REC 4.6 The section 296 power to give directions
Under section 296 of the Act (FSA's power to give directions), the FSA has the power to give directions to a recognised body in order to secure its compliance with the recognition requirements or other obligations in or under the Act.
The FSA must also give a direction to a recognised body if it is directed to do so by the Treasury under section 308 of the Act (Directions by the Treasury).
The FSA is likely to exercise its power under section 296 of the Act if it considers that:
- (1)
there has been, or was likely to be, a failure to satisfy the recognition requirements or there has been a failure to comply with any other obligation in or under the Act which has serious consequences;
- (2)
compliance with the direction would ensure that the recognition requirements, or other obligation in or under the Act, were satisfied; and
- (3)
the recognised body is capable of complying with the direction.
Under section 298(7) of the Act (Directions and revocation: procedure), the FSA need not follow the consultation procedure set out in the rest of section 298 (see REC 4.8), or may cut short that procedure, if it considers it essential to do so. The FSA is likely to consider it essential to cut short the procedure if, in the absence of immediate action, there would be:
- (1)
a serious risk of substantial losses to investors, particularly private customers; or
- (2)
a serious threat to market confidence or to the stability of the financial system; or
- (3)
a serious risk of money laundering or other serious financial crime.