EG 5.4 1Multiple parties and third party rights in enforcement action involving warning and decision notices

1Enforcement cases often involve multiple parties, for example a firm and individuals in the firm. Enforcement action may be appropriate against just the firm, just the individuals or both. In some cases, it will not be possible to reach an acceptable settlement unless all parties are able to reach agreement.

1Even where action is not taken against connected parties, these parties may have what the Act calls ‘third party rights’. Broadly, if any of the reasons contained in a warning notice or decision notice identifies a person (the third party) other than the person to whom the notice is given, and in the opinion of the FCA is prejudicial to the third party, a copy of the notice must be given to the third party unless that person receives a separate warning notice or decision notice at the same time. The third party has the right to make representations and ultimately can refer the matter to the Tribunal. Any representations made by the third party in response to a warning notice or decision notice will be considered by the settlement decision makers, who will also decide whether to give the decision notice or final notice.

1In practice, third party rights do not frequently cause undue difficulty for settlement, either because they do not arise at all or because the third party agrees not to exercise such rights.