragraph 2.5.1 discusses the position where other authorities may have an interest in a case.