Content Options

View Options

Status: You are viewing the version of the handbook as on 2009-03-31.

REC 4.6 The section 296 power to give directions

REC 4.6.1GRP

Under section 296 of the Act (FSA's power to give directions), the FSA has the power to give directions to a recognised body to take specified steps 1in order to secure its compliance with the recognition requirements or other obligations in or under the Act or, in the case of a UK RIE, the MiFID implementing requirements. In the case of a UK RIE those steps may include granting the FSA access to the UK RIE's premises for the purposes of inspecting those premises or any documents on the premises and the suspension of the carrying on of any regulated activity by the UK RIE for the period specified in the direction1.

REC 4.6.2G

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).

REC 4.6.3GRP

The FSA is likely to exercise its power under section 296 of the Act if it considers that:

  1. (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 or, in the case of a UK RIE, the MiFID implementing requirements 1which has serious consequences;

  2. (2)

    compliance with the direction would ensure that the recognition requirements, or other obligation in or under the Act or, in the case of a UK RIE, the MiFID implementing requirements1, were satisfied; and

  3. (3)

    the recognised body is capable of complying with the direction.

REC 4.6.4GRP

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. (1)

    a serious risk of substantial losses to investors, particularly retail clients1; or

    1
  2. (2)

    a serious threat to market confidence or to the stability of the financial system; or

  3. (3)

    a serious risk of money laundering or other serious financial crime.