ENF 21.8 Public statements of censure

The Act provides that instead of imposing a penalty, the FSA may publish a statement of censure (section 91(3)). Where the FSA considers it inappropriate to impose a financial penalty on a person, it may consider that a statement censuring that person may have particular value.

The FSA has no statutory power to impose a financial penalty on a sponsor. As such any references in ENF 21 to financial penalties being a disciplinary sanction, or an alternative disciplinary sanction, do not apply to sponsors. However, the Act enables the FSA to publish a statement censuring a sponsor (under section 89 of the Act (Public censure of sponsor)) where it considers that the sponsor has contravened any requirement imposed on him by listing rules made as a result of section 88(3)(c) of the Act.

The Act further provides that where the FSA considers that a person identified in section 87M of the Act has failed to comply with his obligations under Part VI of the Act, it may publish a statement to that effect (section 87M).

The FSA regards the decision to issue a statement of censure as a serious sanction. The FSA is aware of the effect such a statement may have on the reputation or business of such a person.

The criteria the FSA may take into account when determining whether it is appropriate to issue a public censure are similar to those for determining the level of financial penalty listed in ENF 21.7.6 G. The starting point is that the FSA will consider all the relevant circumstances of the breach. Some particular considerations may be relevant when the FSA determines whether to issue a public censure rather than (in the case only of persons who may be the subject of a financial penalty under section 91(1) of the Act) impose a financial penalty. The following list is not exhaustive; not all of these factors may be relevant in a particular case, and there may be other factors that are relevant:

1. (1)

   if the person has made a profit or avoided a loss as a result of the misconduct, this may be a factor in favour of a financial penalty, on the basis that a person should not be permitted to benefit from their misconduct;

2. (2)

   if the misconduct is more serious in nature or degree, this may be a factor in favour of a financial penalty, on the basis that the sanction should reflect the seriousness of the misconduct: other things being equal, the more serious the misconduct, the more likely the FSA is to impose a financial penalty;

3. (3)

   if the person has brought the misconduct to the attention of the FSA, this may be a factor in favour of a public censure, depending upon the nature and seriousness of the misconduct;

4. (4)

   if the person has admitted the misconduct and provides full and immediate co-operation to the FSA, this may be a factor in favour of a public censure, depending upon the nature and seriousness of the misconduct;

5. (5)

   if the person has a poor disciplinary record or compliance history (for example, where the FSA has previously brought disciplinary action in relation to the same or similar behaviour) this may be a factor in favour of a financial penalty, on the basis that it may be particularly important to deter future cases;

6. (6)

   if the person has inadequate means (excluding any manipulation or attempted manipulation of their assets) to pay the level of financial penalty which their misconduct would otherwise attract, this may be a factor in favour of a lower level of financial penalty or a public censure. However, it would be in an exceptional case that the FSA would be prepared to agree to impose a public statement rather than a financial penalty, if a financial penalty would otherwise be the appropriate sanction. Examples of such exceptional cases could include:

   1. (a)

      verifiable evidence that a person would suffer serious financial hardship if the FSA imposed a financial penalty;

   2. (b)

      the likelihood of a severe adverse impact on a person's shareholders or a consequential impact on market confidence or market stability if the FSA imposed a financial penalty. However, this does not exclude the imposition of a financial penalty which will have an impact on a person's shareholders.