FCA to publicise intended enforcement action

The Financial Conduct Authority will be given the power to announce its intention to take enforcement action against firms or individuals.

FCA_logoThe Financial Conduct Authority will be handed the power to publicise its intention to take enforcement action against firms or individuals.

Treasury consultation paper says: “The Government believes greater transparency as to what enforcement action is currently underway would increase the impact of the regulator’s enforcement work by highlighting potential issues to consumers at an early stage and signaling to firms what behaviours the regulator considers to be unacceptable.”

As it stands, the FCA issues a decision notice to the firm or individual who then has 28 days to refer it to the Upper Tribunual if they want to appeal. The action must then go through the appeal process and succeed before details are published. If that option is not taken up the FCA publishes a final notice explaining what action has been taken against whom.

The coalition Government will legislate to allow the FCA to publicise its warning notices against firms and individuals and the grounds on which action is being taken. However the new regulator will have the discretion rather than a duty to disclose warning notices, and will have to consider the impact of any disclosure.

In addition, the regulator will also be able set requirements around products and product features, set minimum product standards and restrict the sale of a product to certain consumers.

The Government says “Where the FCA identifies a serious problem with a product or product feature, it should be able to take timely and decisive action to ban it, if necessary.” The FCA will publish and consult on a set of 5 principles concerning when product bans can be used.

However, the Government maintains that these new powers do not mark a shift towards product pre-approval. They say: “While representing an important new regulatory tool, it is important to note that neither the product banning power, nor the FCA’s more proactive and interventionist approach to regulation more generally, represents a move towards widespread product pre-approval.

To improve accountability of the FCA, a new panel for markets practitioners will be set up along the lines of the small business, consumer and practitioner panels.

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