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Status: You are viewing the version of the handbook as on 2005-06-30.

ENF 12.3 Factors in determining whether to issue a public censure or public statement

ENF 12.3.1G

Where a breach of the Act or of the rules has occurred, the FSA may consider that formal disciplinary action is not warranted. For example, the proactive supervision and monitoring of firms is central to promoting compliance, and some instances of non-compliance may be addressed satisfactorily by a firm's supervisors, without the need for formal disciplinary action. Alternatively, where the FSA has concerns regarding the behaviour of a firm or approved person, but has made no determination that a breach has occurred, it may issue a private warning.

ENF 12.3.2G

In more serious cases, however, the FSA will institute formal disciplinary action. The main criteria that the FSA may take into account in determining whether to take disciplinary action are listed in ENF 11.4 (Criteria for determining whether to take disciplinary action).

ENF 12.3.3G

The criteria for determining whether it is appropriate to issue a public censure or public statement rather than impose a financial penalty are similar to those for determining the level of financial penalty listed in ENF 3 (Discipline of firms and approved persons: financial penalties). The starting point is that the FSA will consider all the relevant circumstances of the case. Some particular considerations may be relevant when the FSA determines whether to impose a public censure or public statement rather than a financial penalty. 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)

    if the firm or approved person has made a profit or avoided a loss as a result of the breach or misconduct, this may be a factor in favour of a financial penalty, on the basis that a firm or approved person should not be permitted to benefit from its breach or misconduct;

  2. (2)

    if the breach or misconduct is more serious in nature or degree, this may be a factor in favour of a financial penalty, on the basis that the sanction should reflect the seriousness of the breach or misconduct; other things being equal, the more serious the breach or misconduct, the more likely the FSA is to impose a financial penalty;

  3. (3)

    if the firm or approved person has admitted the breach or misconduct and provides full and immediate co-operation to the FSA, and takes steps to ensure that consumers are fully compensated for any losses arising from the contravention, this may be a factor in favour of a public censure or statement of misconduct, rather than a financial penalty, depending upon the nature and seriousness of the breach or misconduct;

  4. (4)

    if the firm or approved person has a poor disciplinary record or compliance history (for example, where the FSA has previously brought disciplinary action resulting in adverse findings in relation to the same or similar behaviour), this may be a factor in favour of a financial penalty, on the basis that it may be particularly important to deter future cases;

  5. (5)

    the FSA's approach in similar previous cases: the FSA will seek to achieve a consistent approach to its decisions on whether to impose a penalty or issue a public statement; and

  6. (6)

    if the firm or approved person has inadequate means (excluding any manipulation or attempted manipulation of their assets) to pay the level of financial penalty which their breach or misconduct would otherwise attract, this may be a factor in favour of a lower level of penalty or a public statement. However, it would only be in an exceptional case that the FSA would be prepared to agree to impose a public statement rather than a financial penalty, if a financial penalty would otherwise be the appropriate sanction. Examples of such exceptional cases could include:

    1. (a)

      verifiable evidence that an approved person would suffer serious financial hardship if the FSA imposed a financial penalty; and

    2. (b)

      verifiable evidence that the firm would be unable to meet other regulatory requirements, particularly financial resource requirements, if the FSA imposed a financial penalty at an appropriate level.