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

ENF 4.5 Statutory procedure and FSA's decision making processes

Section 197 procedure and additional and supplemental procedures

ENF 4.5.1G

When the FSA uses, or proposes to use, its power of intervention to impose a requirement on an incoming firm, it is required to follow the supervisory notice procedure contained in section 197 of the Act (Procedure on exercise of power of intervention). DEC 3 (Statutory notice procedure: Supervisory notice procedure) sets out this procedure in detail and describes the content of the notices that the FSA is required to give to the firm concerned. DEC 4 (The decision maker) also deals with decision making by the RDC (by full or modified procedure) in cases where the requirement on the incoming firm would have an effect equivalent to a fundamental change to the nature of a firm's Part IV permission; and with decision making by executive procedures in other intervention cases against incoming firms.

ENF 4.5.2G

In addition, in certain cases relating to EEA firms, the FSA is required to follow the additional procedure contained in section 199 of the Act (Additional procedure for EEA firms in certain cases). Details of this procedure are set out in ENF 4.5.4 G to ENF 4.5.7 G.

ENF 4.5.3G

Section 200 of the Act (Rescission and variation of requirements) contains supplemental procedure that the FSA must follow when it is considering rescinding or varying those requirements that it has imposed on an incoming firm by exercise of the power of intervention. Details of this procedure are set out in ENF 4.5.8 G to ENF 4.5.10 G.

Section 199 additional procedure for EEA firms in certain cases

ENF 4.5.4G

The additional procedure in section 199 applies where it appears to the FSA that its power of intervention is exercisable:

  1. (1)

    in relation to an incoming EEA firm; and

  2. (2)

    in respect of the contravention of a relevant requirement.

ENF 4.5.5G

A requirement is relevant if:

  1. (1)

    it is imposed by the FSA under the Act; and

  2. (2)

    With respect to its contravention, any of the Single Market Directives provides that a procedure of the following kind applies:

    1. (a)

      the FSA must, in writing, require the firm to remedy the situation;

    2. (b)

      if the firm fails to comply with that requirement within a reasonable time, the FSA must inform the firm's Home State regulator of this and request it to:

      1. (i)

        take all appropriate measures to remedy the situation; and

      2. (ii)

        inform the FSA of the measures it proposes to take, or has taken, or the reasons why it has not taken or will not take such measures.

ENF 4.5.6G

Examples of relevant requirements are the requirements contained in COB. All of the chapters of COB apply to incoming EEA firms.1

ENF 4.5.7G

The additional procedure also differs between urgent and other cases, as follows.

  1. (1)

    Except as mentioned in (2) the FSA may not exercise its power of intervention in these cases, unless it is satisfied that:

    1. (a)

      the firm's Home State regulator has failed or refused to take appropriate measures to remedy the situation; or

    2. (b)

      the measures taken by the Home State regulator have proved inadequate for that purpose.

  2. (2)

    If the FSA decides it should, as a matter of urgency, exercise its power of intervention to protect the interests of consumers, it may exercise the power:

    1. (a)

      before complying with the procedure described in ENF 4.5.5 G (2); or

    2. (b)

      Where it has complied with that procedure, before it is satisfied as mentioned in (1).

  3. (3)

    If it exercises its power of intervention in this way, as a matter of urgency the FSA must, at the earliest opportunity, inform the firm's Home State regulator and the European Commission. If the Commission decides, under any of the Single Market Directives, that the FSA must rescind or vary any requirement imposed by it in this way, the FSA must do so.

Section 200 procedure for rescission and variation of requirements

ENF 4.5.8G

Under section 200 of the Act (Rescission and variation of requirements), the FSA may rescind or vary a requirement it imposed when exercising its power of intervention, either on its own initiative or on the application of the person subject to the requirement.

ENF 4.5.9G

The following procedure applies where the FSA on its own initiative rescinds or varies an existing requirement.

  1. (1)

    The FSA may rescind a requirement on its own initiative by giving written notice to the person concerned. The rescission or variation takes effect on the date specified in the notice.

  2. (2)

    The FSA may vary a requirement on its own initiative by giving a supervisory notice to the person concerned and following the procedure in section 197 of the Act (see ENF 4.5.1 G and DEC 3 (Statutory notice procedure: Supervisory notice procedure)).

ENF 4.5.10G

The following procedure applies where the FSA proposes to refuse an application to rescind or vary an existing requirement.

  1. (1)

    If the FSA proposes to refuse the application, it must give the applicant a warning notice.

  2. (2)

    If the FSA decides to refuse the application:

    1. (a)

      it must give the applicant a decision notice;

    2. (b)

      the firm may refer the matter to the Tribunal.

ENF 4.5.11G

DEC 2 (Statutory notice procedure: warning notice and decision notice procedure) contains a detailed statement of the FSA's procedure for deciding whether to give warning notices and decision notices.