Content Options

Content Options

View Options

You are viewing the version of the document as on 2022-01-01.

EG 7.6 2Private warnings

EG 7.6.1RP

2In certain cases, despite concerns about a person’s behaviour or evidence of a rule breach, the FCA may decide that it is not appropriate, having regard to all the circumstances of the case, to bring formal action for a financial penalty or public censure. This is consistent with the FCA's risk-based approach to enforcement. In such cases, the FCA may give a private warning to make the person aware that they came close to being subject to formal action.

EG 7.6.2RP

2Private warnings are a non-statutory tool. Fundamentally they are no different to any other FCA communication which criticises or expresses concern about a person’s conduct. But private warnings are a more serious form of reprimand than would usually be made in the course of ongoing supervisory correspondence. A private warning requires that the FCA identifies and explains its concerns about a person's conduct and/or procedures, and tells the subject of the warning that the FCA has seriously considered formal steps to impose a penalty or censure. They are primarily used by the FCA as an enforcement tool, but they may also be used by other parts of the FCA.

EG 7.6.3RP

2Typically, the FCA might give a private warning rather than take formal action where the matter giving cause for concern is minor in nature or degree, or where the person has taken full and immediate remedial action. But there can be no exhaustive list of the conduct or the circumstances which are likely to lead to a private warning rather than more serious action. The FCA will take into account all the circumstances of the case before deciding whether a private warning is appropriate. Many of the criteria identified in DEPP 6 for determining whether the FCA should take formal action for a financial penalty or public censure will also be relevant to a decision about whether to give a private warning.

EG 7.6.4RP

2Generally, the FCA would expect to use private warnings in the context of firms, approved persons and conduct rules staff1. However, the FCA may also issue private warnings in circumstances where the persons involved may not necessarily be authorised or approved. For example, private warnings may be issued in potential cases of market abuse; cases where the FCA has considered making a prohibition order or a disapplication order; or cases involving breaches of provisions imposed by or under Part VI of the Act (Official Listing).

EG 7.6.5RP

2In each case, the FCA will consider the likely impact of a private warning on the recipient and whether any risk that person poses to the statutory objectives requires the FCA to take more serious action. Equally, where the FCA gives a private warning to an approved person or conduct rules staff1, the FCA will consider whether it would be desirable and appropriate to inform the person's1 firm (or employer, if different) of the conduct giving rise to the warning and the FCA's response.

EG 7.6.6RP

2A private warning is not intended to be a determination by the FCA as to whether the recipient has breached the FCA's rules. However, private warnings, together with any comments received in response, will form part of the person's compliance history. In this sense they are no different to other FCA correspondence, but the weight the FCA attaches to a private warning is likely to be greater. They may therefore influence the FCA's decision whether to commence action for a penalty or censure in relation to future breaches. Where action is commenced in those circumstances, earlier private warnings will not be relied upon in determining whether a breach has taken place. However, if a person has previously been told about the FCA's concerns in relation to an issue, either by means of a private warning or in supervisory correspondence, then this can be an aggravating factor for the level of a penalty imposed in respect of a similar issue that is the subject of later FCA action.

EG 7.6.7RP

2Where the FCA is assessing the relevance of private warnings in determining whether to commence action for a financial penalty or a public censure, the age of a private warning will be taken into consideration. However, a long-standing private warning may still be relevant.

EG 7.6.8RP

2Private warnings may be considered cumulatively, although they relate to separate areas of a firm's or other person's business, where the concerns which gave rise to those warnings are considered to be indicative of a person's compliance culture. Similarly, private warnings issued to different subsidiaries of the same parent company may be considered cumulatively where the concerns which gave rise to those warnings relate to a common management team.