ENF 1.1 Application

ENF 1.1.1 G 01/12/2004

The Enforcement manual contains guidance for firms, approved persons, and other persons, whether or not they are regulated by the FSA, on the use of the FSA's enforcement powers, as set out in ENF 1 Annex 1 G.

ENF 1.2 Purpose

ENF 1.2.1 G 01/04/2003

The FSA's effective and proportionate use of its enforcement powers to enforce the requirements of the Act, the rules, the Statements of Principle and other relevant legislation (for example, the Criminal Justice Act 1993, the Money Laundering Regulations 1993 and the Unfair Terms Regulations 1) play an important role in the pursuit of its regulatory objectives. For example:

(1)
in relation to the market confidence objective, the FSA's powers to bring criminal prosecutions for insider dealing and misleading statements and practices offences, and to impose financial penalties for market abuse, help to maintain confidence in the financial system;
(2)
in relation to the public awareness objective, the imposition of disciplinary measures such as public censures and public statements of misconduct show that regulatory standards are being upheld;
(3)
in relation to the protection of consumers objective, the imposition of disciplinary measures helps to deter future contraventions, ensure high standards of regulatory conduct and protect consumers; in addition, the FSA's powers to vary permission on its own initiative may be used to require a firm to take urgent remedial action to protect the interests of consumers; and
(4)
in relation to the reduction of financial crime objective, the FSA's use of its criminal prosecution powers under the Act helps to reduce financial crime; for example the prosecution of insider dealing and breaches of prescribed regulations relating to money laundering act as a deterrent.

ENF 1.2.2 G 01/04/2003

Schedule 1 to the Act (The Financial Services Authority) states that the FSA must 'maintain arrangements for enforcing the provisions of, or made under, this Act' (see paragraph 6(3) of Schedule 1). The Enforcement manual describes the FSA's policies and procedures for the exercise of the enforcement powers given to it by the Act and the Unfair Terms Regulations 1, as set out in ENF 1 Annex 1 G G. It does not include the statement of procedures required by section 395 of the Act (The FSA's procedures) relating to the issue of supervisory notices, warning notices and decision notices, which is in the Decision making manual (DEC).

ENF 1.2.2A G 01/07/2005

ENF includes material on the investigation, disciplinary and criminal prosecution powers that are available to the FSA when it is performing functions as the competent authority under Part VI of the Act (see ENF 21). The Act provides a separate statutory framework within which the FSA must operate when it acts in that capacity. Schedule 7 to the Act modifies the application of the Act in relation to the exercise of functions as competent authority under Part VI of the Act. When determining whether to exercise its powers in its capacity as competent authority for listing (for example, the powers described in ENF 21), the FSA will have regard to the matters and objectives which are applicable to the competent authority function.2

ENF 1.2.3 G 01/07/2005

In some cases, the Act expressly requires the FSA to prepare and publish statements of policy and procedures on the exercise of its enforcement powers. The Enforcement manual therefore contains statements of policy and procedures on the following matters:

(1)
sections 69 and 210 of the Act require the FSA to publish statements of policy on the imposition of financial penalties on firms and approved persons (see ENF 13);
(1A)
section 93 of the Act requires the FSA to publish a statement of its policy on the imposition of financial penalties under section 91 of the Act (see ENF 21);
(2)
section 124 of the Act requires the FSA to publish a statement of its policy on the imposition of financial penalties for market abuse (see ENF 14); and
(3)
section 169 of the Act (Investigations etc. in support of overseas regulator) requires the FSA to publish a statement of its policy on the conduct of certain interviews in response to requests from overseas regulators (see ENF 2).

ENF 1.2.4 G 01/12/2004

In addition, the Enforcement manual contains guidance in accordance with section 157(1) of the Act (Guidance) on the FSA's use of its enforcement powers in other areas. These include the FSA's power to vary Part IV permissions on its own initiative (see ENF 3), to apply to court for injunctions (see ENF 6), to obtain restitution (see ENF 9), and to prosecute for certain criminal offences (see ENF 15).

ENF 1.2.5 G 01/12/2004

For ease of reference, ENF 1 Annex 1 G contains a table of the main enforcement powers showing where they are considered in the manual.

ENF 1.2.6 G 01/04/2003

The Authorisation manual (AUTH), the Supervision manual (SUP), the Enforcement manual (ENF), and the Decision making manual (DEC) form the regulatory processes part of the Handbook:

(1)
AUTH sets out the relationships between the FSA and applicants for Part IV permission and persons wishing to exercise EEA rights, Treaty rights or UCITS Directive rights;
(2)
SUP sets out the relationship between the FSA and authorised persons (referred to in the Handbook as firms); as a general rule, material that is of continuing relevance after authorisation is in SUP;
(3)
ENF describes the FSA's enforcement powers under the Act and sets out its policies for using those powers; and
(4)
DEC is principally concerned with, and sets out, the FSA's decision making procedures for decisions that involve the issue of statutory notices. It also gives guidance on the FSA's procedures for using its powers under Part XXIV of the Act (Insolvency orders), Part XXV of the Act (Injunctions and restitution), Part XXVII of the Act (Criminal Offences) and the Unfair Terms Regulations (see DEC 1.1.3 G and DEC 4.6).1

ENF 1.3 The FSA's approach to enforcement

ENF 1.3.1 G 01/02/2004

There are a number of principles underlying the FSA's approach to the exercise of its enforcement powers:

(1)
The effectiveness of the regulatory regime depends to a significant extent on the maintenance of an open and cooperative relationship between the FSA and those whom it regulates.
(2)
The FSA will seek to exercise its enforcement powers in a manner that is transparent, proportionate and consistent with its publicly stated policies.
(3)
The FSA will seek to ensure fair treatment when exercising its enforcement powers. For example, the FSA's decision making process for regulatory enforcement cases generally gives an opportunity for both written and oral representations to be made, and also provides a facility for mediation (where settlement discussions are unlikely to lead to an agreed settlement1) in certain disciplinary cases (see DEC App 1).

ENF 1.3.2 G 01/12/2004

The FSA has a range of enforcement powers and, in any particular enforcement situation, the FSA may need to consider which power to use and whether to use one or more powers. So in any particular case, it may often be necessary to refer to a number of chapters of the Enforcement manual. For example, in market abuse cases, it may be necessary to refer to ENF 2 (Information gathering and investigation powers), ENF 6 (Injunctions), ENF 9 (Restitution), ENF 14 (Sanctions for market abuse) and ENF 15 (Prosecution of criminal offences), as well as the Code of Market Conduct (see MAR 1). Appropriate cross-references have been included in each chapter to help the reader use this manual.

ENF 1.3.3 G 01/12/2004

The FSA has a range of regulatory tools to help it meet its regulatory objectives. The powers to conduct investigations which may lead to formal disciplinary action, together with powers to take intervention action and obtain restitution, are an important part of the FSA's toolkit, but there are many other regulatory tools that the FSA can use. The requirement for authorisation of firms and approval of persons in controlled functions aims to allow only those who satisfy the necessary criteria (including honesty, competence and financial soundness) to engage in regulated activity. Supervision enables the FSA to monitor and influence the behaviour of firms and approved persons.

ENF 1.3.4 G 01/12/2004

Where a firm or other person has failed to comply with the requirements of the Act, the rules, or other relevant legislation (such as the Criminal Justice Act 1993, and the Money Laundering Regulations 1993), it may be appropriate to deal with this without the need for formal disciplinary or other enforcement action. The proactive supervision and monitoring of firms, and an open and cooperative relationship between firms and their supervisors, will, in some cases where a contravention has taken place, lead the FSA to decide against taking formal disciplinary action. However, in those cases, the FSA will expect the firm to act promptly to take the necessary remedial action agreed with its supervisors to deal with the FSA's concerns. If the firm does not do this, the FSA may take disciplinary or other enforcement action in respect of the original contravention.

ENF 1.3.5 G 01/12/2004

The FSA's enforcement powers are exercised in, and reviewed by, the criminal courts, the civil courts and the Tribunal. For example, the FSA has power to prosecute particular offences in the criminal courts, it may seek to obtain injunctions in the civil courts, and its powers to impose disciplinary sanctions are subject to referral to the Tribunal.

ENF 1.4 The structure of the Enforcement manual

The Enforcement manual

ENF 1.4.1 G 01/12/2004

ENF 2 (Information gathering and investigation powers) outlines the FSA's information gathering and investigation powers under the Act (including its power to conduct investigations to assist overseas authorities), and its approach to the use of those powers.

ENF 1.4.2 G 01/12/2004

ENF 3 (Variation of Part IV permission on the FSA's own initiative) outlines the FSA's powers, policies and procedures for exercising its own-initiative powers to impose limitations or requirements on a firm's permitted business.

ENF 1.4.3 G 01/12/2004

ENF 4 (Intervention against incoming firms) is concerned with the FSA's power to intervene against incoming EEA firms and incoming Treaty firms and the FSA's policy for exercising that power.

ENF 1.4.4 G 01/12/2004

ENF 5 (Cancellation of permission) outlines the FSA's powers to cancel a firm's permission, the procedures for exercising those powers and the FSA's approach to their exercise.

ENF 1.4.5 G 01/12/2004

ENF 6 (Injunctions) describes the FSA's powers to apply to court for injunctions, and the FSA's approach to using those powers.

ENF 1.4.6 G 01/12/2004

ENF 7 (Withdrawal of approval) describes the FSA's power to withdraw approval from approved persons, the FSA's procedure and approach in relation to the exercise of this power, other powers that may be relevant when the FSA considers the exercise of the withdrawal power, and the effect of the FSA's decision to withdraw approval.

ENF 1.4.7 G 01/12/2004

ENF 8 (Prohibition of individuals) outlines the FSA's power to make a prohibition order, the policy and procedure for exercising that power, the effect of the decision to make a prohibition order, and the FSA's policy in relation to applications by individuals to have a prohibition order varied or revoked.

ENF 1.4.8 G 01/12/2004

ENF 9 (Restitution and redress) outlines the FSA's power to apply to the court for an order for restitution, the FSA's administrative power to require restitution, the FSA's policy concerning the use of its powers to obtain restitution, and the way in which the court or the FSA will determine the amount of restitution.

ENF 1.4.9 G 01/12/2004

ENF 10 (Insolvency proceedings and orders against debt avoidance) outlines the FSA's powers to seek insolvency orders from the court, the exercise of the FSA's rights to be involved in insolvency regimes concerning firms and unauthorised persons, and the policies in those areas.

ENF 1.4.10 G 01/12/2004

ENF 11 (Discipline of firms and approved persons: the FSA's general approach) explains the FSA's policy on private warnings, the criteria which the FSA will use when it decides whether to take disciplinary action against firms and approved persons; its enforcement policy relating to approved persons; the enforcement of the Principles; guidance on the standard of reasonable care required by some rules; and the FSA's approach where disciplinary action may also be taken by other UK or overseas authorities.

ENF 1.4.11 G 01/12/2004

ENF 12 (Discipline of firms and approved persons: public censures and public statements) describes the FSA's powers to impose public censures and public statements and its approach to the exercise of those powers.

ENF 1.4.12 G 01/12/2004

ENF 13 (Discipline of firms and approved persons: financial penalties) describes the FSA's powers to impose financial penalties (except those relating to market abuse), and the FSA's policy on the exercise of those powers. In particular, it contains a list of some of the factors which the FSA may take into account when it decides the level of a financial penalty.

ENF 1.4.13 G 01/12/2004

ENF 14 (Sanctions for market abuse) describes the FSA's powers to impose financial penalties for market abuse, and contains a statement of policy with a non-exhaustive list of some of the factors which the FSA may take into account when it decides the level of a financial penalty. The chapter also refers to the FSA's power to publish a statement that a person has engaged in market abuse. It also considers the FSA's approach to market abuse cases where there may have been a breach of the Principles, and the FSA's approach to market abuse cases where other regulatory authorities may also be involved.

ENF 1.4.14 G 01/12/2004

ENF 15 (Prosecution of criminal offences) sets out the FSA's policy on the use of its prosecution powers under sections 401 (Proceedings for offences) and 402 (Power of the FSA to institute proceedings for certain other offences) of the Act.

ENF 1.4.15 G 01/12/2004

ENF 16 (Collective investment schemes) sets out the FSA's policies and procedures on the use of its enforcement powers in relation to AUTs, ICVCs, and recognised schemes.

ENF 1.4.16 G 01/12/2004

ENF 17 (Disqualification of auditors and actuaries) describes the FSA's policy on its power to disqualify an auditor or actuary from acting as an auditor or actuary of a firm, where he has failed to comply with a duty imposed on him under the Act.

ENF 1.4.17 G 01/12/2004

ENF 18 (Disapplication orders against members of the professions) describes the FSA's policy on its power to make an order disapplying members of the professions' exemption from the general prohibition on conducting regulated activities without authorisation.

ENF 1.4.18 G 21/08/2002

1 ENF 19 (Directions against incoming ECA providers) describes the FSA's policy on its power to make a direction against an incoming ECA provider.

ENF 1.4.19 G 01/07/2005

ENF 20 (Unfair terms in consumer contracts) describes the FSA's policy on how it will use its powers under the Unfair Terms Regulations.2

ENF 1.4.20 G 01/07/2005

ENF 21 (Official listing: investigation and discipline powers) describes the FSA's policy on how it will use its investigation and discipline powers relating to official listing cases.2

ENF 1.5 Using the Enforcement manual

ENF 1.5.1 G 21/08/2002

(1)
Since most of1 the FSA's enforcement powers are derived from the Act, the manual contains a large number of references to the Act. In some instances, the manual quotes the Act directly (this is shown in the text by quotation marks) although, where possible, it uses Handbook definitions in place of the actual wordings of the Act. In other cases, where reproducing the entire statutory provision would need a lengthy quotation, or considerable further explanation, the relevant provision of the Act has been summarised. So, users of the manual should refer to the Act as well as to the manual where necessary.
(2)
In the event of any discrepancy between the manual and the Act, the provisions of the Act prevail.
(3)
It is a person's responsibility to ensure that his actions comply with the Act at all times, and to seek professional advice where necessary.

ENF 1 Annex 1 Table of powers referred to in the Enforcement manual

G 01/07/2005

This table gives the main location in the Enforcement manual where guidance appears on those powers referred to in the Act , in secondary legislation made under the Act, or the Unfair Terms Regulations and in other legislation listed below. In many instances the powers will be referred to in other locations.2 1

SUBJECT		PART AND SECTION OF THE ACT	ENFORCEMENT MANUAL LOCATION
Variation and cancellation of permission and withdrawal of authorisation
	Duty to withdraw authorisation	Part III, s 33	Cancellation of Part IV permission on the FSA's own initiative
	Variation and cancellation on the FSA's'own initiative	Part IV, s 45	Variation of Part IV permission on the FSA's own initiative (Variation), Cancellation of Part IV permission on the FSA's own initiative (Cancellation)
	Variation on acquisition of control	Part IV, s 46	Variation of Part IV permission on the FSA's own initiative
	Exercise of powers in support of an overseas regulator	Part IV, s 47	Variation of Part IV permission on the FSA's own initiative (Variation), Cancellation of Part IV permission on the FSA's own initiative (Cancellation)
	Prohibitions and restrictions	Part IV, s 48	ENF 3.2.10 G
Prohibition of individuals
	Power to make a prohibition order	Part V, s.56	ENF 8
Withdrawal of Approval
	Power to withdraw approval	Part V, s 63	ENF 7
Disciplinary Powers against Approved persons
	Public statements of misconduct	Part V, s 66	ENF 11 and ENF 12
	Financial penalties	Part V, s 66	ENF 11 and ENF 13
Disciplinary Powers in official listing cases
	3Public censure or statement where an issuer or person fails to comply with his obligations under Part VI of the Act, a provision contained in prospectus rules or any other provision made in accordance with the Prospectus Directive	Part VI, s.87M	ENF 21
	3Cancellation of sponsor's approval	Part VI, s.88	ENF 21
	3Public censure of sponsor	Part VI, s.89	ENF 21
	3Penalties for breach of Part 6 rules	Part VI, s.91	ENF 21
Penalties for Market abuse
	Power to impose penalties	Part VIII, s 123	ENF 14
	Power to publish statement	Part VIII, s 123	ENF 14
	Power to request court to impose penalties	Part VIII, s 129	ENF 14
Information Gathering and Investigation powers
	Power to require information	Part XI, s 165	ENF 2.3.2 G - ENF 2.3.7 G
	Power to require reports	Part XI, s 166	ENF 2.3.8 G - ENF 2.3.11 G
	Power to appoint persons to carry out general investigations	Part XI, s 167	ENF 2.3.12 G - ENF 2.3.13 G
	Power to appoint persons to carry out investigations in particular cases	Part XI, s 168	ENF 2.3.14 G - ENF 2.3.15 G
	Investigations etc in support of an overseas regulator	Part XI, s 169	ENF 2.3.16 G -ENF 2.3.17 G and ENF 2.4.10 G - ENF 2.4.12 G
	Powers of investigators appointed under s 167	Part XI, s 171	ENF 2.4.2 G - ENF 2.4.5 G and ENF 2.4.10 G - ENF 2.4.12 G
	Additional powers of investigators appointed as a result of s 168(1) or (4)	Part XI, s 172	ENF 2.4.6 G - ENF 2.4.7 G and ENF 2.4.10 G - ENF 2.4.12 G
	Powers of investigators appointed as a result of s 168(2)	Part XI, s 173	ENF 2.4.8 G and ENF 2.4.10 G - ENF 2.4.12 G
	Information and documents: supplemental provisions	Part XI, s 175	ENF 2.4.10 G - ENF 2.4.12 G
	Entry of premises under warrant	Part XI, s 176	ENF 2.15.1 G - ENF 2.15.4 G
	3Investigation powers in official listing cases	Part VI, s.97	ENF 21
	Investigation powers in relation to collective investment schemes	Part XVII, s 284	ENF 2.3.18 G - ENF 2.3.21 G and ENF 2.4.13 G
Intervention against Incoming Firms
	General grounds on which power of intervention is exercisable	Part XIII, s 194	ENF 4.3
	Exercise of powers in support of an overseas regulator	Part XIII, s 195	ENF 4.3.5 G
	Power of intervention	Part XIII, s 196	ENF 4
	Power to apply to court for injunctions in respect of certain overseas insurance companies	Part XIII, s 198	ENF 6.8
Disciplinary Powers against firms
	Public censure	Part XIV, s 205	ENF 12
	Financial penalties	Part XIV, s 206	ENF 13
Authorised unit trusts
	Revocation of authorisation order other than by consent	Part XVII, s 254	ENF 16.2.3 G -ENF 16.2.4 G and ENF 16.2.10 G - ENF 16.2.14 G
	Power to give directions	Part XVII, s 257	ENF 16.2.5 G - ENF 16.2.7 G andENF 16.2.10 G - ENF 16.2.14 G
	Applications to the court	Part XVII, s 258	ENF 16.2.8 G - ENF 16.2.14 G
Recognised schemes
	Power to suspend promotion of an EEA scheme	Part XVII, s 267	ENF 16.4.2 G - ENF 16.4.4 G
	Revocation of recognition of s 270 schemes (designated country/territory schemes) and s 272 schemes(individually recognised schemes)	Part XVII, s 279	ENF 16.4.5 G and ENF 16.4.7 G - ENF 16.4.8 G
	Directions in relation to s 270 and s 272 schemes	Part XVII, s 281	ENF 16.4.6 G - ENF 16.4.8 G
Members of designated professional bodies
	Power to make disapplication orders	Part XX, s 329	ENF 18
Disqualification of auditors and actuaries
	Disqualification of auditor of authorised unit trust	Part XVII, s 249	ENF 17
	Disqualification of auditors and actuaries of authorised persons	Part XXII, s 345	ENF 17
Insolvency proceedings and orders against debt avoidance
	Company voluntary arrangements: power to participate in proceedings:	Part XXIV, s 356	ENF 10.7 - ENF 10.8
	Individual voluntary arrangements: power to participate in proceedings:	Part XXIV, s 357	ENF 10.7 - ENF 10.8
	Administration orders: power to present petitions	Part XXIV, s 359	ENF 10.5.1 G - ENF 10.5.4 G
	Administration orders: power to participate in proceedings	Part XXIV, s 362	ENF 10.11.2 G - ENF 10.11.6 G and ENF 10.13
	Receivership: power to participate in proceedings	Part XXIV, s 363	ENF 10.11.15 G - ENF 10.11.20 G
	Voluntary winding up: power to participate in proceedings	Part XXIV, s 365	ENF 10.5.9 G - ENF 10.5.13 G and ENF 10.11.13 G - ENF 10.11.14 G
	Winding-up by the court: power to present petitions	Part XXIV, s 367	ENF 10.5.5 G - ENF 10.5.8 G
	Winding up by the court: power to participate in proceedings	Part XXIV, s 371	ENF 10.11.9 G - ENF 10.11.12 G and ENF 10.13
	Bankruptcy petitions: power to present petitions	Part XXIV, s 372	ENF 10.5.14 G - ENF 10.5.17 G andENF 10.6.12 G - ENF 10.6.14 G
	Bankruptcy: power to participate in proceedings	Part XXIV, s 374	ENF 10.11.22 G - ENF 10.11.23 G and ENF 10.13
	Provisions against debt avoidance: right to apply for an order	Part XXIV, s 375	ENF 10.9 and ENF 10.10
Injunctions
	Power to apply to court for injunctions in respect of certain overseas insurance companies	Part XIII, s 198	ENF 6.8
	Injunctions for breach of a relevant requirement	Part XXV, s 380	ENF 6.3 and ENF 6.5 - ENF 6.6
	Injunctions in cases of market abuse	Part XXV, s 381	ENF 6.4 and ENF 6.5 - ENF 6.6
Restitution
	Power to apply to court for a restitution order	Part XXV, s 382	ENF 9
	Restitution orders in cases of market abuse	Part XXV, s 383	ENF 9
	Power to require restitution	Part XXV, s 384	ENF 9
Prosecution of Criminal Offences
	Power to prosecute offences under the Act and subordinate legislation	Part XXVII, s 401	ENF 15
	Power to prosecute other offences	Part XXVII, s 402	ENF 15
1 Directions against incoming ECA provider
	1Power to make a direction against an incoming ECA provider	ECD Regulations	ENF 19
2 Unfair Terms Regulations
	2Power to seek injunctions under the Unfair Terms Regulations	N/A	ENF 20 (Unfair terms in consumer contracts)

The Enforcement manual does not contain guidance inter alia, on the following:
	sections 77 and 78 Discontinuance and suspension of listing
	3
	sections 297 and 298 Revoking recognition (see REC)
	section 348 Restrictions on disclosure of confidential information
	section 395 Procedures for the issue of supervisory notices and decision notices (See DEC)
	section 404 Schemes for reviewing past business
	Schedule 1, Part III, paragraph 17 Fees

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