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ENF 11.4 Criteria for determining whether to take disciplinary action

ENF 11.4.1G

In determining whether to take disciplinary action in respect of conduct appearing to the FSA to be a breach, the FSA will consider the full circumstances of each case. A number of factors may be relevant for this purpose. The following list is not exhaustive: not all of these factors may be relevant in a particular case, and there may be other factors that are relevant.

  1. (1)

    The nature and seriousness of the suspected breach

    1. (a)

      whether the breach was deliberate or reckless;

    2. (b)

      the duration and frequency of the breach (including, in relation to a firm, when the breach was identified by those exercising significant influence functions in the firm);

    3. (c)

      the amount of any benefit gained or loss avoided as a result of the breach;

    4. (d)

      whether the breach reveals serious or systemic weaknesses of the management systems or internal controls relating to all or part of a firm's business;

    5. (e)

      the impact of the breach on the orderliness of financial markets, including whether public confidence in those markets has been damaged;

    6. (f)

      the loss or risk of loss caused to consumers or other market users;

    7. (g)

      the nature and extent of any financial crime facilitated, occasioned or otherwise attributable to the breach; and

    8. (h)

      whether there are a number of smaller issues, which individually may not justify disciplinary action, but which do so when taken collectively.

  2. (2)

    The conduct of the firm or the approved person after the breach

    1. (a)

      how quickly, effectively and completely the firm or approved person brought the breach to the attentions of the FSA or another relevant regulatory authority;

    2. (b)

      the degree of co-operation the firm or approved person showed during the investigation of the breach;

    3. (c)

      any remedial steps the firm or approved person has taken since the breach was identified, including: identifying whether consumers have suffered loss and compensating them; taking disciplinary action against staff involved (where appropriate); addressing any systemic failures; and taking action designed to ensure that similar problems do not arise in future; and

    4. (d)

      the likelihood that the same type of contravention (whether on the part of the firm or approved person concerned or others) will recur if no disciplinary action is taken.

  3. (3)

    The previous regulatory record of the firm or approved person

    1. (a)

      whether the FSA (or any previous regulator) has taken any previous disciplinary action resulting in adverse findings against the firm or approved person;

    2. (b)

      whether the firm or approved person has previously given any undertakings to the FSA (or any previous regulator) not to do a particular actor engage in particular behaviour;

    3. (c)

      whether the FSA (or any previous regulator) has previously taken protective action in respect of a firm, using its own initiative powers, by means of a variation of a Part IV permission (see ENF 3) or otherwise, or has previously requested the firm to take remedial action, and the extent to which such action has been taken; and

    4. (d)

      the general compliance history of the firm or approved person, such as previous private warnings or the type of correspondence referred to in ENF 11.3.9 G.

  4. (4)

    Guidance given by the FSA

    The FSA will take into account whether any guidance has been issued relating to the behaviour in question and if so the extent to which the firm or approved person has sought to follow that guidance: see the Reader's Guide part of the Handbook.

  5. (5)

    Action taken by the FSA in previous similar cases

    The FSA will take account of action which it has taken previously in cases where the breach has been the same or similar.

  6. (6)

    Action taken by other regulatory authorities

    Where other regulatory authorities propose to take action in respect of the breach which is under consideration by the FSA, or one similar to it, the FSA will consider whether their action would be adequate to address the FSA's concerns, or whether it would be appropriate for the FSA to take its own action (see ENF 11.8).