ENF 1.2 Purpose

The FSA's effective and proportionate use of its enforcement powers to enforce the requirements of the Act, the rules, the Statements of Principle and other relevant legislation (for example, the Criminal Justice Act 1993, the Money Laundering Regulations 1993 and the Unfair Terms Regulations1) play an important role in the pursuit of its regulatory objectives. For example:

1. (1)

   in relation to the market confidence objective, the FSA's powers to bring criminal prosecutions for insider dealing and misleading statements and practices offences, and to impose financial penalties for market abuse, help to maintain confidence in the financial system;

2. (2)

   in relation to the public awareness objective, the imposition of disciplinary measures such as public censures and public statements of misconduct show that regulatory standards are being upheld;

3. (3)

   in relation to the protection of consumers objective, the imposition of disciplinary measures helps to deter future contraventions, ensure high standards of regulatory conduct and protect consumers; in addition, the FSA's powers to vary permission on its own initiative may be used to require a firm to take urgent remedial action to protect the interests of consumers; and

4. (4)

   in relation to the reduction of financial crime objective, the FSA's use of its criminal prosecution powers under the Act helps to reduce financial crime; for example the prosecution of insider dealing and breaches of prescribed regulations relating to money laundering act as a deterrent.

Schedule 1 to the Act (The Financial Services Authority) states that the FSA must 'maintain arrangements for enforcing the provisions of, or made under, this Act' (see paragraph 6(3) of Schedule 1). The Enforcement manual describes the FSA's policies and procedures for the exercise of the enforcement powers given to it by the Act and the Unfair Terms Regulations1, as set out in ENF 1 Annex 1 G G. It does not include the statement of procedures required by section 395 of the Act (The FSA's procedures) relating to the issue of supervisory notices, warning notices and decision notices, which is in the Decision making manual (DEC).

ENF includes material on the investigation, disciplinary and criminal prosecution powers that are available to the FSA when it is performing functions as the competent authority under Part VI of the Act (see ENF 21). The Act provides a separate statutory framework within which the FSA must operate when it acts in that capacity. Schedule 7 to the Act modifies the application of the Act in relation to the exercise of functions as competent authority under Part VI of the Act. When determining whether to exercise its powers in its capacity as competent authority for listing (for example, the powers described in ENF 21), the FSA will have regard to the matters and objectives which are applicable to the competent authority function.2

In some cases, the Act expressly requires the FSA to prepare and publish statements of policy and procedures on the exercise of its enforcement powers. The Enforcement manual therefore contains statements of policy and procedures on the following matters:

1. (1)

   sections 69 and 210 of the Act require the FSA to publish statements of policy on the imposition of financial penalties on firms and approved persons (see ENF 13);

2. (1A)

   section 93 of the Act requires the FSA to publish a statement of its policy on the imposition of financial penalties under section 91 of the Act (see ENF 21);

3. (2)

   section 124 of the Act requires the FSA to publish a statement of its policy on the imposition of financial penalties for market abuse (see ENF 14); and

4. (3)

   section 169 of the Act (Investigations etc. in support of overseas regulator) requires the FSA to publish a statement of its policy on the conduct of certain interviews in response to requests from overseas regulators (see ENF 2).

In addition, the Enforcement manual contains guidance in accordance with section 157(1) of the Act (Guidance) on the FSA's use of its enforcement powers in other areas. These include the FSA's power to vary Part IV permissions on its own initiative (see ENF 3), to apply to court for injunctions (see ENF 6), to obtain restitution (see ENF 9), and to prosecute for certain criminal offences (see ENF 15).

For ease of reference, ENF 1 Annex 1 G contains a table of the main enforcement powers showing where they are considered in the manual.

The Authorisation manual (AUTH), the Supervision manual (SUP), the Enforcement manual (ENF), and the Decision making manual (DEC) form the regulatory processes part of the Handbook:

1. (1)

   AUTH sets out the relationships between the FSA and applicants for Part IV permission and persons wishing to exercise EEA rights, Treaty rights or UCITS Directive rights;

2. (2)

   SUP sets out the relationship between the FSA and authorised persons (referred to in the Handbook as firms); as a general rule, material that is of continuing relevance after authorisation is in SUP;

3. (3)

   ENF describes the FSA's enforcement powers under the Act and sets out its policies for using those powers; and

4. (4)

   DEC is principally concerned with, and sets out, the FSA's decision making procedures for decisions that involve the issue of statutory notices. It also gives guidance on the FSA's procedures for using its powers under Part XXIV of the Act (Insolvency orders), Part XXV of the Act (Injunctions and restitution), Part XXVII of the Act (Criminal Offences) and the Unfair Terms Regulations (see DEC 1.1.3 G and DEC 4.6).1