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ENF 11.6 Discipline for breaches of Principles for Businesses

ENF 11.6.1G

The Principles are set out in PRIN 2.1.1 R. The Principles are a general statement of the fundamental obligations of firms under the regulatory system. The Principles derive their authority from the FSA's rule-making powers set out in section 138 of the Act (General rule-making power). A breach of a Principle will make a firm liable to disciplinary action.

ENF 11.6.2G

In determining whether a Principle has been broken, it is necessary to look to the standard of conduct required by the Principle in question. Under each of the Principles, the onus will be on the FSA to show that a firm has been at fault in some way. This requirement will differ depending upon the Principle: for example, under Principle 1, the FSA must show that a firm has failed to conduct its business with integrity; under Principle 2, the FSA must prove that the firm has failed to Act with due skill, care and diligence in the conduct of its business.

ENF 11.6.3G

In certain cases it may be appropriate to discipline a firm on the basis of the Principles alone. Examples include the following:

  1. (1)

    where there is no detailed rule which prohibits the behaviour in question, but the behaviour clearly contravenes a Principle;

  2. (2)

    where a firm has committed a number of breaches of detailed rules which individually may not merit disciplinary action, but the cumulative effect of which indicates the breach of a Principle.