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Status: You are viewing the version of the handbook as on 2012-01-07.

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) and (for RAPs) under regulation 3 of the RAP regulations3, the FSA has the power to give directions to a recognised body to take specified steps 1in order to secure its compliance with the recognised body requirements. In the case of a UK RIE (including one which operates an RAP) 3those 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.

3
REC 4.6.2G

The FSA must also give a direction to a RIE or RCH 3if it is directed to do so by the Treasury under section 308 of the Act (Directions by the Treasury).

3
REC 4.6.3GRP

The FSA is likely to exercise its power under section 296 of the Act or regulation 3 of the RAP regulations3 if it considers that:

  1. (1)

    there has been, or was likely to be, a failure to satisfy one or more of the recognised body requirements3 1which has serious consequences;

  2. (2)

    compliance with the direction would ensure that 1one or more of the recognised body requirements is3 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), and (for RAPs) regulation 5(7) of the RAP regulations,3 the FSA need not follow the consultation procedure set out in the rest of section 298 (see REC 4.8) 3or (for RAPs) regulation 5 of the RAP regulations, 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 UK financial system;2 or

  3. (3)

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