Under the Financial Services Act 2012, the FCA now has power to publish such information about a Warning Notice as it considers appropriate. This is a controversial power that we regard as carrying great risks for subjects of enforcement action.
In Enforcement Watch 9, we reported on the FSA's consultation on the procedure for publishing such information (see Enforcement Watch 9 "FSA consults on procedure for publishing information about Warning Notices"). In March 2013, the FSA published the results of the consultation and its response.
Like us, respondents to the consultation agreed that the RDC (rather than FCA enforcement staff) is the appropriate decision maker in respect of the decision to publish details of a Warning Notice.
Respondents felt that the proposed seven day notice period before publication would not give subjects sufficient time to respond to the RDC's decision, suggesting that periods of 14 or 28 days would be more appropriate. In response to the consultation, the period to respond to the RDC has been extended in the normal case from seven to 14 days, with a provision to allow for consideration of a further extension if requested within the first seven days. Whilst we welcome the extension of time, there still remain areas of concern. For example, subjects will not normally be permitted to give their response in person. Further, the rules have no provision for a right of comment as to any revised wording proposed by the RDC following a challenge by a subject.
Additional wording has also been added to make clear that decisions regarding publication are to be made by the Chairman of the RDC panel which took the decision to publish the Warning Notice itself or, if not available, the Chairman or Deputy Chairman of the RDC.
The intended consequence of this new power is said to be increased transparency in the enforcement process at a much earlier stage than is the case currently. At this stage, we cannot know how aggressively the FCA, with the RDC, will approach this new power or how receptive the RDC will be to representations made by subjects. The potential unfairness to subjects remains clear.
The FSA has consulted separately in respect of its policy and the practicalities of publishing Warning Notices. That consultation remains open until June 2013 and we deal with this further in this issue (see "Consultation on how the power to publish Warning Notices details will be used").