DEC Decision Making

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DEC 1

Application,
Purpose and Introduction

DEC 1.1

Application and Purpose

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Application

DEC 1.1.1

handbook-guidance
This manual gives guidance on the FSA's decision making and other procedures for giving statutory notices listed in DEC 2 Annex 1 G and DEC 3 Annex 1 G. This manual also gives guidance on the FSA's procedure for using its powers under Part XXIV of the Act (Insolvency), Part XXV of the Act (Injunctions and restitution), Part XXVII of the Act (Criminal Offences) and the Unfair Terms Regulations. It also gives guidance on the FSA's procedures for using certain similar powers with respect to insolvency and criminal offences under the Building Societies Act 1986, the Friendly Societies Acts 1974 and 1992, the Credit Unions Act 1979 and the Industrial and Provident Societies Act 1965. It is relevant to firms, approved persons, applicants for Part IV permission, persons for whom an application for approval under section 59 of the Act has been made, persons that are subject to the requirements set out in the Part 6 rules, and other persons, whether or not they are regulated by the FSA.

Purpose

DEC 1.1.2

handbook-guidance
Section 395 of the Act (The FSA's procedures) requires the FSA to publish a statement of its procedure for the giving of statutory notices. The purpose of the Decision making manual (DEC) is to fulfil this obligation.
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DEC 1.1.3

handbook-guidance
DEC 4.6.1 G and DEC 4.6.2 G set out the FSA's policy on the procedure to be followed:
(1) if the FSA decides to use its:
(a) powers to apply to the civil courts for insolvency orders, injunctions, restitution orders and collective investment scheme related orders; or
(b) powers to prosecute criminal offences; and
(2) if the FSA decides to discontinue any proceedings begun by the use of these powers.
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DEC 1.1.4

handbook-guidance
DEC 4.6.2A G and DEC 4.6.2B G set out the FSA's policy on the procedure to be followed:
(1) if the FSA decides to use its powers to prosecute criminal offences under the Building Societies Act 1986, the Friendly Societies Acts 1974 and 1992, the Credit Unions Act 1979 and the Industrial and Provident Societies Act 1965, in each case as amended; and
(2) if the FSA decides to discontinue any proceedings begun by the use of these powers.
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DEC 1.2

Introduction

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DEC and the other manuals

DEC 1.2.1

handbook-guidance
The Authorisation manual (AUTH), the Supervision manual (SUP), the Enforcement manual (ENF) and the Decision making manual (DEC) form the regulatory processes part of the Handbook:
(1) AUTH sets out the relationships between the FSA and applicants for Part IV permission and persons wishing to exercise EEA rights, Treaty rights or UCITS directive rights;
(2) SUP sets out the relationship between the FSA and authorised persons (referred to in the Handbook as firms). As a general rule, material that is of a continuing relevance after authorisation is in SUP;
(3) ENF describes the FSA's enforcement powers under the Act and sets out its policies for using those powers; and
(4) DEC is principally concerned with, and sets out, the FSA's decision making procedures for decisions that involve the giving of statutory notices.
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Statutory notices

DEC 1.2.2

handbook-guidance
The Act designates certain notices as warning notices, decision notices or supervisory notices ('statutory notices') for which there are certain specified procedures, actions and protections.DEC 1.2.3 G summarises the statutory notices and related notices and provides references to where they are described in the Act.
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DEC 1.2.3

handbook-guidance

Summary of statutory and related notices

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Decision making on giving statutory notices

DEC 1.2.4

handbook-guidance
The FSA has different decision making procedures depending on whether or not a statutory notice is given.
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DEC 1.2.5

handbook-guidance
Events leading to the giving of a statutory notice are covered in AUTH, SUP, ENF and COLL or CIS. DEC 2 Annex 1 G and DEC 3 Annex 1 G list the relevant references.
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DEC 1.2.6

handbook-guidance
Decisions whether to give a statutory notice and decisions associated with the statutory notice once it has been given (a 'statutory notice associated decision', see DEC 4.1.2 G) will be taken by a 'decision maker'. References to the 'decision maker' concerning statutory notice decisions refer to decisions taken by:
(1) the Regulatory Decisions Committee (RDC);
(2) FSA staff under executive procedures; or
(3) FSA staff under the settlement decision procedure.

DEC 1.2.7

handbook-guidance
DEC 4.1 describes the allocation of decisions between the RDC and executive procedures. DEC 4.2 provides further information on the RDC. DEC 4.3 provides further information on executive procedures. DEC Appendix 1 explains settlement procedures and the mediation scheme for FSA enforcement cases. It includes a description of the circumstances in which decisions that would normally be made by the RDC will be made by FSA staff under settlement decision procedure.

Other decisions

DEC 1.2.8

handbook-guidance
The FSA will make regulatory decisions falling outside section 395 of the Act. These will include exercise of statutory powers which do not require statutory notices to be given, for example: when the FSA grants an application for a Part IV permission on the terms applied for; when the FSA grants other applications; decisions on applications for waivers; decisions to give individual guidance; and decisions generally in the course of the FSA's oversight of regulated institutions. They also include decisions on recommendations by FSA staff to the RDC.

DEC 1.2.9

handbook-guidance
The FSA's general policy is that regulatory decisions should be taken at a level of seniority which is appropriate to the decision having regard to such factors as:
(1) the significance of the decision to those who would be affected by it;
(2) its novelty in the light of stated policy and established practice;
(3) the complexity of the relevant considerations;
(4) the range of alternative options; and
(5) the extent to which the facts relating to the decision are or may be disputed.
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DEC 1.2.10

handbook-guidance
The FSA expects that most decisions will be made by individuals accountable through line management to the Board within the management structure of the FSA. Where appropriate, decisions will be made collectively by a group of staff. Decisions will be made within the stated policies of the FSA and in accordance with the Act and other legal requirements.
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Export chapter as

DEC 2

Statutory notice procedure: Warning notice and decision notice procedure

DEC 2.1

Warning notice and decision notice procedure: Introduction

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DEC 2.1.1

handbook-guidance
The Act and certain other enactments requires the FSA, when proposing to exercise its powers in certain circumstances, to use the warning notice and decision notice procedure.
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DEC 2.1.2

handbook-guidance
The circumstances to which the warning notice and decision notice procedure in DEC apply are set out in DEC 2 Annex 1 G. Three flowcharts are provided in DEC 2 Annex 2 G to DEC 2 Annex 4 G. These illustrate:
(1) the procedure for giving warning notices and decision notices in the case of applications for Part IV permission, applications for approval under section 59 of the Act (Approval for particular arrangements), applications for variation of permission, and for certain other applications (see DEC 2 Annex 2 G);
(2) the procedure for giving warning notices and decision notices in non-application cases (see DEC 2 Annex 3 G); and
(3) the procedure for giving warning notices and decision notices in the case of notifications of a change in control (see DEC 2 Annex 4 G).
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DEC 2.1.3

handbook-guidance
DEC 1.2.3 G includes a summary of the purpose of warning notices and decision notices.
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DEC 2.2

Warning notice procedure

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DEC 2.2.1

handbook-guidance
Under the circumstances listed in DEC 2 Annex 1 G, if FSA staff consider that action is appropriate, they will recommend to the relevant decision maker that a warning notice be given. A specimen warning notice for enforcement cases is at DEC 2 Annex 5 G.
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DEC 2.2.2

handbook-guidance
After considering the staff recommendation, the decision maker may:
(1) decide not to take further action (with or without a private warning (see ENF 11.3(Private warnings)); or
(2) decide to give a warning notice to the person concerned.
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DEC 2.2.3

handbook-guidance
In the case of a proposed refusal of an application for approval under section 59 of the Act, the FSA must send a warning notice to all interested parties. Under section 62(5) of the Act (Applications for approval: procedure and right to refer to Tribunal), the interested parties in relation to an application for approval, are:
(1) the applicant;
(2) the person in respect of whom the application is made ('A');
(3) the person by whom A's services are to be retained, if not the applicant.
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DEC 2.2.4

handbook-guidance
Under regulation 22 of the OEIC Regulations, in the case of a warning notice concerning a proposed change in respect of an ICVC, the notice must be given to the depositary as well as the ICVC. The only exception is if the proposal is to replace the depositary or any director.
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DEC 2.2.5

handbook-guidance
If the FSA decides to give a warning notice to a person, in accordance with section 387 of the Act (Warning notices), the warning notice must:
(1) state the action which the FSA proposes to take;
(2) be in writing;
(3) give the FSA's reasons for the proposed action;
(4) state whether section 394 of the Act (Access to FSA material) applies (see DEC 2.4); and
(5) if that section applies, describe its effect and state whether any secondary material exists to which the person concerned must be allowed access under it.
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DEC 2.2.6

handbook-guidance
If the FSA decides to take no further action and the FSA had previously informed the person concerned that it intended to recommend action, the FSA will communicate this decision promptly to the person concerned.
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DEC 2.2.7

handbook-guidance
The warning notice will contain a statement that the person concerned is entitled to make representations to the FSA. The notice must specify a reasonable period, of at least 28 days from receiving (see DEC 5.3) the warning notice, within which the person to whom it is given may make representations.
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DEC 2.2.8

handbook-guidance
The procedures for making representations are set out in DEC 4.4.
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DEC 2.2.9

handbook-guidance
The warning notice will contain (where appropriate) a statement that the mediation scheme is available. The applicability of the FSA's mediation scheme is described in DEC App 1.
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DEC 2.3

Decision notice procedure

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DEC 2.3.1

handbook-guidance
The decision maker will consider any representations made in accordance with DEC 4.4 in relation to a warning notice which has already been given. A decision will be stated in a decision notice or (where appropriate) a notice of discontinuance or other written notice. The decision notice sets out the terms of the decision. A specimen decision notice for enforcement cases is at DEC 2 Annex 6 G.
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DEC 2.3.2

handbook-guidance
In accordance with section 388 of the Act (Decision notices), the decision notice must:
(1) be in writing;
(2) give the FSA's reasons for its decision to take the action to which the decision notice relates;
(3) state whether section 394 of the Act (Access to FSA material) applies (see DEC 2.4);
(4) if that section applies, describe its effect and state whether any secondary material exists to which the person concerned must be allowed access under it; and
(5) give an indication of:
(a) any right given by the Act to have the matter referred to the Tribunal; and
(b) the procedure on referring a case to the Tribunal.
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DEC 2.3.3

handbook-guidance
In the case of a proposed refusal of an application for approval under section 59 of the Act, the FSA must give a decision notice to all interested parties (see DEC 2.2.3 G).
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DEC 2.3.4

handbook-guidance
In the case of a decision notice concerning a notification of a proposed change in respect of an ICVC, the FSA must give a decision notice to the depositary as well as to the ICVC, if the depositary received the warning notice (see DEC 2.2.4 G).
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DEC 2.3.5

handbook-guidance
The decision maker may decide to take action different from that proposed in the warning notice. However, under section 388(2) of the Act, that action must be made under the same Part of the Act as the action proposed in the warning notice.
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Further decision notice

DEC 2.3.6

handbook-guidance
Under section 388(3) of the Act, following the giving of a decision notice but before the FSA takes action to which the decision notice relates, the FSA may give the person concerned a further decision notice relating to different action concerning the same matter. Under section 388(4) of the Act, the FSA can only do this if the person receiving the further decision notice gives his consent. In these circumstances the following procedure will apply:
(1) FSA staff will recommend to the decision maker that a further decision notice be given, either before or after obtaining the person's consent;
(2) the decision maker will consider whether the action proposed in the further decision notice is appropriate in the circumstances;
(3) if the decision maker decides that the action proposed is inappropriate, he will decide not to give the further decision notice. In this case, the original decision notice will stand and the person's rights in relation to that notice will be unaffected. If the person's consent has already been obtained, the FSA will notify him of the decision not to give the further decision notice;
(4) if the decision maker decides that the action proposed is appropriate then, subject to the person's consent being (or having been) obtained, a further decision notice will be given;
(5) a person who had the right to refer the matter to the Tribunal under the original decision notice will have that right under the further decision notice. The time period in which the reference to the Tribunal may be made will begin from the date on which the further decision notice is given.
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DEC 2.3.7

handbook-guidance
For the purpose of establishing whether the person receiving the further decision notice gives his consent, the FSA will normally require consent in writing. If the person concerned is an individual, the FSA will normally require a letter or signed memorandum from him recording his consent. If the person concerned is a body corporate or partnership, the FSA will normally require a letter or signed memorandum on behalf of the body corporate or partnership stating its consent.
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Notice of discontinuance

DEC 2.3.8

handbook-guidance
If the FSA decides not to take action proposed in a warning notice or the action to which a decision notice relates, section 389 of the Act (Notices of discontinuance) requires the FSA to give a notice of discontinuance to the person to whom the warning notice or decision notice was given. (Section 389 of the Act does not apply if the discontinuance of the proceedings results in the granting of an application made by the person to whom the warning notice (or decision notice) was given.)
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DEC 2.3.9

handbook-guidance
A notice of discontinuance:
(1) must identify what proceedings are being discontinued (section 389(3)); and
(2) must state that the FSA may publish information about the matter if the person to whom the notice of discontinuance is given consents (section 391(2)).
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DEC 2.3.10

handbook-guidance
Where the FSA is required to give a person a copy of a notice of discontinuance (see DEC 2.4.10 G), the copy must be accompanied by a statement that the FSA may publish information about the matter, so far as relevant to the person to whom the copy is given, if that person consents.
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Final notice

DEC 2.3.11

handbook-guidance
Under section 390 of the Act (Final notices), the FSA must give a final notice to the person to whom it has given a decision notice:
(1) if the matter was not referred to the Tribunal within the period of 28 days of the date when the decision notice was given, or within any other period that may be prescribed in the Tribunal rules, in which case the FSA will give a final notice at the same time as it takes the action to which the decision notice relates;
(2) if the matter was referred to the Tribunal within the period of 28 days of the date when the decision notice was given, or within any other period that may be prescribed in the Tribunal rules, in which case the FSA will give a final notice at the same time as it takes action in accordance with any directions given by the Tribunal or the Court under section 137 of the Act (Appeal on a point of law).
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DEC 2.3.12

handbook-guidance
A final notice sets out the terms of the statement, order, penalty or other action, and will give details of the date when the action takes effect.
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DEC 2.4

Third party rights and access to FSA material

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DEC 2.4.1

handbook-guidance
Sections 393 (Third party rights) and 394 (Access to FSA material) of the Act confer additional procedural rights relating to third parties and to disclosure of FSA material. These rights apply in certain warning notice and decision notice cases referred to in section 392 of the Act (Application of sections 393 and 394). The cases in which these additional rights apply are identified in DEC 2 Annex 1 G by asterisks; these are generally cases in which the warning notice or decision notice is given on the FSA's own initiative rather than in response to an application or notification made to the FSA.
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Access to FSA material

DEC 2.4.2

handbook-guidance
If section 394 of the Act (Access to FSA material) applies and the FSA gives a person a warning notice or decision notice, it must under section 394(1) allow that person ('A') access to:
(1) the material on which the FSA relied in taking the decision which gave rise to the obligation to give the warning notice (or the decision notice); and
(2) any secondary material, which, in the opinion of the FSA, might undermine that decision.
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DEC 2.4.3

handbook-guidance
However, the duty under section 394(1) is qualified in the following ways:
(1) under section 394(2), the FSA does not have to allow A access to material that is excluded material;
(2) under section 394(2)(a) and (b), the FSA does not have to allow A access to material if this:
(a) relates to a case involving a person other than A; and
(b) was taken into account in A's case only for the purpose of comparison with other cases;
(3) under section 394(3), the FSA may refuse A access to particular material to which it would otherwise have to allow him access if, in the FSA's opinion, allowing him access to the material would not be in the public interest or would not be fair, having regard to:
(a) the likely significance of the material to the person concerned in relation to the matter about which he has been given a notice; and
(b) the potential prejudice to the commercial interests of a person (other than A) which would be caused by the material's disclosure.
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DEC 2.4.4

handbook-guidance
If under section 394(2) the FSA does not allow A access to material because it is excluded material consisting of a protected item, it must give A written notice of the existence of the protected item and of the FSA's decision not to allow him access to it (section 394(4)).
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DEC 2.4.5

handbook-guidance
If under section 394(3) the FSA refuses to allow A access to particular material, it must give him written notice of the refusal and the reasons for it (section 394(5)).
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DEC 2.4.6

handbook-guidance
If the FSA receives a request for access to material, the FSA may within a reasonable period after the request was made:
(1) provide facilities for the inspection and photocopying of the material that it considers it is required to disclose; or
(2) provide a photocopy of the material.
The FSA will provide the first photocopy of the material free of charge, but will charge for subsequent copies it provides to the same person.
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Third party rights

DEC 2.4.7

handbook-guidance
If section 393 (Third party rights) applies and any of the reasons given in the warning notice relate to a matter which:
(1) identifies a person ("the third party") other than the person to whom the warning notice is given; and
(2) in the FSA's opinion is prejudicial to the third party;
then the FSA must give the third party, in accordance with section 393 of the Act, a copy of the warning notice.
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DEC 2.4.8

handbook-guidance
A copy of the warning notice will not be given if the FSA considers that this would be impracticable, or the FSA has already given the third party a separate warning notice about the same matter. Similarly, a copy of the warning notice will not be given if the FSA gives the third party such a notice at the same time as it gives the warning notice which identifies him.
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DEC 2.4.9

handbook-guidance
DEC 2.4.7 G and DEC 2.4.8 G apply similarly in relation to a decision notice.
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DEC 2.4.10

handbook-guidance
The FSA must give a copy of the notice of discontinuance, decision notice or final notice (as appropriate) to a third party who has been given a copy of the warning notice or decision notice (section 393(14), 393(5) and 390(1) of the Act).
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DEC 2.4.11

handbook-guidance
If the FSA gives a copy of a warning notice or decision notice to a third party, the copy must be accompanied by an indication of the third party's right under section 393(9) to refer the case to the Tribunal and the procedure on such a referral.
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DEC 2.4.12

handbook-guidance
If the FSA gives a copy of a warning notice or decision notice to a third party, the provisions about access to FSA material also apply to the third party (DEC 2.4.2 G to DEC 2.4.6 G). Under section 393(12), the material that the FSA must disclose under section 394 is material that relates to the matter that identifies the third party.
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DEC 2 Annex 1

Statutory notice procedure: Warning notice and decision notice procedure

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handbook-guidance

List of warning notices and decision notices under the Act (other than Part VI)and certain other enactments

DEC 2 Annex 2

Statutory notice procedure: Warning notice and decision notice procedure

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handbook-guidance
The FSA's decision making procedure for applications concerning Part IV permission, applications for approval under section 59 of the Act, and for certain other applications involving warning and decision notices
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DEC 2 Annex 3

Statutory notice procedure: Warning notice and decision notice procedure

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handbook-guidance
The FSA's decision making procedure in non-application cases involving warning and decision notices
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DEC 2 Annex 4

Statutory notice procedure: Warning notice and decision notice procedure

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handbook-guidance
The FSA's decision making procedure on notification of a change in control involving warning and decision notices
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DEC 2 Annex 5

Specimen Warning Notice

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handbook-guidance
This annex consists only of one or more forms or templates. Forms and templates are to be found through the 'Forms' link under Useful Links section at www.fsahandbook.info or on the Handbook CD-ROM.
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DEC 2 Annex 6

Specimen Decision Notice

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handbook-guidance
This annex consists only of one or more forms or templates. Forms and templates are to be found through the 'Forms' link under Useful Links section at www.fsahandbook.info or on the Handbook CD-ROM.
  • 01/12/2004

Export chapter as

DEC 3

Statutory notice procedure: Supervisory
notice procedure

DEC 3.1

Supervisory notice procedure

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DEC 3.1.1

handbook-guidance
The Act requires the FSA, when proposing to exercise its powers in certain circumstances, to use the supervisory notice procedure. The relevant circumstances are set out in DEC 3 Annex 1 G. DEC 1.2.3 G includes a summary of the purpose of supervisory notices.
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DEC 3.1.2

handbook-guidance
In DEC 3.1.3 G to DEC 3.1.10 G, the supervisory notice about a matter first given to the recipient is referred to as the "first supervisory notice" and the supervisory notice given after consideration of any representations is referred to as the "second supervisory notice". DEC 3 sets out the procedure which applies when the FSA gives a supervisory notice. The flowchart in DEC 3 Annex 2 G illustrates the procedure for the giving of supervisory notices. A specimen notice for enforcement cases is at DEC 3 Annex 3 G.
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First supervisory notice

DEC 3.1.3

handbook-guidance
In the circumstances listed in DEC 3 Annex 1 G, if FSA staff consider that action is appropriate, they will recommend to the relevant decision maker that a supervisory notice be given. The recommendation will say whether the action should take effect immediately, on a specified date, or when the matter is no longer open to review.
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DEC 3.1.4

handbook-guidance
After considering the staff recommendation, the FSA may:
(1) decide to take no action; or
(2) decide to give a first supervisory notice to the person concerned.
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DEC 3.1.5

handbook-guidance
If the FSA decides to give a first supervisory notice to a person, in accordance with the sections of the Act listed in DEC 3 Annex 1 G, the notice must:
(1) give details of the action;
(2) inform him when the action takes effect, which may be immediately, on a date specified in the notice or (except for a supervisory notice given under section 321 of the Act) when the matter is no longer open to review;
(3) state the FSA's reasons for the action and for its decision as to when the action takes effect;
(4) inform him of his right to refer the matter to the Tribunal and give an indication of the procedure on such a reference; and
(5) inform him that he may make representations to the FSA within such a period as may be specified in the notice (whether or not the matter has been referred to the Tribunal).
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DEC 3.1.5A

handbook-guidance
Except for a supervisory notice given under section 321 of the Act, the action may take effect immediately (or on a specified date) only if the FSA considers this necessary, having regard to the ground on which it is taking the action.
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DEC 3.1.6

handbook-guidance
If the FSA decides to take no further action and the FSA had previously informed the person concerned that it intended to recommend action, the FSA will communicate this decision promptly to the person concerned.
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DEC 3.1.7

handbook-guidance
The procedures for making representations are set out in DEC 4.4. If the FSA receives no representations within the period specified in the first supervisory notice, the default procedures set out in DEC 4.4.13A G apply.
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Second supervisory notice

DEC 3.1.8

handbook-guidance
The FSA will consider any representations made in accordance with DEC 4.4 concerning a first supervisory notice which the FSA has already given.
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DEC 3.1.9

handbook-guidance
If the FSA decides to take the proposed action, or to take action in a different way, or decides not to rescind action that is already effective, then in accordance with the sections of the Act listed in DEC 3 Annex 1 G, a second supervisory notice must be given.
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DEC 3.1.10

handbook-guidance
If the FSA decides to give a second supervisory notice, its content will depend on the action the FSA decides to take.
(1) If the FSA decides to take the action proposed in the first supervisory notice, or if action has already been taken which the FSA decides not to rescind, in accordance with the sections of the Act listed in DEC 3 Annex 1 G, the notice must inform the person concerned of his right to refer the matter to the Tribunal. If a notice informs a person of his right to refer the matter to the Tribunal, it must also describe the procedure on such a reference.
(2) If the FSA decides to take different action from that proposed in the first supervisory notice, then in accordance with the sections of the Act listed in DEC 3 Annex 1 G, the second supervisory notice must be in the same form as a first supervisory notice (see DEC 3.1.5 G).
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DEC 3.1.11

handbook-guidance
If the FSA decides not to take action, or decides to rescind action that is already effective, then in accordance with the sections of the Act listed in DEC 3 Annex 1 G, the person concerned must be informed in writing.
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DEC 3 Annex 1

Statutory notice procedure: Supervisory notice procedure

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handbook-guidance

DEC 3 Annex 2

Statutory notice procedure: Supervisory notice procedure

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handbook-guidance
The FSA's decision making procedure for supervisory notices
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DEC 3 Annex 3

Specimen first supervisory notice

  • 01/12/2004

handbook-guidance
This annex consists only of one or more forms or templates. Forms and templates are to be found through the 'Forms' link under Useful Links section at www.fsahandbook.info or on the Handbook CD-ROM.
  • 21/11/2002

Export chapter as

DEC 4

The decision maker

DEC 4.1

Allocation of decision making

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DEC 4.1.1

handbook-guidance
This section sets out the allocation of decision making between the RDC and executive procedures for decisions which:
(1) give rise to an obligation to give a statutory notice; or
(2) are associated with statutory notice decisions ("statutory notice associated decisions").
  • 01/12/2004

DEC 4.1.2

handbook-guidance
Statutory notice associated decisions include decisions:
(1) to set or extend the period for making representations (see DEC 4.4);
(2) whether a copy of the statutory notice needs to be given to any third party and the period for the third party to make representations;
(3) to refuse access to FSA material; and
(4) as to the information it is appropriate to publish about the matter to which a final notice, or a supervisory notice which has already taken effect, relates.
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DEC 4.1.3

handbook-guidance
FSA staff responsible for preparing and recommending action in individual cases will allocate cases to the RDC (by full or modified procedures) or to executive procedures in accordance with DEC 4.1.4 G and DEC 4.1.6 G.
  • 01/12/2004

Decisions to be taken by the RDC

DEC 4.1.4

handbook-guidance
The RDC has responsibility for statutory notice decisions and statutory notice associated decisions if the FSA proposes or takes any of the following actions:
(1) [deleted]
(2) to restrict a Part IV permission on the FSA's own initiative (by removing a regulated activity, by imposing a limitation or requirement or by specifying a narrower description of regulated activity) in a way that would make a fundamental change (see DEC 4.1.5 G) to the nature of the Part IV permission held (whether indefinitely, or for a limited period);
(3) [deleted]
(4) to cancel a Part IV permission on the FSA's own initiative;
(4A) to revoke a small e-money issuer certificate (see ELM 8 (Small e-money issuers));
(5) to withdraw approved person status under section 63 of the Act (Withdrawal of approval);
(6) to make a prohibition order in relation to any person, or refuse an application to vary or revoke such an order;
(7) to impose a requirement on an incoming firm with an effect equivalent to making a fundamental change (see DEC 4.1.5 G) to the nature of a permission, or to refuse an application to vary or rescind such a requirement;
(8) to exercise the FSA's powers to impose a financial penalty or public censure on any person, or to make a restitution order against any person;
(9) to exercise any power of the FSA relating to a regulated collective investment scheme, other than to:
(a) refuse an application for an authorisation order (but see (10)); or
(b) refuse an application for recognition of a collective investment scheme under section 270 (Schemes authorised in designated countries or territories) or 272 (Individually recognised overseas schemes) of the Act; or
(c) object to a notice of intention to invite persons to participate in a collective investment scheme constituted in another EEA State; or
(d) refuse approval of changes to an AUT or ICVC;
(10) to refuse an application for an authorisation order, if the applicant is not the operator of an existing AUT or ICVC;
(11) to impose a requirement on a former underwriting member of Lloyd's or refuse an application to vary or rescind such a requirement;
(12) to make an order disapplying the exemption in section 327(1) of the Act (Exemption from the general prohibition) in relation to a professional firm to the extent specified in the order, or refuse an application to vary or revoke such an order;
(13) to disqualify an auditor or actuary;
(14) to refuse to give a consent notice to a UK firm wishing to establish a branch under an EEA right;
(15) to give a direction under any of the following sections of the Building Societies Act 1986:
(a) section 36(3), (5), (6), (7) or (10) (power to direct restructuring of business or submission of resolutions for a transfer of society's business to a company when society is failing to comply with principal purpose or the lending or funding nature limits);
(b) section 42B(1) (power to direct transfers of engagements or business), other than a direction where the giving of the direction and its terms have been agreed with the society concerned;
(16) to issue a prohibition order under section 36A of the Building Societies Act 1986;
(17) to determine the appropriate Part IV permission for the successor society on an amalgamation:
(a) under section 93 of the Building Societies Act 1986 between building societies each of whom has a Part IV permission to accept deposits; or
(b) under section 85 of the Friendly Societies Act 1992 between friendly societies each of whom has a Part IV permission;
in a case where it has not been possible to agree the terms of the proposed permission with the successor society;
(18) to give a direction under any of the following sections of the Friendly Societies Act 1992:
(a) sections 54 and 55 (power to direct a society to refrain from taking steps where certain activities have become disproportionate);
(b) section 90 (power to direct a transfer of engagements);
(19) not to include, or to remove, an appointed representative from the Register, or to refuse an application to revoke such a determination;
(20) to refuse an application for listing of securities;
(21) to discontinue the listing of securities on the FSA's own initiative;
(22) to publish a statement censuring an issuer of transferable securities, a person offering transferable securities to the public or a person requesting the admission of transferable securities to trading on a regulated market;
(23) to refuse an application for approval as a sponsor;
(24) to cancel a person's approval as a sponsor on the FSA's own initiative;
(25) to publish a statement censuring a sponsor;
(26) to impose a financial penalty or to issue a statement censuring a person for breach of any requirement set out in LR; and
(27) to object to the acquisition or increase of control under section 186 of the Act (Objection to acquisition of control), to object to existing control under section 187 of the Act (Objecting to existing control) or to attach conditions to an approval to a change in control under section 185 of the Act (Conditions attached to approval) in circumstances where the RDC is already considering or is shortly to consider a closely related matter and it seems appropriate to those making the decision under executive procedures for the RDC to have responsibility for the decision, having regard to such factors as those listed in DEC 1.2.9 G.

DEC 4.1.4A

handbook-guidance
The RDC has responsibility for statutory notice decisions and statutory notice associated decisions if the FSA takes any of the following actions, but only if the action involves a fundamental (see DEC 4.1.5 G) change to the nature of a permission and the applicant makes representations to the FSA:
(1) to impose a limitation or a requirement which was not applied for, or specify a narrower description of regulated activity than that applied for, on the grant of a Part IV permission; and
(2) to refuse an application to vary a Part IV permission, or to restrict a Part IV permission on the grant of a variation (by imposing a limitation or requirement which was not applied for or by specifying a narrower description of regulated activity than that applied for).
  • 20/10/2005

DEC 4.1.4B

handbook-guidance
The RDC has responsibility for statutory notice decisions and statutory notice associated decisions if the FSA takes any of the following actions but only if the applicant makes representations to the FSA:
(1) to refuse an application for a Part IV permission or to refuse an application to cancel a Part IV permission;
(2) to refuse an application for a small e-money issuer certificate (see ELM 8 (Small e-money issuers)); and
(3) to refuse approved person status.
  • 20/10/2005

DEC 4.1.5

handbook-guidance
In DEC 2 Annex 1G, DEC 4.1.4 G(2) and (7), DEC 4.1.4A G and DEC 4.1.8 G (5), making a fundamental change to the nature of a permission means:
(1) removing a type of activity or investment from the firm's permission; or
(2) refusing an application to include a type of activity or investment; or
(3) restricting a firm from taking on new business, dealing with a particular category of client or handling client money by imposing a limitation or requirement, or refusing an application to vary or cancel such a limitation or requirement; or
(4) imposing or varying an assets requirement (as defined in section 48(3) of the Act (Prohibitions and restrictions)), or refusing an application to vary or cancel such a requirement.

Decisions to be taken by executive procedures

DEC 4.1.6

handbook-guidance
Statutory notice decisions and statutory noticeassociated decisions which are not taken by the RDC, will be taken under executive procedures.
  • 01/12/2004

Examples of allocation of decision making

DEC 4.1.7

handbook-guidance
Examples of matters decided by the RDC include:
(1) deciding to give a decision notice, refusing an application to vary a Part IV permission to carry on insurance business or to accept deposits for the first time in circumstances where the applicant makes representations to the FSA; in these cases, the firm will normally have been required to complete parts of the application pack (SUP 6.4.14 G);
(2) deciding to give a decision notice, refusing an application to vary a Part IV permission to carry on regulated activities with private customers for the first time in circumstances where the applicant makes representations to the FSA;
(3) deciding to give a decision notice, refusing an application to vary a Part IV permission to remove a requirement to enable the firm to hold or control client money for the first time in circumstances where the applicant makes representations to the FSA; and
(4) varying a Part IV permission on the FSA's own initiative by removing a regulated activity from a firm'spermission.

DEC 4.1.8

handbook-guidance
Examples of matters decided by executive procedures (where the FSA decides or is required to use the statutory powers in question rather than to achieve the action required in other ways, for example through individual guidance or securing the agreement of a firm to take action on a voluntary basis) include:
(1) imposing a requirement that a firm submit regular reports covering, for example, trading results, management accounts, customer complaints, connected party transactions (SUP 7.4.2 G (1)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;
(2) imposing a requirement that a firm submit a business plan (SUP 7.3.3 (3)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;
(3) setting prudential limits through a requirement, for example on large exposures, foreign currency exposures or liquidity gaps (SUP 7.3.3 (2)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;
(4) imposing a requirement that a firm maintain a particular amount or type of financial resources (SUP 7.3.3 (5)), or varying such a requirement, on the FSA's own initiative, or refusing an application by the firm to vary such a requirement;
(4A) in relation to a financial conglomerate, using the own-initiative power to apply one of the methods for calculating capital adequacy in Annex 1 of the Financial Groups Directive (see GENPRU 3.1.30 R (Capital adequacy requirement: Use of Part IV permission to apply Annex 1 of the Financial Groups Directive)) or to impose a reporting requirement under SUP 16 (Reporting requirements);
(5) refusing an application to vary a Part IV permission, or restricting a Part IV permission on the grant of a variation (by imposing a limitation or requirement which was not applied for, or by specifying a narrower description of regulated activity than that applied for), in a way that would not make a fundamental change (see DEC 4.1.5 G) to the nature of the Part IV permission that would have been held had the application been granted in full (indefinitely, or for a limited period) or in a way that would make such a fundamental change in circumstances where the applicant makes no representations to the FSA;
(6) objecting to the acquisition or increase of control under section 186 of the Act (Objection to acquisition of control), objecting to existing control under section 187 of the Act (Objecting to existing control), or attaching conditions to an approval to a change in control under section 185 of the Act (Conditions attached to approval) unless the RDC is already considering or is shortly to consider a closely related matter and it seems appropriate to those making the decision under executive procedures for the RDC to have responsibility for the decision, having regard to such factors as those listed in DEC 1.2.9 G, in which case the decision will be made by the RDC;
(7) refusing a request for an authorisation order for an operator's proposed AUT or ICVC (if the operator is an operator of an existing AUT or ICVC), refusing approval of a scheme becoming a recognised scheme authorised in a designated territory under section 270 of the Act or refusing an application in respect of a proposed individually recognised overseas scheme under section 272 of the Act;
(8) suspending the listing of securities;
(9) suspending trading in a financial instrument;
(10) discontinuing the listing of securities at the issuer's request;
(11) exercising any of the powers in sections 87K or 87L of the Act in respect of an infringement of any applicable provision;
(12) cancelling a person's approval as a sponsor at the sponsor's request; and
(13) refusing an application by an issuer for cancellation of a suspension of listing made under s. 77 of the Act.

DEC 4.2

The Regulatory Decisions Committee

  • 01/12/2004

DEC 4.2.1

handbook-guidance
The Regulatory Decisions Committee (RDC) is appointed by the FSA Board to exercise certain regulatory powers on behalf of the FSA Board. The RDC is accountable to the FSA Board for its decisions.
  • 01/12/2004

DEC 4.2.2

handbook-guidance
The RDC comprises a Chairman, one or more Deputy Chairmen, and other members.
  • 01/12/2004

DEC 4.2.3

handbook-guidance
The RDC is a body outside the FSA's management structure. Apart from the Chairman, none of the members of the RDC is an FSA employee. The members represent the public interest and comprise:
(1) current and recently retired practitioners with financial services industry skills and knowledge; and
(2) non-practitioners.
  • 21/11/2002

DEC 4.2.4

handbook-guidance
The RDC is supported by the RDCOffice. The RDCOffice is separate from FSA staff involved in making recommendations to the RDC.

Appointment and removal of members of the RDC

DEC 4.2.5

handbook-guidance
The Chairman of the RDC is appointed by the FSA Board on the recommendation of an independent group established by the Board for that purpose. A non-executive member of the FSA Board chairs the independent group. The FSA Board also appoints all other members of the RDC, including its Deputy Chairman or Deputy Chairmen, on the recommendation of the Chairman of the RDC.
  • 01/12/2004

DEC 4.2.6

handbook-guidance
All members of the RDC are appointed for fixed periods.
  • 01/12/2004

DEC 4.2.7

handbook-guidance
The FSA Board may remove a member of the RDC but only in the event of that member's misconduct or incapacity.
  • 01/12/2004

Constitution and procedure of the RDC

DEC 4.2.8

handbook-guidance
The RDC will meet as a full committee or in panels. Except in an urgent supervisory notice case, where the Chairman or a Deputy Chairman and, where possible, any one other member of the RDC will make a decision (see DEC 4.5.7 G (2)), each meeting of the RDC will include:
(1) its Chairman or a Deputy Chairman (who will chair the meeting); and
(2) at least two other members.
  • 01/12/2004

DEC 4.2.9

handbook-guidance
However, the composition and size of panels of the RDC, and the frequency of their meetings, may vary depending on the nature of the particular matter under consideration.
  • 01/12/2004

DEC 4.2.10

handbook-guidance
(1) If a member of the RDC has a potential conflict of interest in any matter before the RDC he will disclose the conflict to the Chairman of the RDC (or if he is the Chairman of the RDC, to the Chairman or Deputy Chairman of the FSA). He will also disclose the conflict to the RDCOffice.
(2) If the Chairman of the RDC (or where appropriate the Chairman or Deputy Chairman of the FSA) considers it reasonable and appropriate, he will require the member of the RDC to stand down from consideration of that particular matter. The Chairman of the RDC (or Chairman or Deputy Chairman of the FSA) may ask another member of the RDC to assist him in considering the potential conflict.

DEC 4.2.11

handbook-guidance
The RDCOffice will record and document all disclosures of potential conflicts of interest and the steps taken to manage them.

DEC 4.2.12

handbook-guidance
The meetings of the RDC will be in private, and will be conducted in the manner the RDC considers suitable in order to enable it to determine fairly the matters which it is required to consider.
  • 01/12/2004

DEC 4.2.13

handbook-guidance
Each member of the RDC present is entitled to vote on the matter under consideration. The Chairman of the meeting of the RDC will have a vote as a member of the RDC and will have the casting vote in a tie.
  • 01/12/2004

DEC 4.2.14

handbook-guidance
The RDC may require FSA staff to attend its meetings.
  • 01/12/2004

Consideration of previous breaches

DEC 4.2.15

handbook-guidance
FSA staff are entitled to put to the RDC the previous disciplinary record of a person, including any previous breach of the Act, the Principles, or other rules (including the record prior to the Act). FSA staff may also draw to the RDC's attention the compliance history of a person, including that under previous legislation.
  • 01/12/2004

DEC 4.2.16

handbook-guidance
The RDC may not consider any of the matters in DEC 4.2.15 G for the purpose of proving a later breach. The matters in DEC 4.2.15 G may be considered when determining whether to take action or, where appropriate, as one of the factors described in ENF 13.3.3 G, in determining the level of the financial penalty.
  • 01/12/2004

Administrative procedure for representations

DEC 4.2.17

handbook-guidance
Representations to the RDC are received in accordance with DEC 4.4.
  • 01/12/2004

DEC 4.2.18

handbook-guidance
The RDC Office, in conjunction with the Chairman or a Deputy Chairman of the RDC, will fix a date or dates for a meeting to consider the representations and to decide:
(1) whether to take the action proposed;
(2) if the action has been taken, whether to rescind the action; and
(3) in either case, whether to take the action in a different way.

DEC 4.2.19

handbook-guidance
The RDCOffice will ensure that a record is kept of:
(1) who took the decision;
(2) the representations made to the RDC;
(3) the material considered by the RDC;
(4) the nature of the decision;
(5) the reasons for the decision; and
(6) the dates on which the decision was taken and then communicated by the FSA to the person concerned.

DEC 4.3

Executive procedure for statutory notice decisions and statutory notice associated decisions

  • 01/12/2004

Who makes the decision?

DEC 4.3.1

handbook-guidance
All statutory notice decisions (and statutory notice associated decisions) under executive procedures are made under authority delegated by the FSA Board. The FSA's senior executive committee may from time to time determine that particular categories of statutory notice decision (and statutory notice associated decisions) which may be made by executive procedures will be made by a senior staff committee. Alternatively, a senior staff committee may take such decisions if referred to it by FSA staff (see DEC 4.3.7 G (2)). Otherwise, such decisions will be made by an individual FSA staff member.
  • 01/12/2004

Separation of functions

DEC 4.3.2

handbook-guidance
Section 395(2) of the Act (The FSA's procedures) requires that the FSA's procedure for the giving of statutory notices must be designed to secure that "the decision which gives rise to the obligation to give any such notice is taken by a person not directly involved in establishing the evidence on which that decision is based".
  • 01/12/2004

DEC 4.3.3

handbook-guidance
In accordance with section 395(2) of the Act,statutory notice decisions taken under executive procedures will not be taken by staff directly involved in establishing the evidence on which that decision is based, except in accordance with section 395(3) of the Act (see DEC 4.3.17 G to DEC 4.3.19 G).
  • 01/12/2004

Decision making by an individual FSA staff member

DEC 4.3.4

handbook-guidance
If an individual FSA staff member makes a statutory notice decision (or statutory noticeassociated decision) the decision will be:
(1) made by an executive director of the FSA Board, or his delegate (who will be of at least the level of associate);
(2) on the recommendation of an FSA staff member of at least the level of associate; and
(3) with the benefit of legal advice from an FSA staff member of at least the level of associate.
  • 01/12/2004

DEC 4.3.5

handbook-guidance
The individual who takes a decision under executive procedures is accountable to the FSA Board directly (if an executive director) or otherwise through line management responsible for the decision concerned.
  • 01/12/2004

DEC 4.3.6

handbook-guidance
An FSA staff member who considers that a statutory notice decision (or statutory noticeassociated decision) should be taken above his own level is free to refer that decision to a more senior level. If an FSA staff member consults another staff member about a decision, the decision remains the independent decision of the FSA staff member who consults his colleague, unless it is agreed that the decision should instead be taken by the colleague, and the colleague has the delegated authority to do so.
  • 01/12/2004

DEC 4.3.7

handbook-guidance
If an individual responsible for a decision by executive procedures (or a more senior FSA staff member with responsibilities in relation to the decision concerned) considers that it warrants collective consideration, the individual may:
(1) take the decision himself, following consultation with other FSA staff members, as above; or
(2) refer it to a senior staff committee, which will take the decision itself.
  • 01/12/2004

DEC 4.3.7A

handbook-guidance
The following decisions will be taken by an individual FSA staff member under executive procedures:
(1) the suspension of listing on the FSA's own initiative or at the request of the issuer;
(2) the suspension of trading in a financial instrument;
(3) the discontinuance of listing of securities at the issuer's request;
(4) the exercise of any of the powers in sections 87K or 87L of the Act in respect of a breach of any applicable provision;
(5) the cancellation of a person's approval as a sponsor at the sponsor's request; and
(6) the refusal of an application by an issuer for cancellation of a suspension of listing made under section 77 of the Act.
  • 01/07/2005

Decision making by a senior staff committee

DEC 4.3.8

handbook-guidance
A senior staff committee, other than the FSA's senior executive committee, will consist of such FSA staff members as the FSA's senior executive committee, may from time to time determine. The FSA's senior executive committee may authorise the chairman of a senior staff committee to select its other members.
  • 21/11/2002

DEC 4.3.9

handbook-guidance
A senior staff committee, other than the FSA's senior executive committee, is accountable for its decisions to the FSA's senior executive committee, and through it, to the FSA Board. The FSA's senior executive committee is accountable for its decisions to the FSA Board.
  • 18/10/2001

DEC 4.3.10

handbook-guidance
A senior staff committee may operate through standing or specific sub-committees to consider particular decisions or classes of decision, for which accountability will lie through the committee. Each meeting of a senior staff committee, or sub-committee, will include:
(1) an individual with authority to act as its chairman; and
(2) at least two other members.
  • 01/12/2004

DEC 4.3.11

handbook-guidance
A senior staff committee will operate on the basis of a recommendation from an FSA staff member of at least the level of associate, and with the benefit of legal advice from an FSA staff member of at least the level of associate.
  • 01/12/2004

DEC 4.3.12

handbook-guidance
If FSA staff recommend action be taken and they consider that the decision falls within the responsibility of a senior staff committee (or sub-committee):
(1) in general, but subject to the need to act swiftly in urgent cases, the FSA staff's recommendation will go before the senior staff committee (or sub-committee);
(2) in an urgent case, if, in FSA staff's opinion, the action proposed should occur before it is practicable to convene a meeting of the senior staff committee (or sub-committee), the FSA staff's recommendation may be considered by the senior staff committee's chairman or a deputy chairman and, where possible, but subject to the need to act swiftly, one other member of the senior staff committee;
(3) in an exceptionally urgent case, if in the FSA staff's opinion:
(a) the action should be taken before a recommendation to the chairman or a deputy chairman of the senior staff committee could be made; and
(b) an urgent decision on the proposed action is necessary to protect the interests of consumers;
the FSA staff's recommendation will be considered and the decision made by a member of the FSA's executive of at least director of division level.
  • 01/12/2004

General

DEC 4.3.13

handbook-guidance
A statutory notice given under executive procedures will identify the decision maker. A decision to give a second supervisory notice will normally be made by the same decision maker (that is, the individual or committee) who made the decision to give the first supervisory notice.

DEC 4.3.14

handbook-guidance
If a firm wishes to make representations in response to a warning notice or first supervisory notice, those representations will be received in accordance with DEC 4.4.
  • 01/12/2004

DEC 4.3.15

handbook-guidance
The decision maker will ensure that a record is kept of:
(1) who took the decision;
(2) any representations to the decision maker;
(3) the material considered by the decision maker;
(4) the nature of the decision;
(5) the reasons for the decision; and
(6) the dates on which the decision was taken and then communicated to the person or persons concerned.
  • 01/12/2004

DEC 4.3.16

handbook-guidance
FSA staff are required by their contract of employment to comply with a code of conduct which imposes strict rules to cover the handling of conflicts of interest which may arise from personal interests or associations. FSA staff who are subject to a conflict of interest must declare that interest to the person to whom they are immediately responsible for the decision. In the case of decisions by a senior staff committee, any conflict of interest must be declared to the chairman of the committee (or, if the person with the conflict is the chairman, to any member of the FSA's senior executive committee or, if the person with the conflict is the chairman of the FSA's senior executive committee, to the Deputy Chairman of the FSA. He will also disclose the conflict to the secretariat to the senior staff committee (or FSA's senior executive committee)). The individual to whom the conflict of interest is declared may ask another person to assist him in considering the potential conflict, and will decide whether that conflict precludes the involvement of the FSA staff member in making a decision.
  • 21/11/2002

DEC 4.3.16A

handbook-guidance
The secretariat to the senior staff committee, or to the FSA's senior executive committee, or to the FSA Board, as appropriate, will record and document all disclosures of potential conflicts of interest and the steps taken to manage them.
  • 21/11/2002

Section 395(3) decisions

DEC 4.3.17

handbook-guidance
Under section 395(3) of the Act, the FSA's procedure may permit a decision which gives rise to an obligation to give a supervisory notice to be taken by a person involved in establishing the evidence on which the decision is based if:
(1) the FSA considers that, in a particular case, it is necessary in order to protect the interests of consumers; and
(2) the person taking the decision is of a level of seniority laid down by the procedure.
  • 01/12/2004

DEC 4.3.18

handbook-guidance
The FSA expects to exercise the power provided by section 395(3) only in exceptional cases. This means cases in which the FSA believes action is needed to protect the interests of consumers in the face of a material threat to those interests, but in which the requirements for separation cannot be met: for example where the notice needs to take immediate effect in order to protect the interests of consumers.
  • 01/12/2004

DEC 4.3.19

handbook-guidance
The level of individual who may make such a decision is a member of the FSA's executive of at least director of division level or a member of a committee which reports directly to the FSA's senior executive committee.
  • 01/12/2004

DEC 4.4

Representations

  • 01/12/2004

DEC 4.4.1

handbook-guidance
(1) Any warning notice or first supervisory notice will contain a statement that the person concerned will have a certain amount of time in which to make representations to the decision maker. In the case of a first supervisory notice the person concerned may make representations whether or not the matter to which the notice relates has been referred to the Tribunal.
(2) If a second supervisory notice is given where the decision maker has decided to take action different from that which was proposed in the first supervisory notice, the second supervisory notice will provide a similar statement about the right to make representations.
  • 01/12/2004

DEC 4.4.2

handbook-guidance
In the case of a warning notice, section 387(2) of the Act requires that the warning notice must specify a reasonable period for the making of representations. This must be at least 28 days. The Act does not specify a minimum period that the FSA must give for making representations for supervisory notices.
  • 01/12/2004

DEC 4.4.3

handbook-guidance
In deciding on the period to make representations, the decision maker will have regard to the circumstances of each case, including the nature of the proposed action and its likely effect on the person concerned. The decision maker will have particular regard to the risk to the FSA's regulatory objectives of any delay in imposing proposed action. The period for representations will normally be 28 days from the date when the person receives the notice, subject to his right to seek an extension of time.
  • 01/12/2004

Request for an extension of time

DEC 4.4.4

handbook-guidance
(1) After receiving the warning notice or first supervisory notice, if the person concerned considers that its stated period for representations is too short, then he may, within 14 days of receiving the notice, request the FSA in writing for more time. In the case of a warning notice, this may be appropriate, for example, if a person has entered or wishes to enter into settlement discussions with FSA staff.
(2) In accordance with section 387(3) of the Act and other relevant sections of the Act, the decision maker may extend the period of time for representations specified in the warning notice or supervisory notice.
  • 01/12/2004

DEC 4.4.5

handbook-guidance
Requests for an extension of time will be considered by the decision maker who will notify the recipient of the notice promptly whether the request has been accepted or not.
  • 01/12/2004

Written representations

DEC 4.4.6

handbook-guidance
Any written representations should be sent to the FSA at the address stated in the warning notice or supervisory notice.
  • 01/12/2004

Oral representations

DEC 4.4.7

handbook-guidance
If he so chooses, a person who receives a warning notice or first supervisory notice may make oral representations to the decision maker and attend a meeting for that purpose.
  • 01/12/2004

DEC 4.4.8

handbook-guidance
If the person wishes to make oral representations, he should send a written notification of this to the FSA at the address stated in the warning notice or supervisory notice. The notification should be made at least five business days before the end of the period for representations specified in the notice. The notification should specify the matters on which the person wishes to make oral representations, include an estimate of how much time the person expects the representations to take, and provide the names of any representatives appointed to attend the meeting at which the representations will be made. If after notifying the FSA of his intention to make oral representations, the person chooses not to make those representations, the decision maker will nevertheless decide the matter.
  • 18/10/2001

DEC 4.4.9

handbook-guidance
A person may appoint a representative of his choice (who may be legally qualified) to attend the meeting at which oral representations will be made. The representative may make or assist in making the representations.
  • 01/12/2004

DEC 4.4.10

handbook-guidance
The decision maker will specify a time as soon as is reasonably possible after receiving the notification for receiving the oral representations. The decision maker may specify the place where he will receive the representations and may specify that the representations will be received in private. The decision maker may limit the type, length and content of any representations. The decision maker may ask the person or his representative at the meeting to clarify any issue arising out of the representations and may require the person, and any representatives, to leave the meeting after they have made their representations.
  • 01/12/2004

DEC 4.4.11

handbook-guidance
DEC 4.4.13 G and DEC 4.4.14 G explain the procedure where no representations are received or made.
  • 01/12/2004

Third parties

DEC 4.4.12

handbook-guidance
DEC 4.4 applies also to a third party who has received a copy of a warning notice, in relation to those matters affecting the third party.
  • 01/12/2004

Default procedures

DEC 4.4.13

handbook-guidance
If the FSA receives no response or representations within the period specified in a warning notice, the decision maker may regard as undisputed the allegations or matters in the warning notice. In such cases, a decision notice will be given accordingly. A person who has received a decision notice and has not previously made any response or representations to the FSA, may, nevertheless, refer the FSA's decision to the Tribunal as described in DEC 5.1.
  • 21/11/2002

DEC 4.4.13A

handbook-guidance
If the FSA receives no response or representations within the period specified in a first supervisory notice, the FSA will not give a second supervisory notice. The outcome depends on when the action took or takes effect (as stated in the notice). If the action:
(1) took effect immediately, or on a specified date which has already passed, it continues to have effect (subject to any decision on a referral to the Tribunal); or
(2) was to take effect on a specified date which is still in the future, it takes effect on that date (subject to any decision on a referral to the Tribunal); or
(3) was to take effect when the matter was no longer open for review, it takes effect when the period to make representations (or the period for referral to the Tribunal, if longer) expires, unless the matter has been referred to the Tribunal.
  • 21/11/2002

DEC 4.4.14

handbook-guidance
In exceptional cases, the decision maker may permit representations from a person who has received a decision notice (or a second supervisory notice) given in accordance with DEC 2.3 (or DEC 3.1.8 G to DEC 3.1.10 G) (or against whom action, detailed in a first supervisory notice, has taken effect as described in DEC 4.4.13A G), and shows on reasonable grounds that he did not receive the warning notice (or first supervisory notice), or that he had reasonable grounds for not responding within the specified period. In these circumstances, the decision maker may decide to give a notice of discontinuance (DEC 2.3.8 G to DEC 2.3.9 G) or a further decision notice (or a written notice or a supervisory notice).
  • 21/11/2002

DEC 4.5

Delegation of RDC decisions and modified RDC procedures

  • 01/12/2004

DEC 4.5.1

handbook-guidance
The making of the following types of statutory noticedecisions and statutory notice associated decisions falling within DEC 4.1.4 G (Decisions to be taken by the RDC) will be discharged, on behalf of the RDC, by the Chairman of the RDC or FSA staff, so that they will be made by modified rather than full RDC procedure:
(1) in relation to warning notices and decision notices:
(a) those relating to financial penalties for late submission of reports (see DEC 4.5.2 G to DEC 4.5.6 G);
(b) those relating to the revocation of recognition of section 270 or 272 recognised schemes, where there is a common understanding between the scheme management and the FSA about the need for revocation (see DEC 4.5.14 G to DEC 4.5.15 G);
(2) in relation to supervisory notices:
(a) those involved in taking urgent action by supervisory notice (see DEC 4.5.7 G and DEC 4.5.8 G);
(b) those relating to the use of the FSA's own-initiative power and other cases involving the imposition of requirements, where there is a common understanding between the FSA and the person concerned about the need for the action (see DEC 4.5.9 G to DEC 4.5.13 G).
  • 01/12/2004

Financial penalties for late submission of reports

DEC 4.5.2

handbook-guidance
When the FSA decides whether to impose a financial penalty on a firm for the late submission of a report (regardless of the period of delay), FSA staff will report on the late submission to at least one other member of staff who is:
(1) at a level senior to that of the member of staff who reports on the late submission and on the reasons for it; and
(2) not directly involved in the day-to-day supervision of the firm concerned, or in establishing the evidence on which the decision is based.
  • 11/04/2002

DEC 4.5.3

handbook-guidance
FSA staff at the appropriate level of seniority will consider the report about the late submission. They will then decide whether a financial penalty is appropriate and, if so, its amount. If they decide a penalty is appropriate, the FSA will give a warning notice.
  • 01/12/2004

DEC 4.5.4

handbook-guidance
If the firm makes representations in relation to the penalty stated in the warning notice, the matter will be referred to the Chairman or Deputy Chairman of the RDC. The Chairman or Deputy Chairman of the RDC will decide whether to confirm the penalty stated in the warning notice or that the penalty should be of a different amount and, if so, give a decision notice.
  • 01/12/2004

DEC 4.5.5

handbook-guidance
If the firm makes no representations, by the time a decision is to be made about the giving of a decision notice, then the decision maker may regard the matters in the warning notice as undisputed. A decision notice will be given accordingly.
  • 21/11/2002

DEC 4.5.6

handbook-guidance
If the firm objects to the decision notice, it may refer the matter to the Tribunal. The right to refer a matter to the Tribunal is outlined in DEC 5.1.
  • 01/12/2004

Supervisory notices: urgent cases

DEC 4.5.7

handbook-guidance
If FSA staff recommend action be taken and they consider that the decision is the RDC's responsibility:
(1) in general, but subject to the need to act swiftly in urgent cases, the FSA staff's recommendation will go before an RDC panel;
(2) in an urgent case, if, in FSA staff's opinion, the action proposed should occur before it is practicable to convene an RDC panel, the FSA staff's recommendation will be considered by the RDC's Chairman or a Deputy Chairman of the RDC and, where possible, but subject to the need to act swiftly, one other RDC member;
(3) in an exceptionally urgent case, where in the FSA's opinion:
(a) the action should be taken before a recommendation to the Chairman or a Deputy Chairman of the RDC can be made; and
(b) an urgent decision on the proposed action is necessary to protect the interests of consumers;
the FSA staff's recommendation will be considered by a member of the FSA's executive of at least director of division level. In these circumstances, the FSA will ensure as far as possible that the executive making the decision was not involved in establishing the evidence on which the decision is based.
  • 18/10/2001

DEC 4.5.8

handbook-guidance
If the executive making the decision has been involved in establishing the evidence on which the decision is based, and a notice is given on the grounds of urgency, this will be in accordance with DEC 4.3.17 G to DEC 4.3.19 G.
  • 01/12/2004

Supervisory notices: non-urgent cases

DEC 4.5.9

handbook-guidance
In certain other cases, including cases relating to collective investment schemes (see DEC 4.5.14 G to DEC 4.5.15 G), FSA staff may be in a position to inform the person concerned of their concerns, and of the action they are considering, before they begin to exercise supervisory notice procedures. If the person concerned consents to the action at that stage, FSA staff may decide to use the modified decision making procedure in DEC 4.5.10 G to DEC 4.5.13 G.
  • 01/12/2004

DEC 4.5.10

handbook-guidance
FSA staff will make recommendations for action to at least one other member of staff who is:
(1) at an appropriate level of seniority; and
(2) not directly involved in the supervision of the person concerned, or in establishing the evidence on which the decision is based.
  • 01/12/2004

DEC 4.5.11

handbook-guidance
FSA staff at the appropriate level of seniority will consider the recommendations. If they are satisfied that the person concerned agrees to the recommended action, they will consider whether the FSA should give a first supervisory notice (see DEC 3.1.3 G to DEC 3.1.7 G).
  • 01/12/2004

DEC 4.5.12

handbook-guidance
If FSA staff decide to give the first supervisory notice and the person concerned accepts its terms, the FSA will then consider whether to give a second supervisory notice (see DEC 3.1.8 G to DEC 3.1.10 G) confirming the decision.
  • 01/12/2004

DEC 4.5.13

handbook-guidance
The FSA will only give the second supervisory notice when it is satisfied that the person concerned accepts the terms of the first supervisory notice, and the circumstances of the case have not materially changed since that notice was given. If FSA staff are not satisfied, or circumstances of the case have changed, they will refer the possible giving of a second supervisory notice to the RDC. In such cases the RDC will follow the process in DEC 3.1.8G to DEC 3.1.10G.
  • 01/12/2004

Modified procedures in collective investment scheme cases

DEC 4.5.14

handbook-guidance
In DEC 4.5.15 G, the term "scheme management" refers:
(1) in relation to an AUT, to the manager and trustee;
(2) in relation to an ICVC, to the directors and the depositary;
(3) in relation to a recognised scheme, to the operator, and (if any) the trustee or depositary.
  • 01/12/2004

DEC 4.5.15

handbook-guidance

In certain cases where it is proposing to exercise its powers under section 257 (Directions), 279 (Revocation of recognition) or 281 (Directions) of the Act or under regulation 23 or 25 of the OEIC regulations, the FSA may be in a position to inform the scheme management of its concerns, and of the action it is considering, before it exercises those powers. Alternatively, the scheme management may request the FSA to exercise one of the powers. For example, the manager and the trustee of an AUT may ask the FSA to give a direction under section 257(2)(a) for the suspension of the issue and redemption of units because of a temporary problem in valuing the property subject to the scheme. If there is a common understanding between the FSA and all the members of the scheme management about the need for the exercise of the power in question at that stage (that is, before the FSA begins to exercise the statutory procedures), the FSA may:

  1. (1) in the case of the exercise of its powers under sections 257 or 281 or under regulation 25, decide to use the modified decision making procedure for non-urgent supervisory notices in DEC 4.5.9 G to DEC 4.5.13 G; or
  2. (2) in the case of the exercise of its powers under section 279 or regulation 23, decide to use a modified decision making procedure under which the matter will be delegated to FSA staff of an appropriate level of seniority. The procedure will be as set out in DEC 4.5.9 G to DEC 4.5.13 G but adapted to be appropriate for a case involving a warning notice and decision notice.
  • 01/12/2004

Modified procedures in straightforward cases

DEC 4.5.16

handbook-guidance
The making of statutory notice decisions and statutory notice associated decisions falling within DEC 4.1.4 G (Decisions to be taken by the RDC) which, in the opinion of the Chairman or a Deputy Chairman of the RDC, are straightforward (see DEC 4.5.17 G), may be discharged, on behalf of the RDC, by the Chairman or a Deputy Chairman alone or together with one other member of the RDC if, in the opinion of the Chairman or Deputy Chairman, this is appropriate, so that they will be made by modified rather than full RDC procedure.
  • 20/10/2005

DEC 4.5.17

handbook-guidance
The Chairman or a Deputy Chairman of the RDC may decide, whether or not following a recommendation from FSA staff, that a decision falling within DEC 4.5.16 G is a straightforward decision, having regard to all the circumstances of the case, including those factors listed in DEC 1.2.9 G. However, a statutory notice decision falling within DEC 4.5.16 G is not a straightforward decision if the person concerned makes representations to the RDC and, in such a case, the decision will be made by full RDC procedure.
  • 20/10/2005

DEC 4.6

Decisions to apply to the civil courts and to prosecute criminal offences

  • 01/12/2004

DEC 4.6.1

handbook-guidance
A decision to begin, or discontinue, proceedings using the powers listed in DEC 1.1.3 G will be made by the RDC Chairman or, in an urgent case and if the Chairman is not available, by an RDC Deputy Chairman and where possible, but subject to the need to act swiftly, one other RDC member.
  • 01/12/2004

DEC 4.6.2

handbook-guidance
In an exceptionally urgent case the matter will be decided by the director of Enforcement or, in his absence, another member of the FSA's executive of at least director of division level. An exceptionally urgent case in these circumstances is one where FSA staff believe that a decision to begin proceedings using the powers in DEC 1.1.3 G:
(1) should be taken before it is possible to follow the procedure described in DEC 4.6.1 G; and
(2) is necessary to protect the interests of consumers or potential consumers.
  • 01/12/2004

DEC 4.6.2A

handbook-guidance
Decisions to prosecute for criminal offences under the legislation listed in DEC 1.1.4 G may be taken by the procedure described in DEC 4.6.1 G and DEC 4.6.2 G, or alternatively may be taken under executive procedures.
  • 21/11/2002

DEC 4.6.2B

handbook-guidance
In determining which procedure should be followed in deciding to prosecute for an offence under the legislation listed in DEC 1.1.4 G, the FSA will have regard to the seriousness of the offence involved, the size and profile of the defendant and the complexity of the issues. The less serious the offence and the less complex the issues, the more likely the decision to prosecute will be taken under executive procedures.
  • 21/11/2002

DEC 4.6.3

handbook-guidance
Decisions to bring proceedings using the powers in DEC 1.1.3 G do not involve any of the procedures relating to the giving of statutory notices including the procedures described in DEC 4.4 relating to representations. Further details about the FSA's policy and procedures in the use of the powers to apply to the civil courts for injunctions, restitution orders, insolvency orders, collective investment scheme related orders and the powers to prosecute criminal offences are contained in ENF 6 (Injunctions), ENF 9 (Restitution and redress), ENF 10 (Insolvency proceedings and orders against debt avoidance), ENF 16 (Collective investment schemes) and ENF 15 (Prosecution of criminal offences) respectively.
  • 01/12/2004

Export chapter as

DEC 5

References to the Tribunal, publication and service of notices

DEC 5.1

The Tribunal

  • 01/12/2004

DEC 5.1.1

handbook-guidance
(1) A person who receives a decision notice or supervisory notice (including a third party who has been given a copy of a decision notice) has the right to refer the FSA's decision to the Tribunal.
(2) The Tribunal is established under Part IX of the Act (Hearings and Appeals) and is governed by Part IX and Schedule 13 to the Act (The Financial Services and Markets Tribunal). The Tribunal is independent of the FSA and appointed by the Lord Chancellor's Department in accordance with the Financial Services and Markets Tribunal Rules 2001 ("the Tribunal rules").
  • 01/12/2004

DEC 5.1.2

handbook-guidance
Under section 133(1) of the Act (Proceedings: general provisions), any reference to the Tribunal must be made within 28 days of the date on which the decision notice or supervisory notice is given, or within any period prescribed by the Tribunal rules. Under section 133(2) of the Act, the Tribunal rules may allow a reference to be made after the end of the 28 day period.
  • 01/12/2004

DEC 5.1.3

handbook-guidance
A reference to the Tribunal will be a full rehearing of the matter that gave rise to the decision referred to the Tribunal. On a reference the Tribunal:
(1) must determine what (if any) is the appropriate action for the FSA to take in relation to the matter referred (section 133(4)); and
(2) may consider any evidence relating to the subject matter of the reference, whether or not it was available to the FSA at the time the FSA took its decision.
  • 01/12/2004

DEC 5.1.4

handbook-guidance
In determining a reference:
(1) made as a result of a decision notice, the Tribunal may not (section 133(6)) direct the FSA to take action which the FSA would not, as a result of section 388(2) of the Act (Decision notices), have had the power to take when giving the decision notice;
(2) made as a result of a supervisory notice, the Tribunal may not (section 133(7)) direct the FSA to take action which would otherwise have required the giving of a decision notice.
  • 01/12/2004

DEC 5.1.5

handbook-guidance
On determining a reference, the Tribunal:
(1) must (section 133(5)) remit the matter to the FSA with such directions (if any) as the Tribunal considers appropriate for giving effect to its determination; and
(2) may make recommendations as to the FSA's regulating provisions or its procedures.
  • 01/12/2004

DEC 5.1.6

handbook-guidance
Under section 133(9) of the Act, the FSA must not take any action specified in a decision notice during the period within which a reference may be made to the Tribunal. Nor may it take such action, if the matter is referred, until the reference, and any appeal against the Tribunal's decision, has been finally disposed of.
  • 01/12/2004

DEC 5.1.7

handbook-guidance
The FSA is required to act in accordance with the determination of, and any direction given by, the Tribunal and an order of the Tribunal will be enforceable as if it were an order of the county court or, in Scotland, as if it were an order of the Court of Session.
  • 01/12/2004

DEC 5.2

Publication

  • 01/12/2004

Publication of final notices and effective supervisory notices

DEC 5.2.1

handbook-guidance
Section 391(4) and (5) of the Act (Publication) provides that the FSA must publish such information about the matter to which a final notice, or supervisory notice that has taken effect, relates, as it considers appropriate. See also DEC 5.2.3 G.
  • 01/12/2004

Publication of notices of discontinuance

DEC 5.2.2

handbook-guidance
If the FSA has given a notice of discontinuance, the FSA may, if the person to whom the notice is given consents, publish such information as it considers appropriate about the matter to which the discontinued proceedings related (section 391(2) of the Act). Similarly, section 391(3) of the Act indicates that where a notice of discontinuance has been copied to a person, the FSA may, if the person to whom the notice is copied consents, publish such information as it considers appropriate about the matter to which the discontinued proceedings related, so far as relevant to that person. See also DEC 5.2.3 G.
  • 01/12/2004

No publication if unfair or prejudicial

DEC 5.2.3

handbook-guidance
Section 391(6) of the Act provides that the FSA may not publish information relating to a final notice, supervisory notice that has taken effect or notice of discontinuance if publication would, in the FSA's opinion, be unfair to the person with respect to whom the action was taken or prejudicial to the interests of consumers.
  • 01/12/2004

Warning and decision notices: no publication

DEC 5.2.4

handbook-guidance
Section 391(1) of the Act provides that neither the FSA nor any other person to whom a warning notice or decision notice is given or copied may publish the notice or any details concerning it.
  • 01/12/2004

Manner of publication

DEC 5.2.5

handbook-guidance
Section 391(7) of the Act provides that information which is published may be published in such a manner as the FSA considers appropriate. The FSA will consider the particular circumstances of each case in deciding what manner of publication will be appropriate.
  • 01/12/2004

DEC 5.3

Service of notices by the FSA

  • 01/12/2004

Service of Notices Regulations

DEC 5.3.1

handbook-guidance
The Financial Services and Markets Act 2000 (Service of Notices) Regulations 2001 (SI 2001/1420) govern service of statutory notices and other notices and documents which must be served by the FSA under the Act.
  • 01/12/2004

Methods of service by the FSA and deemed receipt

DEC 5.3.2

handbook-guidance
The methods by which the FSA may give a notice under the Regulations and the day on which it is deemed to be received, are set out DEC 5.3.3 G.
  • 01/12/2004

DEC 5.3.3

handbook-guidance

Methods of service of notices by the FSA

  • 01/12/2004

DEC 5.3.4

handbook-guidance
The Regulations also make provision for the service of notices on:
(1) the recipient's nominee;
(2) if the recipient is an appointed representative, on his principal; and
(3) if the recipient is not an individual, to particular persons on its behalf.
  • 01/12/2004

Meaning of "business day"

DEC 5.3.5

handbook-guidance
In the Regulations and DEC 5.3.3 G, "business day" means any day except Saturday, Sunday or a bank holiday, where "bank holiday" includes Christmas Day and Good Friday.
  • 01/12/2004

Export chapter as

DEC App 1

Settlement procedure and mediation scheme
for FSA enforcement cases

DEC App 1.1

Introduction

  • 01/12/2004

DEC App 1.1.1

handbook-guidance
A person who is or may be subject to enforcement action may discuss the proposed action with FSA staff through settlement discussions. Settlement discussions may take place on an informal basis at any time during the enforcement process. Where FSA staff have recommended that enforcement action be taken against a person, the mediation scheme will be available to those persons against whom action is proposed where settlement discussions are, in the opinion of either party, unlikely to lead to an agreed settlement. This appendix sets out the procedure for settlement and the framework of the mediation scheme, and explains the special procedure for making statutory notice decisions where a settlement is reached.

DEC App 1.2

Settlement

  • 01/12/2004

DEC App 1.2.1

handbook-guidance
If a person who is or may be subject to enforcement action wishes to discuss the proposed action with FSA staff on an informal basis, he may do so at any time during the enforcement process. This might be before the giving of a warning notice, before a decision notice, or even after referral of the matter to the Tribunal. The FSA and the person concerned should agree that discussions will take place on a "without prejudice" basis, and that neither party may subsequently rely on admissions or statements made in the context of the discussions, or documents recording the discussions. Neither FSA staff nor the person concerned may disclose to the RDC any such admissions or statements made by the other.

DEC App 1.2.2

handbook-guidance
The terms of any proposed settlement will:
(1) be put in writing and be agreed by FSA staff and the person concerned;
(2) include a statement of the facts and any breaches admitted by the person concerned and the proposed action to be taken; and
(3) be considered in accordance with the settlement decision procedure set out in DEC App 1.2.2A G.

DEC App 1.2.2A

handbook-guidance
(1) The fact that the person subject to enforcement action agrees to a financial penalty or other outcome will not usually obviate the need for a statutory notice recording the FSA's decision to take that action.
(2) Where, however, the person subject to enforcement action agrees not to contest the content of a proposed statutory notice, the decision whether to give that statutory notice will be taken by senior FSA staff.
(3) The decision will be taken jointly by two members of the FSA's executive of at least director of division level (the settlement decision makers).
(4) One of the directors taking the decision will usually be, but need not be, the director of Enforcement. (In exceptional cases, the director of Enforcement may have been directly involved in establishing the evidence on which the decision is based and would not therefore be able to participate (see section 395(2) of the Act).)
(5) Statutory notice for these purposes:
(a) means any statutory notice the giving of which would otherwise require a decision by the RDC;
(b) includes a statutory notice associated decision.
  • 20/10/2005

DEC App 1.2.2B

handbook-guidance
(1) The settlement decision makers will often participate in the without prejudice discussions exploring possible settlement. Their involvement may facilitate agreement between FSA staff and the person concerned and avoid the delay that might otherwise result from needing to explain the basis for any settlement reached.
(2) If the settlement decision makers have not been involved in the discussions, but an agreement has been reached, they may ask to meet the relevant FSA staff or the person concerned in order to assist in the consideration of the proposed settlement.
  • 20/10/2005

DEC App 1.2.3

handbook-guidance
The settlement decision makers may:
(1) accept the proposed settlement by issuing a decision notice, second supervisory notice or (where appropriate) notice of discontinuance based on the terms of the settlement; or
(2) decline the proposed settlement;
whether or not the settlement decision makers have met with the relevant FSA staff or the person concerned.

DEC App 1.2.4

handbook-guidance
(1) Where the settlement decision makers decline to issue a statutory notice despite the proposed settlement, they may invite FSA staff and the person concerned to enter into further discussions to try to achieve an outcome the settlement decision makers would be prepared to endorse.
(2) However, if the proposed action by the FSA has been submitted to the RDC for consideration, it will be for the RDC to decide:
(a) whether to extend the period for representations in response to a warning notice; or
(b) if representations have been made in response to a warning notice, whether to proceed to give a decision notice.

DEC App 1.2.5

handbook-guidance
If it is not possible to reach an agreed proposed settlement of the case by informal discussions, the person concerned may elect to submit the case to mediation.
  • 01/12/2004

DEC App 1.3

Mediation

  • 01/12/2004

DEC App 1.3.1

handbook-guidance
Mediation is a confidential without prejudice dispute resolution process in which a neutral mediator assists the parties in trying to settle their differences. The mediator is not a judge or arbitrator and has no power to bind the parties, but rather operates as a facilitator of the discussions.
  • 01/12/2004

DEC App 1.3.2

handbook-guidance
As mediation will be on a "without prejudice" basis, admissions made by the parties in the course of the mediation and documents prepared for the purposes of the mediation may not be referred to in subsequent proceedings relating to the dispute if the mediation is unsuccessful. However, if the mediation results in a proposed settlement of the dispute which is approved by the settlement decision makers , the terms of the proposed settlement will form the basis of a decision notice, and subsequent final notice, or second supervisory notice or (where appropriate) notice of discontinuance, given by the FSA.

DEC App 1.3.3

handbook-guidance
Following the issue of a warning notice the person will have access to certain material on which the FSA has relied in deciding to commence disciplinary proceedings (see DEC 2.4.2 G). The period following the issue of the warning notice is therefore a natural point for mediation if the parties consider that the involvement of a neutral mediator is required to facilitate progress in any settlement discussions.

DEC App 1.4

Scope and availability of the mediation scheme

  • 01/12/2004

DEC App 1.4.1

handbook-guidance
Mediation will not be available in enforcement cases where the FSA is contemplating bringing a criminal prosecution or cases involving disciplinary action for late submission of a report to which ENF 13.5(Financial penalties for late submission of reports) applies.
  • 01/12/2004

DEC App 1.4.2

handbook-guidance
Mediation will be available in all other enforcement cases falling within the scope of the RDC. In those cases involving allegations of unfitness and impropriety based on judgements about dishonesty or lack of integrity and the exercise of the FSA'sown-initiative powers on a variation or cancellation of permission, mediation will be available subject to the FSA's consent.
  • 01/12/2004

DEC App 1.4.3

handbook-guidance
In a case falling within the scope of the scheme, (see DEC App 1.4.1 G and DEC App 1.4.2 G), mediation will take place where an election to mediate is made after the warning notice has been issued and before the FSA issues a decision notice (the relevant warning notice will state the circumstances in which mediation is available for that matter under the terms of the scheme). Where an election to mediate is made before the issue of a warning notice or after the issue of a decision notice, mediation will be available subject to the FSA's consent.
  • 01/12/2004

DEC App 1.4.4

handbook-guidance
A person is not obliged to take part in a mediation in the course of the enforcement process.
  • 01/12/2004

DEC App 1.5

Mediation provider

  • 01/12/2004

DEC App 1.5.1

handbook-guidance
The scheme will be administered by a body (the mediation provider) which:
(1) is independent of the FSA;
(2) provides a panel of experienced mediators who are independent of the FSA; and
(3) has suitable expertise of and experience in the administration of mediation schemes.
  • 01/12/2004

DEC App 1.6

Starting the mediation

  • 01/12/2004

DEC App 1.6.1

handbook-guidance
If a case is submitted to mediation, the parties will send a joint mediation notice in an agreed form to:
(1) the mediation provider; and
(2) if the mediation is between the giving of the warning notice and the decision notice, the RDC Office.

DEC App 1.6.2

handbook-guidance
The mediation notice will commit each party to use their best endeavours to progress the mediation process in a timely manner.
  • 01/12/2004

DEC App 1.6.3

handbook-guidance
The person may request in the mediation notice that the time period specified in the warning notice for making oral or written representations (or both) to the RDC be extended by a maximum of 14 days, to allow time for the mediation to be completed. On receipt of a mediation notice requesting such an extension, the RDC will notify the parties and the mediation provider of its agreement to the requested extension or of any other extension that it sees fit.
  • 01/12/2004

DEC App 1.6.4

handbook-guidance
If required, the person may apply to the RDC for a further extension in order to complete the mediation (see DEC App 1.7.5 G). The total of all extensions to the 28 day time period for making written or oral representations may not exceed 28 days, other than in exceptional circumstances.
  • 01/12/2004

DEC App 1.7

Setting up the mediation

  • 01/12/2004

DEC App 1.7.1

handbook-guidance
Once the parties have agreed to mediate, and a mediation notice has been sent to the mediation provider, the mediation provider will liaise with the parties in order to deal with the matters set out in DEC App 1.7.2 G to DEC App 1.7.11 G.
  • 01/12/2004

Appointment of mediator

DEC App 1.7.2

handbook-guidance
(1) The mediation provider will maintain a panel of suitable mediators, and recommend in each case a mediator to the parties. The parties are free to accept or decline the recommendation. If either party declines the recommendation, the mediation provider will seek to obtain agreement on another mediator from the panel.
(2) If the parties cannot agree a mediator within 7 days of the mediation notice being received by the mediation provider, the mediation provider will appoint a mediator.
(3) The mediators on the panel will all be:
(a) experienced commercial mediators; and
(b) accredited by or registered with a recognised mediation organisation.
(4) Experience of and expertise in the financial services sector will not be compulsory for panel mediators, but may be desirable.
(5) Mediators will, in accepting appointments, be required to confirm to the parties that they have no conflicts of interest in doing so.
  • 01/12/2004

Date for mediation

DEC App 1.7.3

handbook-guidance
The mediation provider will liaise with the parties and the mediator to agree:
(1) a suitable date for the mediation; and
(2) a timetable for the mediation process as a whole, including the date for submission of case summaries and exchange of documents referred to in the case summaries.
  • 01/12/2004

Duration of mediation

DEC App 1.7.4

handbook-guidance
(1) Most mediations should last no longer than one full day, but in complex cases more time may be necessary. The mediator will assist the parties in deciding how much time to set aside. If the mediation requires more time than allotted to it, the parties may ask the mediation provider to set up a further day or days.
(2) The parties and the mediator will use their best endeavours to complete the mediation as soon as practicable.
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Mediation timetable

DEC App 1.7.5

handbook-guidance
(1) In complex cases, the agreed timetable may extend beyond the initial extension agreed by the RDC, in which case the parties may request a further extension from the RDC (see DEC App 1.6.4 G).
(2) If the mediation has not started within the allotted timetable, the FSA may decline to mediate, and the matter will be referred to the decision notice stage.
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Venue

DEC App 1.7.6

handbook-guidance
The mediation may take place at any venue acceptable to the parties and the mediator. This may be at the offices of the mediation provider, the mediator (if different), the FSA or elsewhere.
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Mediation agreement

DEC App 1.7.7

handbook-guidance
(1) Each mediation will take place in accordance with the terms of a mediation agreement. The agreement will set out the terms on which the mediation will take place, in particular, the agreement will provide that:
(a) the mediation will be on a "without prejudice" basis and confidential; and
(b) the parties who attend the mediation will have authority to agree proposed settlement terms (subject, in relation to the FSA staff, to App 1.7.9G).
(2) The mediation agreement will be signed by the parties, the mediator and the mediation provider.
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Confidentiality

DEC App 1.7.8

handbook-guidance
(1) Confidentiality is a key element of the mediation process. It means that:
(a) matters disclosed in, and documents created for the purposes of, the mediation cannot be referred to in the public domain; and
(b) matters disclosed by one party to the mediator in confidence will not be disclosed to the other party without consent.
(2) Under the mediation scheme, however, confidentiality will be limited in that:
(a) if any information indicating potentially criminal conduct is disclosed to the mediator, the mediator will not be required to keep that matter confidential (and may choose to terminate the mediation);
(b) the terms of any settlement reached will, if approved by the settlement decision makers , be incorporated in a decision notice, and subsequent final notice or second supervisory notice, or (where appropriate) notice of discontinuance which may be made public;
(c) the FSA may publish information regarding the operation of the scheme on an anonymous basis in the FSA's annual report; such information may include, for example, the number of mediations conducted under the scheme and the number of those mediations which have resulted in agreed settlements.
(3) In all other respects, documents prepared for the purposes of, and discussions taking place in the course of, the mediation will retain the confidential status they had during the mediation itself.

Authority to settle

DEC App 1.7.9

handbook-guidance
(1) A key feature of mediation is the requirement that those who attend the mediation on behalf of each party have full authority to agree proposed settlement terms.
(2) The FSA will be represented during the mediation proceedings and at the mediation itself by the FSA staff who initially recommended that disciplinary action be taken.
(3) One or both of the settlement decision makers who would make the decision as to the giving of the statutory notice or notices in the event of a settlement may also attend. If their attendance is impracticable, the FSA will endeavour to ensure that the settlement decision makers are available for consultation during the mediation. This is to enable a clear indication to be given to the parties and the meditator whether the settlement decision makers will find the proposed settlement terms acceptable.
(4) [deleted]

Paperwork for the mediation

DEC App 1.7.10

handbook-guidance
(1) Mediation requires the parties to be able to discuss the dispute in an informed way. Therefore, each party attending the mediation will be required to produce:
(a) a short case summary setting out the issues in dispute; and
(b) any documents referred to in the case summary.
(2) These documents must be submitted to the mediation provider in triplicate at least one week before the mediation. The mediation provider will be responsible for the exchange of documents.
(3) The parties and the mediator may agree to dispense with the requirement to produce documentation before the mediation.
  • 01/12/2004

Costs

DEC App 1.7.11

handbook-guidance
(1) The costs of the mediation provider in administering and conducting the mediation process (including the fee payable to the mediator) will be agreed between the FSA and the mediation provider when the mediation provider is appointed.
(2) For each mediation, the mediation provider will invoice the parties for the anticipated costs of administering and conducting the mediation in advance. The FSA and the person will bear half of these costs each. Any additional costs incurred by the mediation provider will be invoiced after the mediation. These costs will also be shared. The costs referred to in (1) and (2) do not include legal or other costs that the FSA or person may incur in relation to the mediation, which will be the responsibility of the parties.
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DEC App 1.8

Preliminary meeting

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DEC App 1.8.1

handbook-guidance
Once appointed, the mediator may (in his discretion) call a preliminary meeting with the parties and their advisers (if any). This may be used to ensure that the parties are properly prepared for the mediation, agree the issues for discussion and understand how the process will operate.
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DEC App 1.9

Termination of the mediation

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DEC App 1.9.1

handbook-guidance
The mediation will take place at the agreed time and place.
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DEC App 1.9.2

handbook-guidance
If the person withdraws from the mediation process after it has agreed to mediate, it will be responsible for its share of any costs incurred by, or owing to, the mediation provider (see DEC App 1.7.11 G (1)).
  • 01/12/2004

DEC App 1.9.3

handbook-guidance
The mediation agreement will set out the terms on which a party or the mediator, or both, may terminate the agreement. These will include terms providing that:
(1) either party may withdraw from and terminate the mediation at any stage before or during the mediation (subject to the provisions on costs in DEC App 1.9.2 G, for terminations before the mediation takes place);
(2) either party or the mediator may withdraw if the mediation has not taken place within the agreed timetable; and
(3) the mediator may withdraw from and terminate the mediation if, for example, a criminal offence by or involving a party to the mediation is disclosed to him (see DEC App 1.7.8 G (2)(a)).
  • 01/12/2004

DEC App 1.10

Result of the mediation

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DEC App 1.10.1

handbook-guidance
Mediation can only give rise to one of two outcomes:
(1) a proposal for settlement agreed between the parties; or
(2) no agreed proposal.
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DEC App 1.10.2

handbook-guidance
If no agreed proposal is reached, the mediation will be terminated and the case will return to the point it had reached in the enforcement process prior to the mediation.
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DEC App 1.10.3

handbook-guidance
If a settlement proposal is agreed, it will be considered in accordance with the settlement decision procedure. If it is approved, a decision notice, and subsequently a final notice, will be issued reflecting the terms of the agreement reached. If it is not approved, the case will return to the point it had reached in the enforcement process prior to the mediation.

DEC App 1.10.4

handbook-guidance
A person may elect to mediate only once during the course of the enforcement process.
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DEC App 1.11

Advisers

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DEC App 1.11.1

handbook-guidance
The parties may bring legal or other advisers of their choice with them to the mediation, although it is important to preserve the informality of the mediation process.
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DEC App 1.12

Review of mediation procedure

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DEC App 1.12.1

handbook-guidance
The mediation provider will administer the mediation scheme and the FSA will monitor and review its operation at the end of each year. The FSA proposes to publish core information relating to the operation of the scheme in the FSA's Annual Report.
  • 01/12/2004

DEC App 1.13

Position of third parties on settlement

  • 20/10/2005

DEC App 1.13.1

handbook-guidance
(1) DEC 2.4.7 G to DEC 2.4.12 G set out the FSA's approach to giving third parties copies of statutory notices pursuant to section 393 of the Act.
(2) The decision to give a warning notice or a decision notice to a third party is a statutory notice associated decision.
(3) In cases therefore where the decision to give a warning notice or decision notice is taken by settlement decision makers, those decision makers will decide whether a copy of the notice should be given to a third party in accordance with section 393 of the Act. Any representations made by the third party in response to a warning notice will be considered by the settlement decision makers.
  • 20/10/2005

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Transitional Provisions and Schedules

DEC TP 1

Transitional provisions

DEC TP 1.1
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DEC Sch 1

Record keeping requirements

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DEC Sch 1.1

handbook-guidance
  • 01/12/2004

DEC Sch 2

Notification requirements

  • 01/12/2004

DEC Sch 2.1

handbook-guidance
  • 01/12/2004

DEC Sch 3

Fees and other required payments

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DEC Sch 3.1

handbook-guidance
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DEC Sch 4

Powers exercised

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DEC Sch 4.1

handbook-guidance
  • 01/12/2004

DEC Sch 5

Rights of action for damages

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DEC Sch 5.1

handbook-guidance
  • 01/12/2004

DEC Sch 6

Rules that can be waived

  • 01/12/2004

DEC Sch 6.1

handbook-guidance
  • 01/12/2004

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