Related provisions for EG 19.22.6
1 - 20 of 58 items.
2In certain cases, despite concerns about a person’s behaviour or evidence of a rule
breach, the FCA may decide that it is not appropriate, having regard to all the circumstances of the case, to bring formal action for a financial penalty or public censure. This is consistent with the FCA's risk-based approach to enforcement. In such cases, the FCA may give a private warning to make the person aware that they came close to being subject to formal action.
2Private warnings are a non-statutory tool. Fundamentally they are no different to any other FCA communication which criticises or expresses concern about a person’s conduct. But private warnings are a more serious form of reprimand than would usually be made in the course of ongoing supervisory correspondence. A private warning requires that the FCA identifies and explains its concerns about a person's conduct and/or procedures, and tells the subject of the warning that the FCA
2Typically, the FCA might give a private warning rather than take formal action where the matter giving cause for concern is minor in nature or degree, or where the person has taken full and immediate remedial action. But there can be no exhaustive list of the conduct or the circumstances which are likely to lead to a private warning rather than more serious action. The FCA will take into account all the circumstances of the case before deciding whether a private warning is appropriate.
2A private warning is not intended to be a determination by the FCA as to whether the recipient has breached the FCA'srules. However, private warnings, together with any comments received in response, will form part of the person's compliance history. In this sense they are no different to other FCA correspondence, but the weight the FCA attaches to a private warning is likely to be greater. They may therefore influence the FCA's decision whether to commence action for a penalty
(1) 1A person subject to enforcement action may
agree to a financial penalty or other outcome rather than contest formal action
by the FCA.44(2) The fact that he does so will not
usually obviate the need for a statutory notice recording the FCA's4 decision to take that action. Where, however, the person subject to enforcement action agrees
not to contest the content of a proposed statutory
notice, the decision to give that statutory notice will be taken
by senior FCA4 staff.44(3)
The FCA4 will consider the full circumstances of each case when determining whether or not to take action for a financial penalty or public censure. Set out below is a list of factors that may be relevant for this purpose. The list is not exhaustive: not all of these factors may be applicable in a particular case, and there may be other factors, not listed, that are relevant.4(1) The nature, seriousness and impact of the suspected breach, including:(a) whether the breach was deliberate
When deciding whether to take action for market abuse or requiring or encouraging, the FCA4 may consider the following additional factors:4(1) The degree of sophistication of the users of the market in question, the size and liquidity of the market, and the susceptibility of the market to market abuse.(2) The impact, having regard to the nature of the behaviour, that any financial penalty or public censure may have on the financial markets or on the interests of consumers:(a)
The FCA's4 rules on systems and controls against money laundering are set out in SYSC 3.2 and SYSC 6.3. The FCA4, when considering whether to take action for a financial penalty or censure in respect of a breach of those rules, will have regard to whether a firm has followed relevant provisions in the Guidance for the UK financial sector issued by the Joint Money Laundering Steering Group.44
Persons subject to enforcement action may be prepared to agree the amount of any financial penalty, or the length of any period of suspension, restriction, condition or limitation (see DEPP 6A)4, and other conditions which the FCA seeks to impose by way of such action. These4 conditions might include, for example, the amount or mechanism for the payment of compensation to consumers. The FCA recognises the benefits of such agreements, as4 they offer the potential for securing earlier
In appropriate cases the FCA's3 approach will be to negotiate with the person concerned to agree in principle the amount of a financial penalty having regard to the FCA's3statement of policy as set out in DEPP 6.5 to DEPP 6.5D and DEPP 6.6.1 (This starting figure will take no account of the existence of the settlement discount scheme described in this section.) Such amount ("A") will then be reduced by a percentage of A according to the stage in the process at which agreement
2The settlement discount scheme which applies to the amount of a financial penalty, described in DEPP 6.7.2 G to DEPP 6.7.5 G, also applies to the length of the period of a suspension, restriction or condition4, having regard to the FCA's3 statement of policy as set out in DEPP 6A.3. The settlement discount scheme does not apply to the length of the period for which approvals under section 59 of the Act have effect as a result of a limitation, as different considerations apply
(1) 1The FCA's3 approach to determining penalties described in DEPP 6.5 to DEPP 6.5C is intended to ensure that financial penalties are proportionate to the breach. The FCA3 recognises that penalties may affect persons differently, and that the FCA3 should consider whether a reduction in the proposed penalty is appropriate if the penalty would cause the subject of enforcement action serious financial hardship.333(2) Where an individual or firm claims that payment of the penalty
In cases against individuals, including market abuse cases, the FCA3 may make a prohibition order under section 56 of the Act or withdraw an individual’s approval under section 63 of the Act, as well as impose a financial penalty. Such action by the FCA3 reflects the FCA's3 assessment of the individual’s fitness to perform regulated activity or suitability for a particular role, and does not affect the FCA's3 assessment of the appropriate financial penalty in relation to a breach.
2The FCA3 may withdraw a firm’s authorisation under section 33 of the Act, as well as impose a financial penalty. Such action by the FCA3 does not affect the FCA's3 assessment of the appropriate financial penalty in relation to a breach. However, the fact that the FCA3 has withdrawn a firm’s authorisation, as a result of which the firm may have less earning potential, may be relevant in assessing whether the penalty will cause the firm serious financial hardship.3333
Where the FCA3 considers that, following commencement of an FCA3 investigation, an individual or firm has reduced their solvency in order to reduce the amount of any disgorgement or financial penalty payable, for example by transferring assets to third parties, the FCA3 will normally take account of those assets when determining whether the individual or firm would suffer serious financial hardship as a result of the disgorgement and financial penalty.333
(1) 1The FCA has the power to publish a statement or impose a financial penalty of such amount as it considers appropriate on: (a) a financial counterparty who is not an authorised person, a non- financial counterparty or any other person who has breached an EMIR requirement or regulation 7 or 8 of the OTC derivatives,
CCPs and trade repositories regulation; (b) a financial counterparty who is an authorised person who has breached regulation 8 of the
1The FCA will use the sanctioning powers where it is appropriate to do so and with regard to the relevant factors listed in DEPP 6.2.1G and DEPP 6.4. In determining the appropriate level of financial penalty, the FCA will have regard to the principles set out in DEPP 6.5, DEPP 6.5A, DEPP 6.5B, DEPP 6.5D and DEPP 6.7.
1Where the FCA proposes or decides to take action to publish a statement or impose a financial penalty referred to in EG 19.26.3, it will give the person concerned a warning notice or a decision notice respectively. In the case of a public statement, the warning notice or decision notice will also set out the terms of the statement. In the case of a financial penalty, the warning notice or decision notice will also state the amount of the penalty. On receiving a warning notice,
1The RCB Regulations provide a framework for issuing covered bonds in the UK.
Covered bonds issued under the RCB Regulations are subject to strict quality controls and both bonds and issuers must be registered with the FCA. The RCB Regulations give the FCA powers to enforce these Regulations. Where a person has failed, or is likely to fail, to comply with any obligation under the RCB Regulations, the FCA may make a direction that the person take
1The FCA's approach to the use of its enforcement powers, and its statement of policy in relation to imposing and determining financial penalties under the RCB Regulations, are set out in RCB 4.2. The FCA's penalty policy includes having regard, where relevant, DEPP 6.5 to DEPP 6.5D and such other specific matters as the likely impact of the penalty on the interests of investors in the relevant bonds. The FCA's statement of procedure in relation to giving warning notices or decision
1The FCA may agree to settle cases in which it proposes to impose a financial penalty under the RCB Regulations if the right regulatory outcome can be achieved. The settlement discount scheme set out in DEPP 6.7 applies to penalties imposed under the RCB Regulations. See DEPP 5 and EG 5 for further information about the settlement process.
Some of the distinguishing features of notices given under enactments other than the Act are as follows: (1) [deleted]66(2) [deleted]66(3) Friendly Societies Act 1992, section 58A1: The warning notice and decision notice must set out the terms of the direction which the FCA6 proposes or has decided to give and any specification of when the friendly society is to comply with it. A decision notice given under section 58A(3) must give an indication of the society's right, given by
(1) The FCA3 will determine a figure which will be based on a percentage of an individual’s “relevant income”. “Relevant income” will be the gross amount of all benefits received by the individual from the employment in connection with which the breach occurred (the “relevant employment”), and for the period of the breach. In determining an individual’s relevant income, “benefits” includes, but is not limited to, salary, bonus, pension contributions, share options and share schemes;
(1) The FCA3 may increase or decrease the amount of the financial penalty arrived at after Step 2, but not including any amount to be disgorged as set out in Step 1, to take into account factors which aggravate or mitigate the breach. Any such adjustments will be made by way of a percentage adjustment to the figure determined at Step 2.3(2) The following list of factors may have the effect of aggravating or mitigating the breach:(a) the conduct of the individual in bringing (or
The FCA3 and the individual on whom a penalty is to be imposed may seek to agree the amount of any financial penalty and other terms. In recognition of the benefits of such agreements, DEPP 6.7 provides that the amount of the financial penalty which might otherwise have been payable will be reduced to reflect the stage at which the FCA3 and the individual concerned reached an agreement. The settlement discount does not apply to the disgorgement of any benefit calculated at Step
(1) The FCA2 will determine a figure that reflects the seriousness of the breach. In many cases, the amount of revenue generated by a firm from a particular product line or business area is indicative of the harm or potential harm that its breach may cause, and in such cases the FCA2 will determine a figure which will be based on a percentage of the firm’s revenue from the relevant products or business areas. The FCA2 also believes that the amount of revenue generated by a firm
(1) The FCA2 may increase or decrease the amount of the financial penalty arrived at after Step 2, but not including any amount to be disgorged as set out in Step 1, to take into account factors which aggravate or mitigate the breach. Any such adjustments will be made by way of a percentage adjustment to the figure determined at Step 2.2(2) The following list of factors may have the effect of aggravating or mitigating the breach:(a) the conduct of the firm in bringing (or failing
The FCA2 and the firm on whom a penalty is to be imposed may seek to agree the amount of any financial penalty and other terms. In recognition of the benefits of such agreements, DEPP 6.7 provides that the amount of the financial penalty which might otherwise have been payable will be reduced to reflect the stage at which the FCA2 and the firm concerned reached an agreement. The settlement discount does not apply to the disgorgement of any benefit calculated at Step 1.22
The FCA1 will consider the full circumstances of each case and determine
whether it is appropriate to impose a suspension, restriction, condition or limitation.2 The FCA1 will
usually make this decision at the same time as it determines whether or not
to impose a financial penalty or a public
censure.11
The FCA1 will consider it appropriate to impose a suspension, restriction, condition or limitation.2 where it believes that such action will be a more effective and persuasive
deterrent than the imposition of a financial penalty alone. This is likely
to be the case where the FCA1 considers that direct and visible action in relation to a particular breach is necessary. Examples of circumstances
where the FCA1 may
consider it appropriate to take such action2 include:111(1) where
(1) The FCA3 may increase or decrease the amount of the financial penalty arrived at after Step 2, but not including any amount to be disgorged as set out in Step 1, to take into account factors which aggravate or mitigate the market abuse. Any such adjustments will be made by way of a percentage adjustment to the figure determined at Step 2.3(2) The following list of factors may have the effect of aggravating or mitigating the market abuse:(a) the conduct of the individual in
The FCA3 and the individual on whom a penalty is to be imposed may seek to agree the amount of any financial penalty and other terms. In recognition of the benefits of such agreements, DEPP 6.7 provides that the amount of the financial penalty which might otherwise have been payable will be reduced to reflect the stage at which the FCA3 and the individual concerned reached an agreement. The settlement discount does not apply to the disgorgement of any benefit calculated at Step
When considering whether to impose
a financial penalty, the amount of penalty, and whether to impose the penalty
on the issuer or the owner, the FCA will have regard, where relevant,1 to:(1) the statement on determining the appropriate level of a financial
penalty set out 1in DEPP 6.5 to DEPP 6.5D1;(2) the particular arrangements between the issuer and
the owner; (3) the likely impact of the penalty on the interests of investors
in a regulated covered bond;
and(4) the conduct
(1) The FCA2 attaches considerable importance to the timely submission by firms of reports. This is because the information that they contain is essential to the FCA's2 assessment of whether a firm is complying with the requirements and standards of the regulatory system and to the FCA2 understanding of that firm's business.222(2) DEPP 6.6.1 G to DEPP 6.6.5 G set out the FCA's2 policy in relation to financial penalties for late submission of reports and is in addition to the FCA's2
In addition to the factors considered in Step 2 for cases against firms (DEPP 6.5A) and cases against individuals (DEPP 6.5B),1 the following considerations are relevant.1(1) In general, the FCA's2 approach to disciplinary action arising from the late submission of a report will depend upon the length of time after the due date that the report in question is submitted.2(2) If the person concerned is an individual, it is open to him to make representations to the FCA2 as to why