ENF 9.7 The FSA's choice of powers

Under sections 382 (Restitution orders) and 383 (Restitution orders in cases of market abuse) of the Act the FSA can apply to the court for an order for restitution. Under section 384 (Power of FSA to require restitution) it can also require restitution from firms which have breached a relevant requirement of the Act and persons, whether authorised or not, who have engaged in, or have required or encouraged others to engage in, market abuse.

In cases where it is appropriate to exercise its powers to obtain restitution from firms, the FSA will first consider using its own administrative powers under section 384 before considering taking court action.

However, there may be circumstances in which the FSA will choose to use the powers under section 382 or section 383 to apply to the court for an order for restitution against a firm. Those circumstances may include, for example, where:

1. (1)

   the FSA wishes to combine an application for an order for restitution with other court action against the firm, for example, where it wishes to apply to the court for an injunction to prevent the firm breaching a relevant requirement of the Act; the FSA's powers to apply for injunctions restraining firms from breaching relevant requirements of the Act are set out in ENF 6;

2. (2)

   the FSA wishes to bring related court proceedings against an unauthorised person where the factual basis of those proceedings is likely to be the same as the claim for restitution against the firm;

3. (3)

   there is a danger that the assets of the firm may be dissipated; in those cases, the FSA may wish to combine an application to the court for an order for restitution with an application for an asset-freezing injunction to prevent assets from being dissipated; the FSA's powers to apply for asset freezing injunctions are set out in ENF 6;

4. (4)

   the FSA suspects that the firm may not comply with an administrative requirement to give restitution; in those cases the FSA may consider that the sanction for breach of a court order may be needed to ensure compliance; a person who fails to comply with a court order may be in contempt of court and is liable to imprisonment, to a fine and/or to have his assets seized.

The FSA may not use its administrative power to obtain restitution from unauthorised persons except in cases of market abuse. Most cases where redress is obtained from unauthorised persons will therefore be dealt with by an application to the court.