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EG App 3.1 The FCA

EG App 3.1.1

3The FCA is the single statutory regulator for all financial business in the UK. Its strategic objective under the Financial Services and Markets Act 2000 (the 2000 Act) is to ensure that the relevant markets function well. The FCA's operational objectives are:

  • securing an appropriate degree of protection for consumers;
  • protecting and enhancing the integrity of the UK financial system; and
  • promoting effective competition in the interests of consumers in the markets.

(Note: The 2000 Act repealed and replaced various enactments which conferred powers and functions on the FCA and other regulators whose functions are now carried out by the FCA. Most notable in this context are the Financial Services Act 1986 and the Banking Act 1987. Transitional provisions under the 2000 Act permit the FCA to continue to investigate and bring proceedings for offences under the old legislation. Details of these transitional provisions are not set out in these guidelines)

EG App 3.1.2

3The FCA's regulatory objectives as the competent authority under Part VI of the Act are:

  • the protection of investors;
  • access to capital; and
  • investor confidence.

EG App 3.1.3

3Under the 2000 Act the FCA has powers to investigate concerns including:

  • regulatory concerns about authorised firms and individuals employed by them;
  • suspected contraventions of the Market Abuse Regulation or any directly applicable EU regulation made under the Market Abuse Regulation or for contraventions of the auction regulation2;

    2[Note: see Regulation 6 and Schedule 1 to the RAP Regulations for powers in relation to contraventions of the auction regulation]

  • suspected misleading statements and practices under s.397 of the 2000 Act and Part 7 of the Financial Services Act 2012;
  • suspected insider dealing under of Part V of the Criminal Justice Act 1993;
  • suspected contraventions of the general prohibition under s.19 of the 2000 Act and related offences;
  • suspected offences under various other provisions of the 2000 Act (see below);
  • suspected breaches of Part VI of the Act, of Part 6 rules or the prospectus rules or a provision otherwise made in accordance with the Prospectus Directive.

The FCA's powers of information gathering and investigation are set out in Part XI of the 2000 Act and in s.97 in relation to its Part VI functions.

EG App 3.1.4

3The FCA has the power to take the following enforcement action:

  • discipline authorised firms under Part XIV of the 2000 Act and approved persons and other individuals1 under s.66 of the 2000 Act;
  • impose penalties on persons that perform controlled functions without approval under s.63A of the 2000 Act;
  • impose civil penalties2 under s.123 of the 2000 Act;

    [Note: see Regulation 6 and Schedule 1 to the RAP Regulations for the application of this power and those below to contraventions of the auction regulation]

  • 2temporarily prohibit an individual from exercising management functions in MiFID investment firms or from dealing in financial instruments or emissions auction products on their own account or on the account of a third party, under s.123A(2) of the 2000 Act;
  • 2temporarily prohibit an individual from making a bid, on his or her own account or the account of a third party, directly or indirectly, at an auction conducted by a recognised auction platform under s.123A(2) of the 2000 Act;
  • 2permanently prohibit an individual from exercising management functions in MiFID investment firms under s.123A(3) of the 2000 Act;
  • 2suspend the permission of an authorised person or impose limitations or other restrictions in relation to the carrying on of a regulated activity by an authorised person under s.123B of the 2000 Act;
  • prohibit an individual from being employed in connection with a regulated activity, under s.56 of the 2000 Act;
  • apply to Court for injunctions (or interdicts) and other orders against persons contravening relevant requirements (under s.380 of the 2000 Act) or engaging in market abuse (under s.381 of the 2000 Act);
  • petition the court for the winding up or administration of companies, and the bankruptcy of individuals, carrying on regulated activities;
  • apply to the court under ss.382 and 383 of the 2000 Act for restitution orders against persons contravening relevant requirements or persons engaged in market abuse;
  • require restitution under s.384 of the 2000 Act of profits which have accrued to authorised persons contravening relevant requirements or persons engaged in market abuse, or of losses which have been suffered by others as a result of those breaches;
  • (except in Scotland) prosecute certain offences, including under the Money Laundering Regulations 2007, the Transfer of Funds (Information on the Payer) Regulations 2007, Part V Criminal Justice Act 1993 (insider dealing), Part 7 of the Financial Services Act 2012 and various offences under the 2000 Act including (Note: The FCA may also prosecute any other offences where to do so would be consistent with meeting any of its statutory objectives):
    • carrying on regulated activity without authorisation or exemption, under s.23;

    • making false claims to be authorised or exempt, under s.24;

    • promoting investment activity without authorisation, under s.25;

    • breaching a prohibition order, under s.56;

    • failing to co-operate with or giving false information to FCA appointed investigators, under s.177;

    • failing to comply with provisions about influence over authorised persons, under s.191;

    • making misleading statements and engaging in misleading practices, under s.397;

    • misleading the FCA, under s.398;

    • various offences in relation to the FCA's Part VI function;

  • Fine, issue public censures, suspend or cancel listing for breaches of the Listing Rules by an issuer; and

  • Issue public censures or cancel a sponsor's approval.