In December 2012, the FSA consulted on how various parts of the new FCA handbook would implement certain aspects of the new regime. In terms of interest for enforcement matters, we focus below on the proposed changes to the current DEPP4 manual in relation to the publication of Warning Notices.
We have previously commented on the controversial power under the new Financial Services Act 2012 ("the Act") for the FCA to publish such information about a Warning Notice as it considers appropriate. We regard this power as carrying great risks for subjects of enforcement action (see for example Enforcement Watch 6 "FSA makes its views known on early publication of Warning Notices") The power has passed into the Act, and the present consultation on the topic relates to the procedure to be followed by the FCA when exercising its new power. The key features of the proposal for exercising the new power are:
- FCA staff will propose that details about a Warning Notice be published, but that the chairman of the RDC issuing the Warning Notice (or an alternate) will ultimately decide for the FCA whether to publish the information;
- the RDC will settle the relevant wording of the publication;
- the subject of the Warning Notice will usually be given 7 days to respond to the proposed publication, but may request an extension within 2 days of receipt of the proposed publication; and
- the subject will not usually be allowed to address the RDC in person in relation to the proposed publication.
Given that the new power has been enshrined in the Act, we welcome the fact that it will be the Chairman of the RDC who decides whether information should be published and what the wording should be, rather than FSA enforcement staff. Having said that, there are aspects of the proposal that we regard as less welcome. For example, faced with what is already a draconian power, it would be fairer if subjects were permitted to address the RDC in person. (It may be, however, that respondents can effectively cater for this by the content of their previous in person representations to the RDC on whether there should be a Warning Notice in the first place.) Another potential unfairness is that the RDC may came up with an alternative formulation of proposed wording, but which the subject does not have the right to comment on.
The above relates to procedure. Separately, the FSA will publish a further consultation shortly on how the FCA proposes to use its power. It will be interesting to see whether it elects to adopt a similar test to that currently set out in the Enforcement Guide (chapter 6) in relation to publication of Decision Notices prior to any decision on appeal to the Tribunal; namely whether or not there is a compelling reason to publish.