Enforcement and Compensation

Question 1

Investigation and Enforcement powers of FCA//PRA

Answer 1

S165 of FSMA 2000
1) Powers of Enforcement Officers

• Dawn raid
• Demand access to documents and take copies
• Info provided in reasonable time period
• Interview any employee
  2) Investigator Powers

S167- Firms appoint competent persons to give info to regulator

S168 - Third party to investigate (forensic accountant )

S177 - Failure to co-operate = criminal offence

S177 - Mislading evident = criminal offence

Question 2

FCA Disciplinary Panel

Answer 2

Regulatory Decisions Committee

Question 3

PRA Disciplinary Panel

Answer 3

Enforcement Decision Making Committee

Question 4

Punishment Notices from RDC

Answer 4

1) Warning Notice
2) Decision Notice
3) Final Decision
4) Disciplinary Measures

Question 5

Preventative Notices from RDC

Answer 5

1) Supervisory Notice
2) Supervisory Notice
3) Final Supervisory

Question 6

Cancelling Notices from RDC

Answer 6

Notice of Discontinuance

At any time during process

Question 7

Minor Breach RDC would give

Answer 7

Private Warning

Question 8

Other points for RDC enforcement process

Answer 8

Firm has chance to response after first initial phase

Appeal to Upper Tribunal within 28 days

Question 9

Disciplinary Processes & Measures

Answer 9

Withdrawal or variation
of authorisation or approval

Prohibition - Individuals S56

Restitution Order - Pay compensation

Public Censure, statements of misconduct and financial penalties (repetitional damage)

Prosecution - breach of criminal law

Question 10

Injunctions

Answer 10

Only issued by Civil Courts

Legal order instructing recipient to stop doing something

Applied by civil court upon anybody

Question 11

Restitution Orders

Answer 11

Civil Courts + Regulator

Legal order to compensate for damages caused to victims

Applied by civil court upon anybody
If breached money paid to regulator and then distributed

Can be applied by FCA/PRA on AUTHORISED Firms
_ if breach firm no longer fit and proper
Money paid directly from firm to victims
Can be appealed by Upper tribunal

Question 12

Cost of Non - Compliance

Answer 12

FCA five step penalty - setting framework

1) Remove any Profits (DISGORGEMENT)
2) Set Figure for seriousness of breach
3) Considering any aggravating and mitigating factors (DISCIPLINE)
4) Achieve appropriate deterrent effect (DETERRENCE)
5) Settlement Discount (up to 30%) - no arguing early stage

Question 13

Senior Manager attestations

Answer 13

S166 FSMA 2000

Accountability

SMF putting his/her name on particular measures

Question 14

How long firm to resolve complaint

Answer 14

Firm has 8 weeks to resolve complaint

Unresolved = complainant has 6 months to refer to FOS

Question 15

FOS Compensation

Answer 15

Max Award - 355,000 Pounds (and reasonable costs)

Financial loss, Pain and suffering, damage to reputation and distress inconvenience

Complainant accepts - award binding on firm

Complainant rejects - Pursue matter through courts

Question 16

Eligible Complainants

Answer 16

Retail Clients who are also

_ a consumer

• Small/medium enterprises annual turnover less than 6.5 million
  less than 50 employees/or balance sheet less than 5 million pounds
• Charities with annual income up to 5 million pounds
• Trustees of trusts with net assets up to 5 Million pounds

Question 17

FSCS

Answer 17

Financial Services Compensation Scheme

Claim for losses when authorised firms goes insolvent

Eligible claimants = most cutomers , expect other authorised firms
foreign firms
large companies

Exhaust all legal routes before using FSCS

Question 18

Eligible Claimants only

Answer 18

Deposits - Max claim - 85,000 pounds

Designated Investments - Max claim - 85,000 pounds

Question 19

All Clients

Answer 19

Long term/compulosry insurance = 100% of claim

General Insurance = 90% of claim