This section sets out the allocation of decision making between the RDC and executive procedures for decisions which:

1. (1)

   give rise to an obligation to give a statutory notice; or

2. (2)

   are associated with statutory notice decisions ("statutory notice associated decisions").

Statutory notice associated decisions include decisions:

1. (1)

   to set or extend the period for making representations (see DEC 4.4);

2. (2)

   whether a copy of the statutory notice needs to be given to any third party and the period for the third party to make representations;

3. (3)

   to refuse access to FSA material; and

4. (4)

   as to the information it is appropriate to publish about the matter to which a final notice, or a supervisory notice which has already taken effect, relates.

FSA staff responsible for preparing and recommending action in individual cases will allocate cases to the RDC (by full or modified procedures) or to executive procedures in accordance with DEC 4.1.4 G and DEC 4.1.6 G.

The RDC has responsibility for statutory notice decisions and statutory notice associated decisions if the FSA proposes or takes any of the following actions:

1. (1)

   to impose a limitation or a requirement which was not applied for, or specify a narrower description of regulated activity than that applied for, on the grant of a Part IV permission;

2. (2)

   to restrict a Part IV permission on the FSA's own initiative (by removing a regulated activity, by imposing a limitation or requirement or by specifying a narrower description of regulated activity) in a way that would make a fundamental change (see DEC 4.1.5 G) to the nature of the Part IV permission held (whether indefinitely, or for a limited period);

3. (3)

   to refuse an application to vary a Part IV permission, or to restrict a Part IV permission on the grant of a variation (by imposing a limitation or requirement which was not applied for or by specifying a narrower description of regulated activity than that applied for), in a way that would make a fundamental change (see DEC 4.1.5 G) to the nature of the Part IV permission that would have been held had the application been granted in full (whether indefinitely, or for a limited period);

4. (4)

   to refuse an application for a Part IV permission, to refuse an application to cancel a Part IV permission or to cancel a Part IV permission on the FSA's own initiative;

5. (4A)

   1to refuse an application for, or to revoke, a small e-money issuer certificate (see ELM 8 (Small e-money issuers));

6. (5)

   to refuse approved person status, or withdraw it under section 63 of the Act (Withdrawal of approval);

7. (6)

   to make a prohibition order in relation to any person, or refuse an application to vary or revoke such an order;

8. (7)

   to impose a requirement on an incoming firm with an effect equivalent to making a fundamental change (see DEC 4.1.5 G) to the nature of a permission, or to refuse an application to vary or rescind such a requirement;

9. (8)

   to exercise the FSA's powers to impose a financial penalty or public censure on any person, or to make a restitution order against any person;

10. (9)

    to exercise any power of the FSA relating to a regulated collective investment scheme, other than to:

    1. (a)

       refuse an application for an authorisation order (but see (10)); or

    2. (b)

       refuse an application for recognition of a collective investment scheme under section 270 (Schemes authorised in designated countries or territories) or 272 (Individually recognised overseas schemes) of the Act; or

    3. (c)

       object to a notice of intention to invite persons to participate in a collective investment scheme constituted in another EEA State; or

    4. (d)

       refuse approval of changes to an AUT or ICVC;

11. (10)

    to refuse an application for an authorisation order, if the applicant is not the operator of an existing AUT or ICVC;

12. (11)

    to impose a requirement on a former underwriting member of Lloyd's or refuse an application to vary or rescind such a requirement;

13. (12)

    to make an order disapplying the exemption in section 327(1) of the Act (Exemption from the general prohibition) in relation to a professional firm to the extent specified in the order, or refuse an application to vary or revoke such an order;

14. (13)

    to disqualify an auditor or actuary;

15. (14)

    to refuse to give a consent notice to a UK firm wishing to establish a branch under an EEA right;

16. (15)

    2to give a direction under any of the following sections of the Building Societies Act 1986:

    1. (a)

       section 36(3), (5), (6), (7) or (10) (power to direct restructuring of business or submission of resolutions for a transfer of society's business to a company when society is failing to comply with principal purpose or the lending or funding nature limits);

    2. (b)

       section 42B(1) (power to direct transfers of engagements or business), other than a direction where the giving of the direction and its terms have been agreed with the society concerned;

17. (16)

    2to issue a prohibition order under section 36A of the Building Societies Act 1986;

18. (17)

    2to determine the appropriate Part IV permission for the successor society on an amalgamation:

    1. (a)

       under section 93 of the Building Societies Act 1986 between building societies each of whom has a Part IV permission to accept deposits; or

    2. (b)

       under section 85 of the Friendly Societies Act 1992 between friendly societies each of whom has a Part IV permission;

    in a case where it has not been possible to agree the terms of the proposed permission with the successor society;

19. (18)

    2to give a direction under any of the following sections of the Friendly Societies Act 1992:

    1. (a)

       sections 54 and 55 (power to direct a society to refrain from taking steps where certain activities have become disproportionate);

    2. (b)

       section 90 (power to direct a transfer of engagements);

       5
20. (19)

    not to include, or to remove, an appointed representative from the Register, or to refuse an application to revoke such a determination;54

    5
21. (20)

    to refuse an application for listing of securities;

22. (21)

    to discontinue the listing of securities on the FSA's own initiative;

23. (22)

    to publish a statement censuring an issuer of transferable securities, a person offering transferable securities to the public or a person requesting the admission of transferable securities to trading on a regulated market;

24. (23)

    to refuse an application for approval as a sponsor;

25. (24)

    to cancel a person's approval as a sponsor on the FSA's own initiative;

26. (25)

    to publish a statement censuring a sponsor; and

27. (26)

    to impose a financial penalty or to issue a statement censuring a person for breach of any requirement set out in LR.

In DEC 4.1.4 G(2), (3) and (7), making a fundamental change to the nature of a permission means:

1. (1)

   removing a type of activity or investment from the firm's permission; or

2. (2)

   refusing an application to include a type of activity or investment; or

3. (3)

   restricting a firm from taking on new business, dealing with a particular category of client or handling client money by imposing a limitation or requirement, or refusing an application to vary or cancel such a limitation or requirement; or

4. (4)

   imposing or varying an assets requirement (as defined in section 48(3) of the Act (Prohibitions and restrictions)), or refusing an application to vary or cancel such a requirement.

Statutory notice decisions and statutory noticeassociated decisions which are not taken by the RDC, will be taken under executive procedures.

Examples of matters decided by the RDC include:

1. (1)

   refusing an application to vary a Part IV permission to carry on insurance business or to accept deposits for the first time; in these cases, the firm will normally have been required to complete parts of the application pack (SUP 6.4.14 G);

2. (2)

   refusing an application to vary a Part IV permission to carry on regulated activities with private customers for the first time;

3. (3)

   refusing an application to vary a Part IV permission to remove a requirement to enable the firm to hold or control client money for the first time; and

4. (4)

   varying a Part IV permission on the FSA's own initiative by removing a regulated activity from a firm'spermission.

Examples of matters decided by executive procedures (where the FSA decides or is required to use the statutory powers in question rather than to achieve the action required in other ways, for example through individual guidance or securing the agreement of a firm to take action on a voluntary basis) include:

1. (1)

   imposing a requirement that a firm submit regular reports covering, for example, trading results, management accounts, customer complaints, connected party transactions (SUP 7.4.2 G (1)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;

2. (2)

   imposing a requirement that a firm submit a business plan (SUP 7.3.3 (3)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;

3. (3)

   setting prudential limits through a requirement, for example on large exposures, foreign currency exposures or liquidity gaps (SUP 7.3.3 (2)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;

4. (4)

   imposing a requirement that a firm maintain a particular amount or type of financial resources (SUP 7.3.3 (5)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;

5. (4A)

   in relation to a financial conglomerate, using the own-initiative power to apply one of the methods for calculating capital adequacy in Annex 1 of the Financial Groups Directive (see PRU 8.4.50R (Capital adequacy requirement: Use of Part IV permission to apply Annex 1 of the Financial Groups Directive)) or to impose a reporting requirement under SUP 16 (Reporting requirements);3

6. (5)

   refusing an application to vary a Part IV permission, or to restrict a Part IV permission on the grant of a variation (by imposing a limitation or requirement which was not applied for, or by specifying a narrower description of regulated activity than that applied for), in a way that would not make a fundamental change (see DEC 4.1.5 G) to the nature of the Part IV permission that would have been held had the application been granted in full (indefinitely, or for a limited period);

7. (6)

   objecting to the acquisition or increase of control under section 186 of the Act (Objection to acquisition of control), objecting to existing control under section 187 of the Act (Objecting to existing control), or attaching conditions to an approval to a change in control under section 185 of the Act (Conditions attached to approval);

   5
8. (7)

   refusing a request for an authorisation order for an operator's proposed AUT or ICVC (if the operator is an operator of an existing AUT or ICVC), refusing approval of a scheme becoming a recognised scheme authorised in a designated territory under section 270 of the Act or refusing an application in respect of a proposed individually recognised overseas scheme under section 272 of the Act;5

   5
9. (8)

   suspending the listing of securities;

10. (9)

    suspending trading in a financial instrument;

11. (10)

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

12. (11)

    exercising any of the powers in sections 87K or 87L of the Act in respect of an infringement of any applicable provision;

13. (12)

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

14. (13)

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

The Regulatory Decisions Committee (RDC) is appointed by the FSA Board to exercise certain regulatory powers on behalf of the FSA Board. The RDC is accountable to the FSA Board for its decisions.

The RDC comprises a Chairman, one or more Deputy Chairmen, and other members.

The RDC is a body outside the FSA's management structure. Apart from the Chairman, none of the members of the RDC is an FSA employee. The members represent the public interest and comprise:

1. (1)

   current and recently retired practitioners with financial services industry skills and knowledge; and

2. (2)

   non-practitioners.1

The RDC is supported by the RDC Secretariat. The RDC Secretariat is separate from FSA staff involved in making recommendations to the RDC.

The Chairman of the RDC is appointed by the FSA Board on the recommendation of an independent group established by the Board for that purpose. A non-executive member of the FSA Board chairs the independent group. The FSA Board also appoints all other members of the RDC, including its Deputy Chairman or Deputy Chairmen, on the recommendation of the Chairman of the RDC.

All members of the RDC are appointed for fixed periods.

The FSA Board may remove a member of the RDC but only in the event of that member's misconduct or incapacity.

The RDC will meet as a full committee or in panels. Except in an urgent supervisory notice case, where the Chairman or a Deputy Chairman and, where possible, any one other member of the RDC will make a decision (see DEC 4.5.7 G (2)), each meeting of the RDC will include:

1. (1)

   its Chairman or a Deputy Chairman (who will chair the meeting); and

2. (2)

   at least two other members.

However, the composition and size of panels of the RDC, and the frequency of their meetings, may vary depending on the nature of the particular matter under consideration.

1. (1)

   If a member of the RDC has a potential conflict of interest in any matter before the RDC he will disclose the conflict to the Chairman of the RDC (or if he is the Chairman of the RDC, to the Chairman or Deputy Chairman of the FSA). He will also disclose the conflict to the RDC Secretariat.

2. (2)

   If the Chairman of the RDC (or where appropriate the Chairman or Deputy Chairman of the FSA) considers it reasonable and appropriate, he will require the member of the RDC to stand down from consideration of that particular matter. The Chairman of the RDC (or Chairman or Deputy Chairman of the FSA) may ask another member of the RDC to assist him in considering the potential conflict.

The RDC Secretariat will record and document all disclosures of potential conflicts of interest and the steps taken to manage them.

The meetings of the RDC will be in private, and will be conducted in the manner the RDC considers suitable in order to enable it to determine fairly the matters which it is required to consider.

Each member of the RDC present is entitled to vote on the matter under consideration. The Chairman of the meeting of the RDC will have a vote as a member of the RDC and will have the casting vote in a tie.

The RDC may require FSA staff to attend its meetings.

FSA staff are entitled to put to the RDC the previous disciplinary record of a person, including any previous breach of the Act, the Principles, or other rules (including the record prior to the Act). FSA staff may also draw to the RDC's attention the compliance history of a person, including that under previous legislation.

The RDC may not consider any of the matters in DEC 4.2.15 G for the purpose of proving a later breach. The matters in DEC 4.2.15 G may be considered when determining whether to take action or, where appropriate, as one of the factors described in ENF 13.3.3 G, in determining the level of the financial penalty.

Representations to the RDC are received in accordance with DEC 4.4.

The FSA will fix a date or dates for a meeting to consider the representations and to decide:

1. (1)

   whether to take the action proposed;

2. (2)

   if the action has been taken, whether to rescind the action; and

3. (3)

   in either case, whether to take the action in a different way.

The RDC Secretariat will ensure that a record is kept of:

1. (1)

   who took the decision;

2. (2)

   the representations made to the RDC;

3. (3)

   the material considered by the RDC;

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 by the FSA to the person concerned.

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 noticeassociated 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 noticeassociated 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 decision notice or 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 warning notice or 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.

1. (1)

   Any warning notice or first supervisory notice will contain a statement that the person concerned will have a certain amount of time in which to make representations to the decision maker. In the case of a first supervisory notice the person concerned may make representations whether or not the matter to which the notice relates has been referred to the Tribunal.

2. (2)

   If a second supervisory notice is given where the decision maker has decided to take action different from that which was proposed in the first supervisory notice, the second supervisory notice will provide a similar statement about the right to make representations.

In the case of a warning notice, section 387(2) of the Act requires that the warning notice must specify a reasonable period for the making of representations. This must be at least 28 days. The Act does not specify a minimum period that the FSA must give for making representations for supervisory notices.

In deciding on the period to make representations, the decision maker will have regard to the circumstances of each case, including the nature of the proposed action and its likely effect on the person concerned. The decision maker will have particular regard to the risk to the FSA's regulatory objectives of any delay in imposing proposed action. The period for representations will normally be 28 days from the date when the person receives the notice, subject to his right to seek an extension of time.

1. (1)

   After receiving the warning notice or first supervisory notice, if the person concerned considers that its stated period for representations is too short, then he may, within 14 days of receiving the notice, request the FSA in writing for more time. In the case of a warning notice, this may be appropriate, for example, if a person has entered or wishes to enter into settlement discussions with FSA staff.

2. (2)

   In accordance with section 387(3) of the Act and other relevant sections of the Act, the decision maker may extend the period of time for representations specified in the warning notice or supervisory notice.

Requests for an extension of time will be considered by the decision maker who will notify the recipient of the notice promptly whether the request has been accepted or not.

Any written representations should be sent to the FSA at the address stated in the warning notice or supervisory notice.

If he so chooses, a person who receives a warning notice or first supervisory notice may make oral representations to the decision maker and attend a meeting for that purpose.

If the person wishes to make oral representations, he should send a written notification of this to the FSA at the address stated in the warning notice or supervisory notice. The notification should be made at least five business days before the end of the period for representations specified in the notice. The notification should specify the matters on which the person wishes to make oral representations, include an estimate of how much time the person expects the representations to take, and provide the names of any representatives appointed to attend the meeting at which the representations will be made. If after notifying the FSA of his intention to make oral representations, the person chooses not to make those representations, the decision maker will nevertheless decide the matter.1

A person may appoint a representative of his choice (who may be legally qualified) to attend the meeting at which oral representations will be made. The representative may make or assist in making the representations.

The decision maker will specify a time as soon as is reasonably possible after receiving the notification for receiving the oral representations. The decision maker may specify the place where he will receive the representations and may specify that the representations will be received in private. The decision maker may limit the type, length and content of any representations. The decision maker may ask the person or his representative at the meeting to clarify any issue arising out of the representations and may require the person, and any representatives, to leave the meeting after they have made their representations.

DEC 4.4.13 G and DEC 4.4.14 G explain the procedure where no representations are received or made.

DEC 4.4 applies also to a third party who has received a copy of a warning notice, in relation to those matters affecting the third party.

If the FSA receives no response or representations within the period specified in a warning notice, the decision maker may regard as undisputed the allegations or matters in the warning notice. In such cases, a decision notice will be given accordingly. A person who has received a decision notice and has not previously made any response or representations to the FSA, may, nevertheless, refer the FSA's decision to the Tribunal as described in DEC 5.1.2

2If the FSA receives no response or representations within the period specified in a first supervisory notice, the FSA will not give a second supervisory notice. The outcome depends on when the action took or takes effect (as stated in the notice). If the action:

1. (1)

   took effect immediately, or on a specified date which has already passed, it continues to have effect (subject to any decision on a referral to the Tribunal); or

2. (2)

   was to take effect on a specified date which is still in the future, it takes effect on that date (subject to any decision on a referral to the Tribunal); or

3. (3)

   was to take effect when the matter was no longer open for review, it takes effect when the period to make representations (or the period for referral to the Tribunal, if longer) expires, unless the matter has been referred to the Tribunal.

In exceptional cases, the decision maker may permit representations from a person who has received a decision notice (or a second supervisory notice) given in accordance with DEC 2.3 (or DEC 3.1.8 G to DEC 3.1.10 G) (or against whom action, detailed in a first supervisory notice, has taken effect as described in DEC 4.4.13A G), and shows on reasonable grounds that he did not receive the warning notice (or first supervisory notice), or that he had reasonable grounds for not responding within the specified period. In these circumstances, the decision maker may decide to give a notice of discontinuance (DEC 2.3.8 G to DEC 2.3.9 G) or a further decision notice (or a written notice or a supervisory notice).2

The making of the following types of statutory noticedecisions and statutory notice associated decisions falling within DEC 4.1.4 G (Decisions to be taken by the RDC) will be discharged, on behalf of the RDC, by the Chairman of the RDC or FSA staff, so that they will be made by modified rather than full RDC procedure:

1. (1)

   in relation to warning notices and decision notices:

   1. (a)

      those relating to financial penalties for late submission of reports (see DEC 4.5.2 G to DEC 4.5.6 G);

   2. (b)

      those relating to the revocation of recognition of section 270 or 272 recognised schemes, where there is a common understanding between the scheme management and the FSA about the need for revocation (see DEC 4.5.14 G to DEC 4.5.15 G);

2. (2)

   in relation to supervisory notices:

   1. (a)

      those involved in taking urgent action by supervisory notice (see DEC 4.5.7 G and DEC 4.5.8 G);

   2. (b)

      those relating to the use of the FSA's own-initiative power and other cases involving the imposition of requirements, where there is a common understanding between the FSA and the person concerned about the need for the action (see DEC 4.5.9 G to DEC 4.5.13 G).

When the FSA decides whether to impose a financial penalty on a firm for the late submission of a report (regardless of the period of delay), FSA staff will report on the late submission to at least one other member of staff who is:

1. (1)

   at a level senior to that of the member of staff who reports on the late submission and on the reasons for it; and

2. (2)

   not directly involved in the day-to-day supervision of the firm concerned, or in establishing the evidence on which the decision is based.2

FSA staff at the appropriate level of seniority will consider the report about the late submission. They will then decide whether a financial penalty is appropriate and, if so, its amount. If they decide a penalty is appropriate, the FSA will give a warning notice.

If the firm makes representations in relation to the penalty stated in the warning notice, the matter will be referred to the Chairman or Deputy Chairman of the RDC. The Chairman or Deputy Chairman of the RDC will decide whether to confirm the penalty stated in the warning notice or that the penalty should be of a different amount and, if so, give a decision notice.

If the firm makes no representations, by the time a decision is to be made about the giving of a decision notice, then the decision maker may regard the matters in the warning notice as undisputed. A decision notice will be given accordingly.3

If the firm objects to the decision notice, it may refer the matter to the Tribunal. The right to refer a matter to the Tribunal is outlined in DEC 5.1.

If FSA staff recommend action be taken and they consider that the decision is the RDC's responsibility:

1. (1)

   in general, but subject to the need to act swiftly in urgent cases, the FSA staff's recommendation will go before an RDC panel;

2. (2)

   in an urgent case, if, in FSA staff's opinion, the action proposed should occur before it is practicable to convene an RDC panel, the FSA staff's recommendation will be considered by the RDC's Chairman or a Deputy Chairman of the RDC and, where possible, but subject to the need to act swiftly, one other RDC member;

3. (3)

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

   1. (a)

      the action should be taken before a recommendation to the Chairman or a Deputy Chairman1 of the RDC can 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 by a member of the FSA's executive of at least director of division level. In these circumstances, the FSA will ensure as far as possible that the executive making the decision was not involved in establishing the evidence on which the decision is based.

If the executive making the decision has been involved in establishing the evidence on which the decision is based, and a notice is given on the grounds of urgency, this will be in accordance with DEC 4.3.17 G to DEC 4.3.19 G.

In certain other cases, including cases relating to collective investment schemes (see DEC 4.5.14 G to DEC 4.5.15 G), FSA staff may be in a position to inform the person concerned of their concerns, and of the action they are considering, before they begin to exercise supervisory notice procedures. If the person concerned consents to the action at that stage, FSA staff may decide to use the modified decision making procedure in DEC 4.5.10 G to DEC 4.5.13 G.

FSA staff will make recommendations for action to at least one other member of staff who is:

1. (1)

   at an appropriate level of seniority; and

2. (2)

   not directly involved in the supervision of the person concerned, or in establishing the evidence on which the decision is based.

FSA staff at the appropriate level of seniority will consider the recommendations. If they are satisfied that the person concerned agrees to the recommended action, they will consider whether the FSA should give a first supervisory notice (see DEC 3.1.3 G to DEC 3.1.7 G).

If FSA staff decide to give the first supervisory notice and the person concerned accepts its terms, the FSA will then consider whether to give a second supervisory notice (see DEC 3.1.8 G to DEC 3.1.10 G) confirming the decision.

The FSA will only give the second supervisory notice when it is satisfied that the person concerned accepts the terms of the first supervisory notice, and the circumstances of the case have not materially changed since that notice was given. If FSA staff are not satisfied, or circumstances of the case have changed, they will refer the possible giving of a second supervisory notice to the RDC. In such cases the RDC will follow the process in DEC 3.1.8G to DEC 3.1.10G.

In DEC 4.5.15 G, the term "scheme management" refers:

1. (1)

   in relation to an AUT, to the manager and trustee;

2. (2)

   in relation to an ICVC, to the directors and the depositary;

3. (3)

   in relation to a recognised scheme, to the operator, and (if any) the trustee or depositary.

In certain cases where it is proposing to exercise its powers under section 257 (Directions), 279 (Revocation of recognition) or 281 (Directions) of the Act or under regulation 23 or 25 of the OEIC Regulations, the FSA may be in a position to inform the scheme management of its concerns, and of the action it is considering, before it exercises those powers. Alternatively, the scheme management may request the FSA to exercise one of the powers. For example, the manager and the trustee of an AUT may ask the FSA to give a direction under section 257(2)(a) for the suspension of the issue and redemption of units because of a temporary problem in valuing the property subject to the scheme. If there is a common understanding between the FSA and all the members of the scheme management about the need for the exercise of the power in question at that stage (that is, before the FSA begins to exercise the statutory procedures), the FSA may:

1. (1)

   in the case of the exercise of its powers under sections 257 or 281 or under regulation 25, decide to use the modified decision making procedure for non-urgent supervisory notices in DEC 4.5.9 G to DEC 4.5.13 G; or

2. (2)

   in the case of the exercise of its powers under section 279 or regulation 23, decide to use a modified decision making procedure under which the matter will be delegated to FSA staff of an appropriate level of seniority. The procedure will be as set out in DEC 4.5.9 G to DEC 4.5.13 G but adapted to be appropriate for a case involving a warning notice and decision notice.

A decision to begin, or discontinue, proceedings using the powers listed in DEC 1.1.3 G will be made by the RDC Chairman or, in an urgent case and if the Chairman is not available, by an RDC Deputy Chairman and where possible, but subject to the need to act swiftly, one other RDC member.

In an exceptionally urgent case the matter will be decided by the director of Enforcement or, in his absence, another member of the FSA's executive of at least director of division level. An exceptionally urgent case in these circumstances is one where FSA staff believe that a decision to begin proceedings using the powers in DEC 1.1.3 G:

1. (1)

   should be taken before it is possible to follow the procedure described in DEC 4.6.1 G; and

2. (2)

   is necessary to protect the interests of consumers or potential consumers.

2Decisions to prosecute for criminal offences under the legislation listed in DEC 1.1.4 G may be taken by the procedure described in DEC 4.6.1 G and DEC 4.6.2 G, or alternatively may be taken under executive procedures.

2In determining which procedure should be followed in deciding to prosecute for an offence under the legislation listed in DEC 1.1.4 G, the FSA will have regard to the seriousness of the offence involved, the size and profile of the defendant and the complexity of the issues. The less serious the offence and the less complex the issues, the more likely the decision to prosecute will be taken under executive procedures.

Decisions to bring proceedings using the powers in DEC 1.1.3 G do not involve any of the procedures relating to the giving of statutory notices including the procedures described in DEC 4.4 relating to representations. Further details about the FSA's policy and procedures in the use of the powers to apply to the civil courts for injunctions, restitution orders, insolvency orders, collective investment scheme related orders and the powers to prosecute criminal offences are contained in ENF 6 (Injunctions), ENF 9 (Restitution and redress), ENF 10 (Insolvency proceedings and orders against debt avoidance), ENF 16 (Collective investment schemes) and ENF 15 (Prosecution of criminal offences) respectively.