1The MiFI Regulations in part implement MiFID. The FCA has investigative and enforcement powers in relation to both criminal and non-criminal breaches of the MiFI Regulations (including requirements imposed on persons subject to the MiFI Regulations by MiFIR and any directly applicable EU regulation made under MiFIR or MiFID). The MiFI Regulations impose requirements on:
1The FCA’s approach to enforcing under the MiFI Regulations, whether the person is authorised or not, will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance and, where appropriate, to remedy the harm caused by the non-compliance.
the power to require information and appoint investigators;
powers of entry and inspection;
the power to publicly censure;
the power to impose financial penalties;
the power to apply for an injunction or restitution order;
the power to require restitution;
the power to impose limitation, restriction or requirement; and
the power to prosecute relevant offences.
1In addition, the MiFI Regulations provide the power to require the removal of persons from the management board of an investment firm, a credit institution or a recognised investment exchange. This is a supervisory power, rather than a disciplinary one, and it may be exercised whenever the FCA deems it necessary for the purpose of any of our functions under MiFID or MiFIR.
1The MiFI Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below.
1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the MiFI Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the MiFI Regulations is to use powers to compel the provision of information in the same way as we would in the course of an investigation under the Act.
1When determining whether to take action to impose a penalty or to issue a public censure under the MiFI Regulations the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the MiFI Regulations to assist us to exercise our functions under the MiFI Regulations in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.
1This power may be used where the FCA considers that the removal is necessary for the purpose of exercising functions under MiFID or MiFIR. Examples of where this power may be used include, but are not limited to, ensuring that all members of the management body:
are of sufficiently good repute;
possess sufficient knowledge, skills and experience to perform their duties;
commit sufficient time to perform their functions;
do not hold too many directorships;
act with honesty, integrity and independence of mind; and
have no conflicts of interest.
1The FCA will have regard to all relevant circumstances, on a case-by-case basis, taking into account the specific circumstances of the investment firm, credit institution or recognised investment exchange and the member of the management board. The FCA will exercise this power fairly and proportionately.