What powers do national financial services authorities have to examine and investigate compliance? What enforcement powers do they have for compliance breaches? How is compliance examined and enforced in practice?
Both the Consolidated Finance Act and the Consolidated Banking Act grant Consob and the Bank of Italy, within their respective competences, strong powers to inspect and require information from supervised entities.
In particular, the supervisory authorities can request information or documentation from supervised entities as well as from their personnel and outsourcers (also to be provided on a periodical basis) and carry out on-site verifications and inspections.
In addition, Consob and the Bank of Italy can exercise certain intervention powers over supervised entities such as:
- convening directors, auditors and personnel;
- ordering the convening of the corporate bodies of the supervised entities determining their agenda;
- directly convening the corporate bodies of the supervised entities where the competent bodies do not comply with the authorities’ order (see point above).
The supervisory authorities may also remove one or more members of the corporate bodies of the supervised entities where their permanence is prejudicial to the sound and prudent management of the relevant entity or detrimental to transparency and correctness in its conduct of business.
To ensure stability, the Bank of Italy, upon consultation with Consob, may adopt restrictive measures regarding one or more supervised entities (eg, limit the services and activities they provide also on a territorial basis, prohibit the distribution of profits, set limits on the total amount of the variable part of remuneration).Disciplinary powers
What are the powers of national financial services authorities to discipline or punish infractions? Which other bodies are responsible for criminal enforcement relating to compliance violations?
Infractions are provided for by the Consolidated Finance Act and the Consolidated Banking Act (depending on the matter involved). Both Consob and the Bank of Italy, within their respective competences, may impose administrative sanctions (mainly pecuniary administrative sanctions) on supervised entities and relevant individuals (often as a result of a verification or inspection carried out in the performance of supervision powers). Specific regulations discipline the supervisory authorities’ sanction proceedings (and relevant phases and timeline). In any case, the sanction proceedings need to allow all interested parties to intervene and to have access to the investigation file. It is possible to bring opposition against a sanction issued by the supervisory authorities before the competent court of appeal.Tribunals
What tribunals adjudicate criminal and civil financial services infractions?
Competence in relation to financial services criminal and civil infractions is reserved to ordinary criminal and civil courts. See also question 33 of Getting the Deal Through - Securities Litigation (https://gettingthedealthrough.com/area/73/securities-litigation/) with regard to cases where retail clients can resort to arbitration through the Banking and Financial Arbitrator or the Financial Disputes Arbitrator.Penalties
What are typical sanctions imposed against firms and individuals for violations? Are settlements common?
The Consolidated Finance Act provides for different sanctions of criminal and administrative nature against supervised entities and relevant individuals.
Among the criminal sanctions provided by the Consolidated Finance Act, it is worth mentioning those relating to unauthorised performance of investment services and activities, collective asset management or off-site offer of financial products or investment services or activities (punished with imprisonment and a fine).
As to administrative sanctions, they mainly relate to non-fulfilment by supervised entities and relevant individuals of duties under the primary and secondary sources of law (the latter basically consisting in Consob regulations concerning intermediaries, markets and issuers).
Both criminal and administrative sanctions are provided for obstruction or non-cooperation with respect to the supervision activities of Consob and the Bank of Italy.