ENF 2.11 The FSA's policy on investigators and control of investigations

The FSA sees its investigation powers as essentially fact-finding powers. Consequently, it will ensure that its investigators use them primarily to obtain the information it needs in order to decide what further action, if any, may be necessary in a particular case.

In practice, investigators appointed under sections 167 (Appointment of persons to carry out general investigations), 168 (Appointment of persons to carry out investigations in particular cases) or 284 (Power to investigate) of the Act may not always deem it necessary to use their statutory powers. However, where they do so, they will at all times make this clear to those persons to whom their enquiries are addressed, and will inform those persons of the statutory requirements (see ENF 2.4) and the possible penalties for failure to comply. (See also ENF 2.14.3 G on compulsory interviews and ENF 2.15 on enforcement of requirements).

The FSA's powers to control investigators are contained in section 170 of the Act (Investigations: general). Section 170(5) permits the FSA to appoint a member of its staff as an investigator, and the FSA will usually do this.

The FSA has power under section 170(7) to direct an investigator so that it can control:

1. (1)

   the scope of the investigation;

2. (2)

   the period during which the investigation is to be conducted;

3. (3)

   the conduct of the investigation; and

4. (4)

   the reporting of the investigation.

Under section 170(8) a direction may, in particular:

1. (1)

   Confine the investigation to particular matters;

2. (2)

   Extend the investigation to additional matters;

3. (3)

   Require the investigator to stop the investigation or to take only certain steps; and

4. (4)

   Require the investigator to make an interim report or reports.

Section 170(5) to (9) also applies to investigations into collective investment schemes under section 284 of the Act.

Where the FSA has appointed an investigator in response to a request from an overseas regulator, it may under section 169(7) (Investigations etc. in support of overseasregulator) direct the investigator to allow a representative of that regulator to attend, and take part in, any interview conducted for the purposes of the investigation. However, the FSA may only use this power if it is satisfied that any information obtained by an overseas regulator as a result of the interview will be subject to safeguards equivalent to those in Part XXIII of the Act (Public Record, Disclosure of Information and Cooperation) (section 169(8)).

The factors that the FSA may take into account when deciding whether to make a section 169(7) interview direction include the following:

1. (1)

   the complexity of the case;

2. (2)

   the nature and sensitivity of the information sought;

3. (3)

   the FSA's own interest in the case;

4. (4)

   costs, where no Community obligation is involved, and the availability of resources; and

5. (5)

   the availability of similar assistance to UK authorities in similar circumstances.

Under section 169(9), the FSA is required to prepare a statement of policy with the approval of the Treasury on the conduct of interviews attended by representatives of overseas regulators. The statement is set out in ENF 2 Annex 2 G G.