EG 19.36 The Packaged Retail and Insurance-based Investment Products Regulations 2017

1The Packaged Retail and Insurance-based Investment Products Regulations implement the PRIIPs Regulation. The FCA has investigative and enforcement powers in relation to both criminal and civil breaches of the Packaged Retail and Insurance-based Investment Products Regulations, PRIIPs Regulation and any directly applicable EU regulation made under the PRIIPs Regulation. The PRIIPs Regulation imposes requirements on both authorised and unauthorised persons who manufacture, advise on, market or sell a PRIIP.

1The FCA’s approach to enforcing the Packaged Retail and Insurance-based Investment Products 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.

1The regulatory powers which the Packaged Retail and Insurance-based Investment Products Regulations provide to the FCA include:

1. (1)

   the power to appoint investigators and require information;

2. (2)

   powers of entry and inspection;

3. (3)

   the power of public censure;

4. (4)

   the power to impose financial penalties;

5. (5)

   the power to impose a limitation, restriction or requirement;

6. (6)

   the power to apply for an injunction or restitution order;

7. (7)

   the power to require restitution; and

8. (8)

   the power of prohibition and suspension.

1In addition, the PRIIPs Regulation imposes requirements directly on appointed representatives for, amongst other things, regulated activity which their principal may have accepted responsibility. We would expect to usually take enforcement action against the principal, rather than the appointed representative, in these circumstances.

1The Packaged Retail and Insurance-based Investment Products 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 it has under the Act. Key features of the FCA’s approach are described below.

1The Packaged Retail and Insurance-based Investment Products Regulations apply to much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Packaged Retail and Insurance-based Investment Products Regulations.

1For example, the FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the Packaged Retail and Insurance-based Investment Products 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 civil investigations under the Packaged Retail and Insurance-based Investment Products Regulations is to use powers to compel information in the same way as it would in the course of an investigation under the Act.

1The decision making procedure for those decisions under the Packaged Retail and Insurance-based Investment Products Regulations requiring the giving of a warning notice, decision notice or a supervisory notice are dealt with in DEPP.

1The Packaged Retail and Insurance-based Investment Products Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that it will normally follow its decision-making procedures for the equivalent decisions under the Act, as set out in EG 12.

1The Packaged Retail and Insurance-based Investment Products Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow its decision-making procedure for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

1The Packaged Retail and Insurance-based Investment Products Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.

1Certain FCA decisions (for example making an order prohibiting a person from marketing a PRIIP; making an order requiring a person to suspend the marketing of a PRIIP) may be referred to the Tribunal by an aggrieved party.

1When determining whether to take action to impose a penalty or to issue a public censure under the Packaged Retail and Insurance-based Investment Products Regulations the FCA will have regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of 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 civil breaches of the Packaged Retail and Insurance-based Investment Products Regulations to assist it exercise its functions under the Packaged Retail and Insurance-based Investment Products Regulations in the most efficient and economic way.

[Note: See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.]

1The FCA will apply the approach to publicity that is outlined in EG 6.

1The Packaged Retail and Insurance-based Investment Products Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Packaged Retail and Insurance-based Investment Products Regulations the FCA will follow the procedures described in DEPP 7.