DEC 4.3 Executive procedure for statutory notice decisions and statutory notice associated decisions

All statutory notice decisions (and statutory notice associated decisions) under executive procedures are made under authority delegated by the FSA Board. The FSA's senior executive committee may from time to time determine that particular categories of statutory notice decision (and statutory notice associated decisions) which may be made by executive procedures will be made by a senior staff committee. Alternatively, a senior staff committee may take such decisions if referred to it by FSA staff (see DEC 4.3.7 G (2)). Otherwise, such decisions will be made by an individual FSA staff member.

Section 395(2) of the Act (The FSA's procedures) requires that the FSA's procedure for the giving of statutory notices must be designed to secure that "the decision which gives rise to the obligation to give any such notice is taken by a person not directly involved in establishing the evidence on which that decision is based".

In accordance with section 395(2) of the Act,statutory notice decisions taken under executive procedures will not be taken by staff directly involved in establishing the evidence on which that decision is based, except in accordance with section 395(3) of the Act (see DEC 4.3.17 G to DEC 4.3.19 G).

If an individual FSA staff member makes a statutory notice decision (or statutory notice associated decision) the decision will be:

1. (1)

   made by an executive director of the FSA Board, or his delegate (who will be of at least the level of associate);

2. (2)

   on the recommendation of an FSA staff member of at least the level of associate; and

3. (3)

   with the benefit of legal advice from an FSA staff member of at least the level of associate.

The individual who takes a decision under executive procedures is accountable to the FSA Board directly (if an executive director) or otherwise through line management responsible for the decision concerned.

An FSA staff member who considers that a statutory notice decision (or statutory notice associated decision) should be taken above his own level is free to refer that decision to a more senior level. If an FSA staff member consults another staff member about a decision, the decision remains the independent decision of the FSA staff member who consults his colleague, unless it is agreed that the decision should instead be taken by the colleague, and the colleague has the delegated authority to do so.

If an individual responsible for a decision by executive procedures (or a more senior FSA staff member with responsibilities in relation to the decision concerned) considers that it warrants collective consideration, the individual may:

1. (1)

   take the decision himself, following consultation with other FSA staff members, as above; or

2. (2)

   refer it to a senior staff committee, which will take the decision itself.

The following decisions will be taken by an individual FSA staff member under executive procedures:

1. (1)

   the suspension of listing on the FSA's own initiative or at the request of the issuer;

2. (2)

   the suspension of trading in a financial instrument;

3. (3)

   the discontinuance of listing of securities at the issuer's request;

4. (4)

   the exercise of any of the powers in sections 87K or 87L of the Act in respect of a breach of any applicable provision;

5. (5)

   the cancellation of a person's approval as a sponsor at the sponsor's request; and

6. (6)

   the refusal of an application by an issuer for cancellation of a suspension of listing made under section 77 of the Act.

A senior staff committee, other than the FSA's senior executive committee, will consist of such FSA staff members as the FSA's senior executive committee, may from time to time determine. The FSA's senior executive committee may authorise the chairman of a senior staff committee to select its other members.1

A senior staff committee, other than the FSA's senior executive committee, is accountable for its decisions to the FSA's senior executive committee, and through it, to the FSA Board. The FSA's senior executive committee is accountable for its decisions to the FSA Board.1

A senior staff committee may operate through standing or specific sub-committees to consider particular decisions or classes of decision, for which accountability will lie through the committee. Each meeting of a senior staff committee, or sub-committee, will include:

1. (1)

   an individual with authority to act as its chairman; and

2. (2)

   at least two other members.

A senior staff committee will operate on the basis of a recommendation from an FSA staff member of at least the level of associate, and with the benefit of legal advice from an FSA staff member of at least the level of associate.

If FSA staff recommend action be taken and they consider that the decision falls within the responsibility of a senior staff committee (or sub-committee):

1. (1)

   in general, but subject to the need to act swiftly in urgent cases, the FSA staff's recommendation will go before the senior staff committee (or sub-committee);

2. (2)

   in an urgent case, if, in FSA staff's opinion, the action proposed should occur before it is practicable to convene a meeting of the senior staff committee (or sub-committee), the FSA staff's recommendation may be considered by the senior staff committee's chairman or a deputy chairman and, where possible, but subject to the need to act swiftly, one other member of the senior staff committee;

3. (3)

   in an exceptionally urgent case, if in the FSA staff's opinion:

   1. (a)

      the action should be taken before a recommendation to the chairman or a deputy chairman of the senior staff committee could be made; and

   2. (b)

      an urgent decision on the proposed action is necessary to protect the interests of consumers;

   the FSA staff's recommendation will be considered and the decision made by a member of the FSA's executive of at least director of division level.

A statutory notice given under executive procedures will identify the decision maker. A decision to give a second supervisory notice will normally be made by the same decision maker (that is, the individual or committee) who made the decision to give the first supervisory notice.

If a firm wishes to make representations in response to a warning notice or first supervisory notice, those representations will be received in accordance with DEC 4.4.

The decision maker will ensure that a record is kept of:

1. (1)

   who took the decision;

2. (2)

   any representations to the decision maker;

3. (3)

   the material considered by the decision maker;

4. (4)

   the nature of the decision;

5. (5)

   the reasons for the decision; and

6. (6)

   the dates on which the decision was taken and then communicated to the person or persons concerned.

FSA staff are required by their contract of employment to comply with a code of conduct which imposes strict rules to cover the handling of conflicts of interest which may arise from personal interests or associations. FSA staff who are subject to a conflict of interest must declare that interest to the person to whom they are immediately responsible for the decision. In the case of decisions by a senior staff committee, any conflict of interest must be declared to the chairman of the committee (or, if the person with the conflict is the chairman, to any member of the FSA's senior executive committee or, if the person with the conflict is the chairman of the FSA's senior executive committee, to the Deputy Chairman of the FSA. He will also disclose the conflict to the secretariat to the senior staff committee (or FSA's senior executive committee)). The individual to whom the conflict of interest is declared may ask another person to assist him in considering the potential conflict, and will decide whether that conflict precludes the involvement of the FSA staff member in making a decision.2

2The secretariat to the senior staff committee, or to the FSA's senior executive committee, or to the FSA Board, as appropriate, will record and document all disclosures of potential conflicts of interest and the steps taken to manage them.

Under section 395(3) of the Act, the FSA's procedure may permit a decision which gives rise to an obligation to give a supervisory notice to be taken by a person involved in establishing the evidence on which the decision is based if:

1. (1)

   the FSA considers that, in a particular case, it is necessary in order to protect the interests of consumers; and

2. (2)

   the person taking the decision is of a level of seniority laid down by the procedure.

The FSA expects to exercise the power provided by section 395(3) only in exceptional cases. This means cases in which the FSA believes action is needed to protect the interests of consumers in the face of a material threat to those interests, but in which the requirements for separation cannot be met: for example where the notice needs to take immediate effect in order to protect the interests of consumers.

The level of individual who may make such a decision is a member of the FSA's executive of at least director of division level or a member of a committee which reports directly to the FSA's senior executive committee.