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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(Note: The 2000 Act repealed and replaced various enactments which conferred powers and functions on the FCA and other regulators whose functions are now carried out by the FCA.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'sregulatory 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:

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.

EG App 3.2 2BIS

EG App 3.2.1

1The Secretary of State for Business, Innovation and Skills exercises concurrently with the FCA those powers and functions marked with an asterisk in App 3.1.3 above. The investigation functions are undertaken by Companies Investigation Branch (CIB) and the prosecution functions by the Legal Services Directorate.

EG App 3.2.2

1The principal activities of CIB are, however, the investigations into the conduct of companies under the Companies Acts. These are fact-finding investigations but may lead to follow-up action by CIB such as petitioning for the winding up of a company, disqualification of directors of the company or referring the matter to the Solicitors Office for prosecution. CIB may also disclose information to other prosecution or regulatory authorities to enable them to take appropriate action under their own powers and functions. Such disclosure is, however, strictly controlled under a gateway disclosure regime.

EG App 3.2.3

1The Solicitors Office advises on investigation work carried out by CIB and undertakes criminal investigations and prosecutions in respect of matters referred to it by CIB, the Insolvency Service or other directorates of BIS or its agencies.

EG App 3.3 1SFO

EG App 3.3.1

1The aim of the SFO is to contribute to:

  • reducing fraud and the cost of fraud;
  • the delivery of justice and the rule of law;
  • maintaining confidence in the UK's business and financial institutions.

EG App 3.3.2

1Under the Criminal Justice Act 1987 the Director of the SFO may investigate any suspected offence which appears on reasonable grounds to involve serious or complex fraud and may also conduct, or take over the conduct of, the prosecution of any such offence. The SFO may investigate in conjunction with any other person with whom the Director thinks it is proper to do so; that includes a police force (or the FCA or any other regulator). The criteria used by the SFO for deciding whether a case is suitable for it to deal with are set out in App 3.3.3.

EG App 3.3.3

1The key criterion should be that the suspected fraud is such that the direction of the investigation should be in the hands of those who would be responsible for any prosecution.

The factors that are taken into account include:

  • whether the amount involved is at least £1 million (this is simply an objective and recognisable signpost of seriousness and likely public concern rather than the main indicator of suitability);
  • whether the case is likely to give rise to national publicity and widespread public concern. That includes those involving government bodies, public bodies, the governments of other countries and commercial cases of public interest;
  • whether the case requires highly specialist knowledge of, for example, stock exchange practices or regulated markets;
  • whether there is a significant international dimension;
  • whether legal, accountancy and investigative skills need to be brought together; and
  • whether the case appears to be complex and one in which the use of Section 2 powers might be appropriate.

EG App 3.4 1CPS

EG App 3.4.1

1The CPS has responsibility for taking over the conduct of all criminal proceedings instituted by the police in England and Wales. The CPS may advise the police in respect of criminal offences. The CPS prosecutes all kinds of criminal offences, including fraud. Fraud cases may be prosecuted by local CPS offices but the most serious and complex fraud cases will be prosecuted centrally.

EG App 3.5 1ACPO and ACPOS

EG App 3.5.1

1ACPO represents the police forces of England, Wales, and Northern Ireland. ACPO represents the police forces of Scotland.

EG App 3.6 COPFS

EG App 3.6.1

1The investigation and prosecution of crime in Scotland is the responsibility of the Lord Advocate, who is the head of the COPFS, which comprises Procurators Fiscal and their Deputes, who are answerable to the Lord Advocate. The Procurator Fiscal is the sole public prosecutor in Scotland, prosecuting cases reported not only by the police but all regulatory departments and agencies. All prosecutions before a jury, both in the High Court of Justiciary and in the Sheriff Court, run in the name of the Lord Advocate; all other prosecutions run in the name of the local Procurator Fiscal. The Head Office of the Procurator Fiscal Service is the Crown Office and the Unit within the Crown Office which deals with serious and complex fraud cases and with the investigation of cases of interest or concern to the Financial Services Authority is the National Casework Division: the remit of this Unit is directly comparable to that of the Serious Fraud Office.

EG App 3.7 1The PPS

EG App 3.7.1

1The PPS is responsible for the prosecution of all offences on indictment in Northern Ireland, other than offences prosecuted by the Serious Fraud Office. The PPS is also responsible for the prosecution of certain summary offences, including offences reported to it by any government department.