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Regulators tighten enforcement regime for industry wrongdoers

  • 01/02/2017
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Regulators tighten enforcement regime for industry wrongdoers
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) will abolish penalty discounts at stage two and three of settlement during enforcement investigations, but still allow discounts for partly-contested cases.

Before, the FCA could heavily discount any penalties levied after investigations into financial wrongdoing by financial services employees if the subject admitted guilt at an earlier stage or offered full co-operation, for example.

However, the FCA is also introducing a process for partly-contested cases. This will allow a person under investigation to agree certain elements of a case (whether penalty, facts, liability or a combination of these issues) and contest the other elements before the Regulatory Decisions Committee.

The changes have been laid out in a policy statement today following Consultation Paper (CP) 16/10: Proposed Implementation of the Enforcement Review and the Green Report.

The timetable for changes has already begun and the PRA will continue to do follow-up work on the decision-making commission, produce a short guide to PRA enforcement procedures, including referral criteria and review its approach to settlements.

Other changes on the way include providing more information to the subject of any about the investigation and the background for it. Subjects will also be offered more regular updates and increase engagement generally, said the regulator.

The regulators also plan to produce more detailed guidance on the process for joint FCA and PRA investigations.

Mark Steward, director of enforcement and market oversight at the FCA, said: “It is essential that our enforcement decision-making processes command public confidence and operate both efficiently and fairly. The changes set out in today’s policy statement are designed to achieve just that and reflect the views of stakeholders who responded to our consultation.”

Miles Bake, head of legal, regulatory action division of the PRA, said: “The PRA’s enforcement processes must be clear, transparent and reasonable. This Policy statement outlines a number of concrete steps the PRA is taking to ensure that we implement the recommendations from the HMT Enforcement Review and the report of Andrew Green QC.”

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