ENF 1
Introduction
to the Enforcement manual
ENF 1.1
Application
- 01/12/2004
ENF 1.1.1
See Notes
The
Enforcement manual contains guidance for firms, approved persons, and other persons, whether or not they are regulated
by the FSA,
on the use of the FSA's enforcement
powers, as set out in ENF
1 Annex 1 G.
- 01/12/2004
ENF 1.2
Purpose
- 01/12/2004
ENF 1.2.1
See Notes
The FSA's effective and proportionate use of its enforcement powers to enforce the requirements of the Act, the rules, the Statements of Principle and other relevant legislation (for example, the Criminal Justice Act 1993, the Money Laundering Regulations 1993 and the Unfair Terms Regulations) play an important role in the pursuit of its regulatory objectives. For example:
- (1) in relation to the market confidence objective, the FSA's powers to bring criminal prosecutions for insider dealing and misleading statements and practices offences, and to impose financial penalties for market abuse, help to maintain confidence in the financial system;
- (2) in relation to the public awareness objective, the imposition of disciplinary measures such as public censures and public statements of misconduct show that regulatory standards are being upheld;
- (3) in relation to the protection of consumers objective, the imposition of disciplinary measures helps to deter future contraventions, ensure high standards of regulatory conduct and protect consumers; in addition, the FSA's powers to vary permission on its own initiative may be used to require a firm to take urgent remedial action to protect the interests of consumers; and
- (4) in relation to the reduction of financial crime objective, the FSA's use of its criminal prosecution powers under the Act helps to reduce financial crime; for example the prosecution of insider dealing and breaches of prescribed regulations relating to money laundering act as a deterrent.
- 01/04/2003
ENF 1.2.2
See Notes
Schedule 1 to the Act (The Financial Services Authority) states
that the FSA must
'maintain arrangements for enforcing the provisions of, or made under, this Act' (see paragraph 6(3)
of Schedule 1). The Enforcement manual describes the FSA's policies and procedures for the exercise
of the enforcement powers given to it by the Act and the Unfair Terms Regulations, as set out in ENF
1 Annex 1 G G. It does not include the statement of procedures
required by section 395 of the Act (The
FSA's procedures) relating to the issue of supervisory notices, warning notices and decision notices, which is in the Decision
making manual (DEC).
- 01/07/2005
ENF 1.2.2A
See Notes
ENF includes
material on the investigation, disciplinary and criminal prosecution powers
that are available to the FSA when
it is performing functions as the competent authority under Part VI of the Act (see ENF 21). The Act provides
a separate statutory framework within which the FSA must operate when it acts in that capacity.
Schedule 7 to the Act modifies
the application of the Act in
relation to the exercise of functions as competent authority under Part VI
of the Act.
When determining whether to exercise its powers in its capacity as competent
authority for listing (for example, the powers described in ENF 21), the FSA will
have regard to the matters and objectives which are applicable to the competent
authority function.
- 01/07/2005
ENF 1.2.3
See Notes
In some cases, the Act expressly requires the FSA to prepare and publish statements of policy and procedures on the exercise of its enforcement powers. The Enforcement manual therefore contains statements of policy and procedures on the following matters:
- (1) sections 69 and 210 of the Act require the FSA to publish statements of policy on the imposition of financial penalties on firms and approved persons (see ENF 13);
- (1A) section 93 of the Act requires the FSA to publish a statement of its policy on the imposition of financial penalties under section 91 of the Act (see ENF 21);
- (2) section 124 of the Act requires the FSA to publish a statement of its policy on the imposition of financial penalties for market abuse (see ENF 14); and
- (3) section 169 of the Act (Investigations etc. in support of overseas regulator) requires the FSA to publish a statement of its policy on the conduct of certain interviews in response to requests from overseas regulators (see ENF 2).
- 01/07/2005
ENF 1.2.4
See Notes
In addition, the Enforcement manual contains guidance in accordance
with section 157(1) of the Act (Guidance)
on the FSA's use
of its enforcement powers in other areas. These include the FSA's power to vary Part IV permissions on its own initiative
(see ENF 3), to apply to court for injunctions (see ENF 6), to obtain restitution (see ENF 9), and to prosecute for
certain criminal offences (see ENF 15).
- 01/12/2004
ENF 1.2.5
See Notes
For ease of reference, ENF
1 Annex 1 G contains a table of the main enforcement
powers showing where they are considered in the manual.
- 01/12/2004
ENF 1.2.6
See Notes
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 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 issue of statutory notices. It also gives guidance on the FSA's procedures for using its powers under
Part XXIV of the Act (Insolvency orders), Part
XXV of the Act (Injunctions
and restitution), Part XXVII of the Act (Criminal Offences) and the Unfair Terms Regulations (see DEC
1.1.3 G and DEC 4.6).
- 01/04/2003
ENF 1.3
The FSA's approach to enforcement
- 01/12/2004
ENF 1.3.1
See Notes
There are a number of principles underlying
the FSA's
approach to the exercise of its enforcement powers:
(1) The effectiveness of the regulatory regime
depends to a significant extent on the maintenance of an open and cooperative
relationship between the FSA and
those whom it regulates.
(2) The FSA will
seek to exercise its enforcement powers in a manner that is transparent, proportionate
and consistent with its publicly stated policies.
(3) The FSA will
seek to ensure fair treatment when exercising its enforcement powers. For
example, the FSA's
decision making process for regulatory enforcement cases generally gives an
opportunity for both written and oral representations to be made, and also
provides a facility for mediation (where settlement discussions are unlikely
to lead to an agreed settlement)
in certain disciplinary cases (see DEC App 1).
- 01/02/2004
ENF 1.3.2
See Notes
The FSA has a range of enforcement powers and, in any particular enforcement situation, the FSA may need to consider which power to use and whether to use one or more powers. So in any particular case, it may often be necessary to refer to a number of chapters of the Enforcement manual. For example, in market abuse cases, it may be necessary to refer to ENF 2 (Information gathering and investigation powers), ENF 6 (Injunctions), ENF 9 (Restitution), ENF 14 (Sanctions for market abuse) and ENF 15 (Prosecution of criminal offences), as well as the Code of Market Conduct (see MAR 1). Appropriate cross-references have been included in each chapter to help the reader use this manual.
- 01/12/2004
ENF 1.3.3
See Notes
The FSA has
a range of regulatory tools to help it meet its regulatory objectives. The powers to conduct
investigations which may lead to formal disciplinary action, together with
powers to take intervention action and obtain restitution, are an important
part of the FSA's
toolkit, but there are many other regulatory tools that the FSA can use. The requirement for authorisation of firms and approval of persons in controlled functions aims
to allow only those who satisfy the necessary criteria (including honesty,
competence and financial soundness) to engage in regulated activity. Supervision enables the FSA to monitor and influence
the behaviour of firms and approved persons.
- 01/12/2004
ENF 1.3.4
See Notes
Where a firm or other person has failed to comply with the requirements
of the Act,
the rules,
or other relevant legislation (such as the Criminal Justice Act 1993, and
the Money Laundering Regulations 1993),
it may be appropriate to deal with this without the need for formal disciplinary
or other enforcement action. The proactive supervision and monitoring of firms, and an open and
cooperative relationship between firms and
their supervisors, will, in some cases where a contravention has taken place,
lead the FSA to
decide against taking formal disciplinary action. However, in those cases,
the FSA will
expect the firm to
act promptly to take the necessary remedial action agreed with its supervisors
to deal with the FSA's
concerns. If the firm does
not do this, the FSA may
take disciplinary or other enforcement action in respect of the original contravention.
- 01/12/2004
ENF 1.3.5
See Notes
The FSA's
enforcement powers are exercised in, and reviewed by, the criminal courts,
the civil courts and the Tribunal.
For example, the FSA has
power to prosecute particular offences in the criminal courts, it may seek
to obtain injunctions in
the civil courts, and its powers to impose disciplinary sanctions are subject
to referral to the Tribunal.
- 01/12/2004
ENF 1.4
The structure of the Enforcement manual
- 01/12/2004
The Enforcement manual
ENF 1.4.1
See Notes
- 01/12/2004
ENF 1.4.2
See Notes
ENF 3 (Variation of Part IV permission on
the FSA's own initiative) outlines the FSA's
powers, policies and procedures for exercising its own-initiative powers to impose limitations or requirements on a firm's permitted business.
- 01/12/2004
ENF 1.4.3
See Notes
ENF
4 (Intervention against incoming firms) is concerned
with the FSA's power
to intervene against incoming
EEA firms and incoming
Treaty firms and the FSA's policy
for exercising that power.
- 01/12/2004
ENF 1.4.4
See Notes
ENF 5 (Cancellation of permission)
outlines the FSA's powers
to cancel a firm'spermission, the procedures
for exercising those powers and the FSA's approach
to their exercise.
- 01/12/2004
ENF 1.4.5
See Notes
ENF 6 (Injunctions) describes
the FSA's powers
to apply to court for injunctions,
and the FSA's approach
to using those powers.
- 01/12/2004
ENF 1.4.6
See Notes
ENF 7 (Withdrawal of approval)
describes the FSA's power
to withdraw approval from approved
persons, the FSA's procedure
and approach in relation to the exercise of this power, other powers that
may be relevant when the FSA considers
the exercise of the withdrawal power, and the effect of the FSA's decision to withdraw approval.
- 01/12/2004
ENF 1.4.7
See Notes
ENF
8 (Prohibition of individuals)
outlines the FSA's power
to make a prohibition order,
the policy and procedure for exercising that power, the effect of the decision
to make a prohibition order,
and the FSA's policy
in relation to applications by individuals to have a prohibition order varied or revoked.
- 01/12/2004
ENF 1.4.8
See Notes
ENF 9 (Restitution and redress)
outlines the FSA's power
to apply to the court for an order for restitution, the FSA's administrative power to require restitution,
the FSA's policy
concerning the use of its powers to obtain restitution, and the way in which
the court or the FSA will
determine the amount of restitution.
- 01/12/2004
ENF 1.4.9
See Notes
ENF 10 (Insolvency proceedings
and orders against debt avoidance) outlines the FSA's powers to seek insolvency orders from the court, the exercise
of the FSA's rights
to be involved in insolvency regimes concerning firms and unauthorised persons, and the policies in
those areas.
- 01/12/2004
ENF 1.4.10
See Notes
ENF 11 (Discipline of firms
and approved persons: the FSA's general
approach) explains the FSA's policy
on private warnings, the criteria which the FSA will use when it decides whether to take
disciplinary action against firms and approved persons; its enforcement
policy relating to approved
persons; the enforcement of the Principles; guidance on the standard of reasonable care
required by some rules;
and the FSA's approach
where disciplinary action may also be taken by other UK or overseas authorities.
- 01/12/2004
ENF 1.4.11
See Notes
- 01/12/2004
ENF 1.4.12
See Notes
ENF 13 (Discipline of firms and approved persons: financial penalties) describes the FSA's powers to impose financial penalties (except those relating to market abuse), and the FSA's policy on the exercise of those powers. In particular, it contains a list of some of the factors which the FSA may take into account when it decides the level of a financial penalty.
- 01/12/2004
ENF 1.4.13
See Notes
ENF 14 (Sanctions for market abuse) describes the FSA's powers to impose financial penalties for market abuse, and contains a statement of policy with a non-exhaustive list of some of the factors which the FSA may take into account when it decides the level of a financial penalty. The chapter also refers to the FSA's power to publish a statement that a person has engaged in market abuse. It also considers the FSA's approach to market abuse cases where there may have been a breach of the Principles, and the FSA's approach to market abuse cases where other regulatory authorities may also be involved.
- 01/12/2004
ENF 1.4.14
See Notes
- 01/12/2004
ENF 1.4.15
See Notes
ENF
16 (Collective investment
schemes) sets out the FSA's policies
and procedures on the use of its enforcement powers in relation to AUTs, ICVCs, and recognised schemes.
- 01/12/2004
ENF 1.4.16
See Notes
- 01/12/2004
ENF 1.4.17
See Notes
ENF 18 (Disapplication orders
against members of the professions) describes the FSA's policy on its power to make an order
disapplying members of
the professions' exemption from the general
prohibition on conducting regulated
activities without authorisation.
- 01/12/2004
ENF 1.4.18
See Notes
ENF 19 (Directions against incoming ECA providers) describes
the FSA's policy
on its power to make a direction against an incoming ECA provider.
- 21/08/2002
ENF 1.4.19
See Notes
ENF 20 (Unfair
terms in consumer contracts) describes the FSA's policy on how it will use its powers
under the Unfair
Terms Regulations.
- 01/07/2005
ENF 1.4.20
See Notes
- 01/07/2005
ENF 1.5
Using the Enforcement manual
- 01/12/2004
ENF 1.5.1
See Notes
(1) Since most of the FSA's enforcement powers are derived from
the Act, the
manual contains a large number of references to the Act. In some instances, the manual quotes
the Act directly
(this is shown in the text by quotation marks) although, where possible, it
uses Handbook definitions
in place of the actual wordings of the Act.
In other cases, where reproducing the entire statutory provision would need
a lengthy quotation, or considerable further explanation, the relevant provision
of the Act has
been summarised. So, users of the manual should refer to the Act as well as to the manual
where necessary.
- 21/08/2002
ENF 1 Annex 1
Table of powers referred to in the Enforcement manual
- 01/12/2004
See Notes
| This table gives the main location in the Enforcement manual where guidance appears on those powers referred to in the Act , in secondary legislation made under the Act, or the Unfair Terms Regulations and in other legislation listed below. In many instances the powers will be referred to in other locations. |
| SUBJECT | PART AND SECTION OF THE ACT | ENFORCEMENT MANUAL LOCATION | |
| Variation and cancellation of permission and withdrawal of authorisation | |||
| Duty to withdraw authorisation | Part III, s 33 | Cancellation of Part IV permission on the FSA's own initiative | |
| Variation and cancellation on the FSA's' own initiative | Part IV, s 45 | Variation of Part IV permission on the FSA's own initiative (Variation), Cancellation of Part IV permission on the FSA's own initiative (Cancellation) | |
| Variation on acquisition of control | Part IV, s 46 | Variation of Part IV permission on the FSA's own initiative | |
| Exercise of powers in support of an overseas regulator | Part IV, s 47 | Variation of Part IV permission on the FSA's own initiative (Variation), Cancellation of Part IV permission on the FSA's own initiative (Cancellation) | |
| Prohibitions and restrictions | Part IV, s 48 | ENF 3.2.10 G | |
| Prohibition of individuals | |||
| Power to make a prohibition order | Part V, s.56 | ENF 8 | |
| Withdrawal of Approval | |||
| Power to withdraw approval | Part V, s 63 | ENF 7 | |
| Disciplinary Powers against Approved persons | |||
| Public statements of misconduct | Part V, s 66 | ENF 11 and ENF 12 | |
| Financial penalties | Part V, s 66 | ENF 11 and ENF 13 | |
| Disciplinary Powers in official listing cases | |||
| Public censure or statement where an issuer or person fails to comply with his obligations under Part VI of the Act, a provision contained in prospectus rules or any other provision made in accordance with the Prospectus Directive | Part VI, s.87M | ENF 21 | |
| Cancellation of sponsor's approval | Part VI, s.88 | ENF 21 | |
| Public censure of sponsor | Part VI, s.89 | ENF 21 | |
| Penalties for breach of Part 6 rules | Part VI, s.91 | ENF 21 | |
| Penalties for Market abuse | |||
| Power to impose penalties | Part VIII, s 123 | ENF 14 | |
| Power to publish statement | Part VIII, s 123 | ENF 14 | |
| Power to request court to impose penalties | Part VIII, s 129 | ENF 14 | |
| Information Gathering and Investigation powers | |||
| Power to require information | Part XI, s 165 | ENF 2.3.2 G - ENF 2.3.7 G | |
| Power to require reports | Part XI, s 166 | ENF 2.3.8 G - ENF 2.3.11 G | |
| Power to appoint persons to carry out general investigations | Part XI, s 167 | ENF 2.3.12 G - ENF 2.3.13 G | |
| Power to appoint persons to carry out investigations in particular cases | Part XI, s 168 | ENF 2.3.14 G - ENF 2.3.15 G | |
| Investigations etc in support of an overseas regulator | Part XI, s 169 | ENF 2.3.16 G -ENF 2.3.17 G and ENF 2.4.10 G - ENF 2.4.12 G | |
| Powers of investigators appointed under s 167 | Part XI, s 171 | ENF 2.4.2 G - ENF 2.4.5 G and ENF 2.4.10 G - ENF 2.4.12 G | |
| Additional powers of investigators appointed as a result of s 168(1) or (4) | Part XI, s 172 | ENF 2.4.6 G- ENF 2.4.7 G and ENF 2.4.10 G - ENF 2.4.12 G | |
| Powers of investigators appointed as a result of s 168(2) | Part XI, s 173 | ENF 2.4.8 G and ENF 2.4.10 G - ENF 2.4.12 G | |
| Information and documents: supplemental provisions | Part XI, s 175 | ENF 2.4.10 G - ENF 2.4.12 G | |
| Entry of premises under warrant | Part XI, s 176 | ENF 2.15.1 G - ENF 2.15.4 G | |
| Investigation powers in official listing cases | Part VI, s.97 | ENF 21 | |
| Investigation powers in relation to collective investment schemes | Part XVII, s 284 | ENF 2.3.18 G - ENF 2.3.21 G and ENF 2.4.13 G | |
| Intervention against Incoming Firms | |||
| General grounds on which power of intervention is exercisable | Part XIII, s 194 | ENF 4.3 | |
| Exercise of powers in support of an overseas regulator | Part XIII, s 195 | ENF 4.3.5 G | |
| Power of intervention | Part XIII, s 196 | ENF 4 | |
| Power to apply to court for injunctions in respect of certain overseas insurance companies | Part XIII, s 198 | ENF 6.8 | |
| Disciplinary Powers against firms | |||
| Public censure | Part XIV, s 205 | ENF 12 | |
| Financial penalties | Part XIV, s 206 | ENF 13 | |
| Authorised unit trusts | |||
| Revocation of authorisation order other than by consent | Part XVII, s 254 | ENF 16.2.3 G -ENF 16.2.4 G and ENF 16.2.10 G - ENF 16.2.14 G | |
| Power to give directions | Part XVII, s 257 | ENF 16.2.5 G - ENF 16.2.7 G and ENF 16.2.10 G - ENF 16.2.14 G | |
| Applications to the court | Part XVII, s 258 | ENF 16.2.8 G - ENF 16.2.14 G | |
| Recognised schemes | |||
| Power to suspend promotion of an EEA scheme | Part XVII, s 267 | ENF 16.4.2 G - ENF 16.4.4 G | |
| Revocation of recognition of s 270 schemes (designated country/territory schemes) and s 272 schemes (individually recognised schemes) | Part XVII, s 279 | ENF 16.4.5 G and ENF 16.4.7 G - ENF 16.4.8 G | |
| Directions in relation to s 270 and s 272 schemes | Part XVII, s 281 | ENF 16.4.6 G - ENF 16.4.8 G | |
| Members of designated professional bodies | |||
| Power to make disapplication orders | Part XX, s 329 | ENF 18 | |
| Disqualification of auditors and actuaries | |||
| Disqualification of auditor of authorised unit trust | Part XVII, s 249 | ENF 17 | |
| Disqualification of auditors and actuaries of authorised persons | Part XXII, s 345 | ENF 17 | |
| Insolvency proceedings and orders against debt avoidance | |||
| Company voluntary arrangements: power to participate in proceedings: | Part XXIV, s 356 | ENF 10.7 - ENF 10.8 | |
| Individual voluntary arrangements: power to participate in proceedings: | Part XXIV, s 357 | ENF 10.7 - ENF 10.8 | |
| Administration orders: power to present petitions | Part XXIV, s 359 | ENF 10.5.1 G - ENF 10.5.4 G | |
| Administration orders: power to participate in proceedings | Part XXIV, s 362 | ENF 10.11.2 G - ENF 10.11.6 G and ENF 10.13 | |
| Receivership: power to participate in proceedings | Part XXIV, s 363 | ENF 10.11.15 G - ENF 10.11.20 G | |
| Voluntary winding up: power to participate in proceedings | Part XXIV, s 365 | ENF 10.5.9 G - ENF 10.5.13 G and ENF 10.11.13 G - ENF 10.11.14 G | |
| Winding-up by the court: power to present petitions | Part XXIV, s 367 | ENF 10.5.5 G - ENF 10.5.8 G | |
| Winding up by the court: power to participate in proceedings | Part XXIV, s 371 | ENF 10.11.9 G - ENF 10.11.12 G and ENF 10.13 | |
| Bankruptcy petitions: power to present petitions | Part XXIV, s 372 | ENF 10.5.14 G - ENF 10.5.17 G and ENF 10.6.12 G - ENF 10.6.14 G | |
| Bankruptcy: power to participate in proceedings | Part XXIV, s 374 | ENF 10.11.22 G - ENF 10.11.23 G and ENF 10.13 | |
| Provisions against debt avoidance: right to apply for an order | Part XXIV, s 375 | ENF 10.9 and ENF 10.10 | |
| Injunctions | |||
| Power to apply to court for injunctions in respect of certain overseas insurance companies | Part XIII, s 198 | ENF 6.8 | |
| Injunctions for breach of a relevant requirement | Part XXV, s 380 | ENF 6.3 and ENF 6.5 - ENF 6.6 | |
| Injunctions in cases of market abuse | Part XXV, s 381 | ENF 6.4 and ENF 6.5 - ENF 6.6 | |
| Restitution | |||
| Power to apply to court for a restitution order | Part XXV, s 382 | ENF 9 | |
| Restitution orders in cases of market abuse | Part XXV, s 383 | ENF 9 | |
| Power to require restitution | Part XXV, s 384 | ENF 9 | |
| Prosecution of Criminal Offences | |||
| Power to prosecute offences under the Act and subordinate legislation | Part XXVII, s 401 | ENF 15 | |
| Power to prosecute other offences | Part XXVII, s 402 | ENF 15 | |
| Directions against incoming ECA provider | |||
| Power to make a direction against an incoming ECA provider | ECD Regulations | ENF 19 | |
| Unfair Terms Regulations | |||
| Power to seek injunctions under the Unfair Terms Regulations | N/A | ENF 20 (Unfair terms in consumer contracts) | |
| The Enforcement manual does not contain guidance inter alia, on the following: | |
| sections 77 and 78 Discontinuance and suspension of listing | |
| sections 297 and 298 Revoking recognition (see REC) | |
| section 348 Restrictions on disclosure of confidential information | |
| section 395 Procedures for the issue of supervisory notices and decision notices (See DEC) | |
| section 404 Schemes for reviewing past business | |
| Schedule 1, Part III, paragraph 17 Fees | |
- 01/07/2005