On 14 October 2010, the FSA published a consultation paper (CP10/23) on its 2010 Decision Procedure and Penalties manual (“DEPP”) and Enforcement Guide (“EG”) review. (The FSA committed to review DEPP and EG, which came into force in August 2007, on at least an annual basis.)
The changes proposed in CP10/23 include the following:
- Employees’ fines. The FSA intends to add a new rule prohibiting firms from paying financial penalties imposed on a present or former employee, director or partner of the firm or an affiliated company.
- Publishing decision notices. S.391 of the Financial Services and Markets Act 2000 (“FSMA”), as amended by the Financial Services Act 2010 (“the 2010 Act”) gave the FSA power to publish decision notices as well as final notices; the FSA is proposing only to publish a decision notice where the recipient has decided to refer the matter to the Upper Tribunal: (the amended s.391 came into force on 12 October 2010).
- Review of published notices. The FSA intends to remove its commitment, currently set out in EG, to review whether final notices, and related press releases, should remain published on its website six years after their publication: it will, however, carry out such a review on request, with the expectation that it will usually conclude that they should not be removed.
- Suspensions and the settlement discount scheme: the FSA currently applies a discount of up to 30 per cent to financial penalties to encourage early settlement of enforcement cases (the settlement discount scheme). The FSA intends to apply this approach to its power to impose suspensions and restrictions on authorised persons (meaning that firms which settle cases early may receive a 30 per cent reduction of the length of their suspension or restriction).
- Cross-Border Payments in Euro Regulations 2010 (“the Cross-Border Regulations”). The FSA must publish its policy for giving warning and decision notices under the Cross-Border Regulations: the FSA intends to take the same approach to these powers as it has taken to its penalty powers under the Payment Services Regulations 2009 (SI 2009/209) (the Cross-Border Regulations came into force in February 2010).
Comments on these proposals can be submitted until 14 December 2010. The FSA intends to publish a policy statement with final rules in January 2011