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ENF 2.7 The FSA's policy on investigations into unauthorised business

ENF 2.7.1G

The FSA may appoint investigators into unauthorised persons under section 168 of the Act (Appointment of persons to carry out investigations in particular cases) (see ENF 2.3.14 G (2) and ENF 2.3.14 G (3)) where it appears to it that circumstances suggest that:

  1. (1)

    a person has contravened the general prohibition in section 19 of the Act against carrying on a regulated activity without authorisation or exemption; or

  2. (2)

    a person has breached a prohibition order; or

  3. (3)

    a person has committed a specified offence, including:

    1. (a)

      Making a false claim to be authorised or exempt;

    2. (b)

      Contravening the restriction on financial promotion; and

    3. (c)

      Making a false or misleading statement to induce an investment agreement.

ENF 2.7.2G

The FSA's primary aim in using its investigation powers will be to protect the interests of consumers. The FSA's priority will be to confirm whether or not a regulated activity has been carried on in the United Kingdom by someone without authorisation or exemption, and, if so, the extent of that activity and whether other related contraventions have occurred. It will seek to assess the risk to consumers' assets and interests arising from the activity as soon as possible.

ENF 2.7.3G

The FSA may be alerted to possible contraventions or breaches by complaints from the public or firms, by referrals from other prosecuting authorities or through its own enquiries. It will assess on a case-by-case basis whether to carry out a formal investigation, after considering all the available information. Factors it will take into account are:

  1. (1)

    the elements of the suspected contravention or breach;

  2. (2)

    whether the FSA considers that the persons concerned are willing to cooperate with it; and

  3. (3)

    whether obligations of confidentiality inhibit individuals from providing information unless compelled to do so by the FSA's use of its formal powers.

ENF 2.7.4G

At an early stage in the investigation the FSA may need to consider whether to take urgent enforcement action to protect consumers. Its investigators will then use their powers to collect documentary and oral evidence for use in support of that action. Nevertheless, even when it has commenced enforcement proceedings, it may need to continue with its fact-finding investigations. For instance, the FSA may need further information to consider whether it should use any of its other statutory powers, to apply for further civil remedies or to start criminal prosecutions.

ENF 2.7.5G

The FSA will not always be the only investigating, enforcement or prosecuting authority with an interest in investigating unauthorised business. From time to time the Serious Fraud Office, the Department of Trade and Industry, the police and the prosecuting authorities (both in the United Kingdom and overseas) may have an interest in such cases.

ENF 2.7.6G

The FSA has agreed guidelines that will establish a framework for liaison and cooperation in cases where one or more of these authorities has an interest in prosecuting any aspect of a matter that the FSA is considering for investigation, investigating or considering prosecuting. These Guidelines are set out in ENF 2 Annex 1 G G.