ENFG 3.2 Enforcement and the FCA’s Principles for Businesses (‘the Principles’)

The FCA will, in appropriate cases, take enforcement action on the basis of the Principles alone (see DEPP 6.2.14G).

The FCA wishes to encourage firms to exercise judgement about, and take responsibility for, what the Principles mean for them in terms of how they conduct their business. But we also recognise the importance of an environment in which firms understand what is expected of them. So we have indicated that firms must be able reasonably to predict, at the time of the action concerned, whether the conduct would breach the Principles. The FCA will not take enforcement action unless it was possible to determine at the time that the relevant conduct fell short of our requirements.

To determine whether there has been a failure to comply with a Principle, the standards we will apply are those required by the Principles at the time the conduct took place. The FCA will not apply later, higher standards to behaviour when deciding whether to take enforcement action for a breach of the Principles. However, where conduct falls below expected standards, the FCA considers that it is legitimate for consequences to follow, even if the conduct is widespread within the industry or the Principle is expressed in general terms.