ENF 2
Information gathering and investigation powers
ENF 2.1
Application and purpose
- 01/12/2004
Application
ENF 2.1.1
See Notes
This
chapter applies to firms, appointed representatives, approved persons, and other persons who may be subject
to the FSA's investigations
or who may be required to provide information to the FSA.
- 01/12/2004
ENF 2.1.1A
See Notes
The FSA's policy on how it
will use its powers to investigate in support of its enforcement functions,
when acting in the capacity of the competent
authority under Part VI of the Act, are set out in ENF 21.2
to ENF 21.4. That guidance contains cross
references to material in this Chapter, where relevant.
- 01/07/2005
Purpose
ENF 2.1.2
See Notes
This chapter explains the FSA's policy on how it
will use its powers to gather information and investigate in support of its
enforcement functions. The FSA may
also use some of these powers to support its supervision functions and the
Supervision manual explains how it will use the powers in those circumstances
(see SUP
2 (Information gathering by the FSA on its own initiative) andSUP 5 (Reports by skilled persons).
- 01/12/2004
ENF 2.2
Introduction
- 01/12/2004
ENF 2.2.1
See Notes
This chapter is divided into two parts.
The first part of the chapter, ENF 2.3 to ENF
2.9, relates to the main provisions
of the Act on
information gathering and investigations. It outlines:
(1) the FSA's powers
to gather information, and to appoint investigators;
(2) the powers of investigators appointed
by the FSA;
and
(3) the FSA's policy
on the use of its powers in each of the following circumstances:
(a) to gather information from firms and unauthorised incoming ECA providers and
to conduct investigations of firms, approved persons, individuals
involved in firms, appointed representatives,
small e-money issuers and unauthorised incoming
ECA providers, including issuing preliminary findings letters;
(b) to investigate suspected market misconduct;
(c) to investigate unauthorised business;
(d) to conduct investigations to assist overseas
authorities; and
(e) to investigate collective investment schemes.
- 21/08/2002
ENF 2.2.2
See Notes
The second part of the chapter, ENF 2.10 to ENF 2.15, relates to provisions that apply to investigations generally.
It outlines:
(1) the provisions of the Act relating to protected items, banking confidentiality
and the admissibility of statements made to investigators;
(2) the FSA's powers
to control and direct investigations;
- 01/12/2004
ENF 2.3
The FSA's powers to gather information and investigate
- 01/12/2004
ENF 2.3.1
See Notes
The FSA's powers
to gather information and to appoint investigators are contained in sections
165 to 169 and 284 of the Act.
They are described in this section of the chapter under the following cross-headings:
(3) general investigations of firms and appointed representatives (section
167:ENF
2.3.12 G and ENF
2.3.13 G);
(4) Investigations of specific contraventions,
offences and other matters (section 168: see ENF
2.3.14 G and ENF
2.3.15 G);
(5) investigations in support of overseas regulators (section 169:
see ENF
2.3.16 G and ENF
2.3.17 G); and
(6) investigations into collective investment schemes (section 284:
see ENF
2.3.18 G to ENF
2.3.21 G).
- 01/12/2004
Requiring information and documents from firms
ENF 2.3.2
See Notes
Section 165 of the Act (FSA's power
to require information) relates to the FSA's powers
to require information and documents from firms. There are two ways
in which the FSA may
do this.
(1) Under section 165(1), the FSA may, by notice in
writing, require a firm to:
(a) provide specified information or information
of a specified description; or
The firm must do this within
a reasonable period of time, which the FSA will
specify, at a specified place. The firm must
provide the specified information in any form that the FSA may reasonably require.- 01/12/2004
ENF 2.3.3
See Notes
- 01/12/2004
ENF 2.3.4
See Notes
- 01/12/2004
ENF 2.3.5
See Notes
(1) Under section 165(7), the FSA may also use the power
to impose requirements to
provide information or to produce documents on:
(b) an operator, trustee or depositary of certain
types of recognised collective
investment schemes who is not an authorised person;
(2) In this context a 'firm' includes a person who was an authorised person but who has now ceased to
be one (section 165(8)).
- 01/12/2004
ENF 2.3.6
See Notes
- 01/12/2004
ENF 2.3.7
See Notes
The FSA may
use its section 165 power to require information and documents from firms in support of both its supervisory
functions and its enforcement functions. The FSA will often use this power in support
of its supervision functions and SUP 2 (Information
gathering by the FSA on
its own initiative) deals with the FSA's use
of the power in that context. For completeness, the use of the power is also
referred to in ENF 2.5 in
support of the FSA's enforcement
functions in relation to firms.
- 01/12/2004
Reports on firms by skilled persons
ENF 2.3.8
See Notes
Section 166 (Reports by skilled persons)
relates to the FSA's power
to require firms to
provide a report by a skilled
person. Under section 166, the FSA may require any of the following, who
are or were at the relevant time carrying on a business, to provide it with
a report on any matter about which the FSA has
required or could require the provision of information or documents under section 165:
(1) a firm ('A');
(2) any other member of A's group;
(3) a partnership of
which A is a member;
(4) a person who
has at any relevant time been one of the above.
The FSA may specify the form
in which it requires the report.- 01/12/2004
ENF 2.3.9
See Notes
- 01/12/2004
ENF 2.3.10
See Notes
(1) Section 166(5) applies to any person ('X') who is providing
or has provided a person whom
the FSA has
required to provide a report ('Y') with services in relation to a matter about
which the FSA has
required the report.
(2) Under section 166(5), X has a duty to
give the skilled person appointed
to provide such a report ('Z') any assistance as Z may reasonably require.
The FSA may
apply for an injunction or,
in Scotland, for an order for specific performance, to enforce this obligation.
- 01/12/2004
ENF 2.3.11
See Notes
As with its power to require information
and documents,
the FSA may
use its section 166 power to require reports by skilled persons in support of both its supervision
and enforcement functions. SUP 5 (Reports
by skilled persons) contains rules and guidance that will apply
whenever the FSA uses
the power. ENF 2.5 refers
briefly to the FSA's use
of the power in support of its enforcement functions in relation to firms. As a result of
article 9G of the Regulated
Activities Order, the FSA has
certain powers to require specified information and documents from a small e-money issuer and a power under section
166 to require a small
e-money issuer to provide a report by a skilled person. These powers are described
in ELM 8.7.
- 27/04/2002
General investigations of firms and appointedrepresentatives
ENF 2.3.12
See Notes
Section 167 of the Act (Appointment of persons to carry out general
investigations) relates to the appointment of investigators to conduct general
investigations into firms and appointed representatives.
(1) Under section 167(1), if it appears to
the FSA (or
the Secretary of State) that there is good reason to do so, then the FSA (or the Secretary
of State) may appoint one or more competent persons to conduct an investigation into:
(b) a particular aspect of that business;
or
(2) Under Section 167(2), if the person appointed to investigate
thinks it necessary for his investigation, he may also investigate the business
of a person who
is or has at any relevant time been:
(b) a partnership of
which A is a member.
(3) Under section 167(4) the FSA may also use this
power in relation to a former firm or
former appointed representative,
concerning:
(a) Business carried on at any time when
it or he was an authorised
person or appointed
representative; or
(4) In section 167 'business' includes any
part of a business even if it does not consist of regulated activities.
- 01/12/2004
ENF 2.3.13
See Notes
Under
the ECD Regulations,
the FSA may
exercise the powers in sections 165 and 166 of the Act in relation to an incoming ECA provider, whether the provider
is a firm or
not. The FSA's policy
on how it will use this power (and other information gathering investigation
powers) in support of its enforcement function is set out in ENF 2.5 (The FSA's policy
on exercising its powers: firms, approved persons, and others). In addition,
under these regulations, the FSA may
exercise the power under section 167 in relation to an unauthorised incoming ECA provider (the Act enables the FSA to appoint an investigator
under section 167 to investigate any part of the business of an incoming ECA provider which
is a firm).
- 21/08/2002
Investigations of specific contraventions, offences and other matters
ENF 2.3.14
See Notes
Section 168 of the Act (Appointment of persons to carry out investigations in particular cases) relates to the conduct of investigations into certain specified contraventions, offences or other matters. The FSA's powers to appoint investigators are contained in section 168(3) and (5) and the circumstances in which it can do so are listed in section 168(1), (2) and (4) of the Act.
- (1) Under section 168(1) and (3) the FSA may appoint one or more competent persons to carry out an investigation on its behalf if it appears to the FSA that there are circumstances suggesting that:
- (a) a person may have breached regulations made under section 142 of the Act (Insurance business: regulations supplementing FSA's rules); or
- (b) a person may be guilty of an offence under section 177 (Offences), 191 (Offences under Part XII), 346 (Provision of false or misleading information to auditor or actuary) or 398(1) (Misleading the FSA: residual cases) of the Act or under Schedule 4 to the Act (Treaty Rights).
- (2) Under section 168(2) and (3) the FSA may appoint one or more competent persons to carry out an investigation on its behalf if it appears to the FSA that there are circumstances suggesting that:
- (a) an offence under section 24(1) (False claims to be authorised or exempt) or 397 (Misleading statements and practices) of the Act or under Part V of the Criminal Justice Act 1993 may have been committed; or
- (b) there may have been a breach of the general prohibition; or
- (c) there may have been a contravention of section 21 (Restrictions on financial promotion) or 238 (Restrictions on promotion of collective investment schemes) of the Act; or
- (d) market abuse may have taken place.
- (3) Under section 168(4) and (5) the FSA may appoint one or more competent persons to carry out an investigation on its behalf if it appears to the FSA that there are circumstances suggesting that:
- (a) a firm may have breached the requirement for permission in section 20 of the Act (Authorised persons acting without permission); or
- (b) a person may be guilty of an offence under the Money Laundering Regulations; or
- (c) a firm may have breached a rule made by the FSA; or
- (d) an individual may not be a fit and proper person to perform functions in relation to a regulated activity carried on by an authorised or exempt person; or
- (e) an individual may have performed or agreed to perform a function in breach of a prohibition order; or
- (f) a firm or an exempt person may have failed to comply with section 56(6) of the Act (Prohibition orders); or
- (g) a firm may have failed to comply with section 59(1) or (2) of the Act (Approval for particular arrangements); or
- (h) a person to whom the FSA has given its approval under section 59 may not be a fit and proper person to perform the function to which that approval relates; or
- (i) a person may be guilty of misconduct for the purposes of section 66 of the Act.
- (4) As a result of regulation 12 of the ECD Regulations, the FSA may also appoint investigators under section 168(4)(c) and (5) where it appears to the FSA that there are circumstances suggesting that an incoming ECA provider, whether a firm or not, may have breached a requirement imposed by the FSA under those regulations.
- 21/08/2002
ENF 2.3.15
See Notes
The FSA may
use these powers to investigate firms, approved persons, individuals
employed by firms,
and small e-money issuers as
well as cases of market misconduct and breaches of the general prohibition. The FSA's policies on the use of this power are
therefore set out in three different sections of this chapter:
(1)
ENF 2.5 deals
with the use of this power and other powers in relation to firms, approved
persons, individuals employed by firms, appointed
representatives, small
e-money issuers, and unauthorised incoming ECA providers;
(2)
ENF
2.6 deals
with the use of this power in relation to cases of market misconduct; and
(3)
ENF 2.7 deals
with the use of this power in relation to unauthorised business.
- 21/08/2002
Investigations in support of overseas regulators
ENF 2.3.16
See Notes
Investigations in support of overseas regulatorsSection 169
of the Act (Investigations
etc. in support of overseas
regulators) relates to investigations conducted to assist an overseas regulator. It
states that at the request of an overseas
regulator, the FSA may
use its powers to require documents or
information under section 165 or to appoint a person to investigate any matter. ENF
2.8.4 G to ENF
2.8.6 G set out the matters that the FSA must, or may, take into account when
considering whether to use these powers in support of an overseas regulator.
- 01/12/2004
- 01/12/2004
Investigations into collective investment schemes
ENF 2.3.18
See Notes
Section 284(1) of the Act (Power to investigate) relates to the FSA's powers to investigate
the affairs of collective
investment schemes. Under section 284, if it appears to the FSA that it is in the
interests of the participants or
potential participants,
or that the matter is of public concern, it may appoint one or more competent persons to investigate
and report on:
(2) the affairs of, or of the operator, trustee or depositary of, any recognised scheme that
relate to its activities carried on in the UK; or
(3) the affairs of, or of the operator, trustee or depositary of, any other collective investment scheme except
a body incorporated by virtue of regulations under section 262 of the Act (that is, an open-ended investment company).
- 01/12/2004
ENF 2.3.19
See Notes
Section 284(2) states that an investigator
appointed under section 284(1) to investigate the affairs of, or of the manager, trustee, operator or depositary of, any scheme may also, if he
thinks it necessary for the purposes of that investigation, investigate:
(1) the affairs of, or of the manager, trustee, operator or depositary of, any other scheme that is mentioned
in section 284(1) whose manager, trustee, operator or depositary is the same person as the manager, trustee, operator or depositary of the scheme;
(2) the affairs of other schemes and persons (including bodies incorporated by
virtue of regulations under section 262 of the Act (Open-ended investment companies) and
the directors and depositaries of those
bodies) as may be prescribed.
- 01/12/2004
ENF 2.3.20
See Notes
Regulations to be made by the Treasury
will also give the FSA powers
to appoint investigators to investigate and report on the affairs of ICVCs, or directors or depositaries of ICVCs.
- 01/12/2004
ENF 2.3.21
See Notes
- 01/12/2004
ENF 2.4
Powers of FSA investigators
- 01/12/2004
ENF 2.4.1
See Notes
The nature and extent of an investigator's
powers depend on the provision of the Act under
which he was appointed.
(1) The powers of an investigator appointed
under section 167 of the Act (Appointment
of persons to carry out general investigations) are contained in section 171
(Powers of persons appointed under section 167) and 175 (Information and documents:
supplemental provisions) of the Act and
are described in ENF
2.4.2 G to ENF
2.4.5 G and ENF
2.4.10 G to ENF
2.4.12 G.
(2) The powers of an investigator appointed
under section 168 of the Act (Appointment
of persons to
carry out investigations in particular cases) depend on whether he is appointed
to investigate the matters listed in section 168(1) and (4) (see ENF 2.3.14 G (1) and ENF 2.3.14 G (3)) or those listed in section 168(2) (see ENF 2.3.14 G (2)):
(a) the powers of an investigator appointed
as a result of section 168(1) or (4) are contained in sections 172 (Additional
power of persons appointed as a result of section 168(1) or (4)) and 175 (Information
and documents: supplemental provisions) and are described in ENF
2.4.6 G to ENF
2.4.7 G and ENF
2.4.10 G to ENF
2.4.12 G;
(b) The powers of an investigator appointed
as a result of section 168(2) are contained in sections 173 (Powers of persons appointed as a
result of section 168(2)) and 175 (Information and documents: supplemental
provisions) and are described in ENF
2.4.8 G and ENF
2.4.10 G to ENF
2.4.12 G.
(3) The powers of an investigator (appointed
under section 169 of the Act (Investigations
etc. in support of overseas
regulator) are the same as those of an investigator appointed
as a result of section 168(1) (see ENF
2.4.9 G, ENF
2.4.6 G to ENF
2.4.7 G and ENF
2.4.10 G to ENF
2.4.12 G).
(4) The powers of an investigator appointed
under section 284 of the Act (Power
to investigate) are contained in section 284(3) and are described in ENF
2.4.13 G.
- 01/12/2004
Powers of section 167 investigators
ENF 2.4.2
See Notes
Section 171 states that an investigator
conducting a general investigation under section 167 of the Act may require the person who is the subject of the investigation
or any person connected
with the person under
investigation:
(1) to attend before the investigator at
a specified time and place to answer questions; or
(2) otherwise to provide such information
as the investigator may require.
- 01/12/2004
ENF 2.4.3
See Notes
- 01/12/2004
ENF 2.4.4
See Notes
However, under section 171(3), the investigator
may only impose requirements referred to in ENF
2.4.2 G and ENF
2.4.3 G) so far as he reasonably
considers the question, provision of information or production of the document to be relevant
to the purposes of the investigation.
- 01/12/2004
ENF 2.4.5
See Notes
For the purposes of section 171 (see ENF
2.4.2 G) , a person is connected with the person under investigation
('A') if he is or has at any relevant time been:
(1) a member of A's group; or
(2) a controller of
A; or
(3) a partnership of
which A is a member; or
- 01/12/2004
Powers of section 168(1) and (4) investigators
ENF 2.4.6
See Notes
Section 172 states that an investigator
appointed as a result of section 168(1) or (4) will have the powers given
by section 171, which are described in ENF
2.4.2 G to ENF
2.4.5 G. Under section 172(2),
he will also have the power to require a person who
is not the subject of the investigation, nor a person connected with the person under investigation, to attend before
him at a specified time and place and answer questions, or otherwise to provide
such information as he may require, for the purposes of the investigation.
- 01/12/2004
ENF 2.4.7
See Notes
The investigator may only impose a requirement
under section 172(2) if satisfied that this is necessary or expedient for
the purposes of the investigation.
- 01/12/2004
Powers of section 168(2) investigators
ENF 2.4.8
See Notes
Section 173 sets out the powers of an
investigator appointed as a result of section 168(2) (see ENF 2.3.14 G (2)). Under section 173, if an investigator
considers that any person is
or may be able to give information which is or may be relevant to the investigation,
he may require that person:
(1) to attend before the investigator at
a specified time and place and answer questions;
(2) otherwise to provide such information
as the investigator may require for the purposes of the investigation;
(3) to produce at a specified time and place
any specified documents or documents of a specified
description which appear to the investigator to relate to any matter relevant
to the investigation;
(4) to give the investigator all assistance
in connection with the investigation which he is reasonably able to give.
- 01/12/2004
Powers of section 169 investigators
ENF 2.4.9
See Notes
Section 169(2) states that an investigator
appointed in support of an overseas
regulator under section 169(1)(b) has the same powers as an
investigator appointed as a result of section 168(1) (see ENF
2.4.6 G to ENF
2.4.7 G and ENF
2.4.10 G to ENF
2.4.12 G).
- 01/12/2004
Powers common to section 167, 168(1), (2) and (4), and 169 investigators
ENF 2.4.10
See Notes
Section 175 provides that if the FSA, or an investigator
appointed by it under Section 167 or 168 of the Act, has the power to require a person to produce a document but that it appears
that the document is
in the possession of a third person,
the FSA or
investigator may use that power in relation to the third person.
- 01/12/2004
ENF 2.4.11
See Notes
Section 175(2) states that the person to whom the document is produced may
take copies or extracts from the document,
or require the person producing
the document ('A')
or any relevant person to
provide an explanation of it. Under section 175(7) a relevant person means a person who:
(1) has been or is or is proposed to be a
director or controller of
A; or
(2) has been or is an auditor of A; or
(3) has been or is an actuary, accountant
or lawyer appointed or instructed by A; or
(4) has been or is an employee of A.
- 01/12/2004
ENF 2.4.12
See Notes
Section 175(3) states that if a person who is required
to produce a document fails
to do so, the FSA or
an investigator may require him to state, to the best of his knowledge and
belief, where the document is. ENF
2.10.2 G explains the provisions
of section 413 of the Act (Protected items) relating to communications or
items that a person may not be required to produce, disclose, or allow to
be inspected.
- 01/12/2004
Powers of section 284 investigators
ENF 2.4.13
See Notes
Section 284(3) states that if an investigator
appointed under section 284 of the Act ('B')
considers that a person ('C')
is or may be able to give information which is relevant to the investigation,
B may require C:
(1) to produce to B any documents in C's possession or under his control which appear to
B to be relevant to the investigation;
(2) to attend before him; and
(3) Otherwise to give B all assistance in
connection with the investigation which C is reasonably able to give; and
that it is C's
duty to comply with that requirement.- 01/12/2004
ENF 2.5
The FSA's policy on exercising its powers: firms, approvedpersons, and others
- 01/12/2004
Introduction
ENF 2.5.1
See Notes
ENF
2.5.2 G to ENF
2.5.11 G refer to the FSA's policies on using
its powers to require information and reports from firms and others(which
are explained in SUP 2 (Information gathering
by the FSAon
its own initiative) and SUP 5 (Reports
by skilled persons)). They also set out the FSA's policy on using its powers to carry
out investigations into the affairs of firms, approved persons, individuals
involved in firms, appointed representatives, small e-money issuers and unauthorised incoming ECA providers. The powers
available to the FSA are
summarised in ENF
2 Annex 3 G.
- 21/08/2002
Requiring information and documents under section 165 of the Act
ENF 2.5.2
See Notes
Section 165 of the Act (FSA's power to require information) gives
the FSA powers
to require the provision of information and documents from firms. Under the ECD Regulations, the FSA may exercise the power under section
165 (and section 166) in relation to an incoming
ECA provider, whether the provider is a firm or not.
- 21/08/2002
ENF 2.5.3
See Notes
The FSA may
require the provision of information and documents under
section 165 of the Act if
it reasonably requires them, in connection with the exercise of the functions
conferred on it by or under the Act (section
165(4)). This power may be used in a range of circumstances and for different
purposes, such as supervision, including routine supervisory activities, and consumer education (see SUP
2).
- 01/12/2004
Reports by skilledpersons under section 166 of the Act and investigations under sections 167 and 168 of the Act.
ENF 2.5.4
See Notes
If the information available to the FSA raises a regulatory
concern about a firm,
an approved person's conduct
or fitness and propriety, a small
e-money issuer or an unauthorised incoming ECA provider, the FSA may need to make further
enquiries by using its powers to require reports by skilled persons or to appoint investigators.
The nature of the FSA's enquiries
will depend on the nature and seriousness of its concerns and on the attitude
of the firm, small e-money issuer or
unauthorised incoming ECA
provider concerned.
- 21/08/2002
ENF 2.5.5
See Notes
The types of concern that may prompt
the FSA to
make further enquiries into a firm cannot
be listed exhaustively. They will extend to any matter which relates to a firm's business and to
the FSA's performance
of its statutory functions, having regard to its regulatory objectives. Broadly speaking,
they will include circumstances which suggest that:
(1) a firm,
or an approved person within
a firm, may
have acted in a way which prejudiced the interests of consumers;
(2) a firm,
or an approved person within
a firm, may
have acted in breach of the requirements of the legislation or the rules;
(3) a firm may
no longer meet the threshold
conditions or an approved
person within a firm may
not be a fit and proper person to
perform a controlled function;
(4) a firm may
have been used or may be being used for the purposes of financial crime including money laundering;
(5) the FSA should
be concerned about the ownership or control of
a firm, including
whether a person who
has acquired influence over the firm meets
the requirements for FSA approval;
(6) the conduct of certain types of regulated activities in
which a firm is
involved are a cause of serious public concern.
- 01/12/2004
Reports by skilled persons
ENF 2.5.6
See Notes
If the FSA decides that it should use its statutory
powers to make further enquiries, it will have regard to the objectives of
those enquiries, and the relative effectiveness of its available powers to
achieve those objectives. For example:
(1) if the FSA's objectives are limited to gathering
historic information or evidence for determining whether enforcement action
may be appropriate, the FSA's information
gathering and investigation powers under sections 165, 167 and 168 of the Act are likely to be more
effective and more appropriate than the power under section 166 (Reports by skilled persons) (see ENF
2.3.2 G to ENF
2.3.15 G); and
- 01/12/2004
ENF 2.5.7
See Notes
SUP 5 contains guidance on the FSA's use of the section
166 power, including guidance on
the appointment and reporting process. It also contains rules and guidance on the duties
of firms which
are subject to section 166 requirements, and guidance on the contractual duties of skilled persons appointed
as a result of section 166 requirements. The rules and guidance in SUP 5 apply
whenever the FSA uses
the section 166 power.
- 01/12/2004
Investigations into general and specific concerns
ENF 2.5.8
See Notes
(1) In some circumstances, the provision
of a report by a skilled
person under section 166 may not be appropriate, or may be insufficient
(because of the limited nature of the power) to address the seriousness of
the FSA's concerns.
This will include cases where an effective and thorough investigation by the FSA is likely to call
for the exercise of powers to require the firm, connected
persons, small
e-money issuer, or unauthorised incoming ECA provider to answer questions
and/or produce documents.
In those cases, the FSA will
appoint an investigator under section 167 or 168 of the Act, if appropriate the FSA may also require the firm, small
e-money issuer or unauthorised incoming ECA provider to provide a skilled person's report
under section 166. In other cases, the FSA may
appoint an investigator, under section 167 or 168, as a result of information
in a report under section 166.
(2) Investigators will usually be members
of the FSA's staff.
- 21/08/2002
ENF 2.5.9
See Notes
Where the FSA has general concerns about a firm, an appointed representative or
an unauthorised incoming
ECA provider, but the circumstances do not at that stage suggest
any specific breach or contravention, it will rely on its power under section
167 of the Act and,
if it appears that there are good reasons for doing so, the FSA will appoint investigators to investigate
the business of a firm,
an appointed representative or
an unauthorised incoming
ECA provider.
- 21/08/2002
ENF 2.5.10
See Notes
Where it appears to the FSA that circumstances
suggest the contraventions or offences set out in section 168 of the Act (listed in ENF
2.3.14 G) may have happened, the FSA will appoint investigators
under section 168. These powers are wider than those available to investigators
under section 167 (see ENF
2.4.2 G to ENF
2.4.8 G). An investigator appointed
under section 168 may also require persons who
are neither the subject of the investigation, nor connected with the person under investigation,
to attend before him, and to answer questions and provide information. In
addition, where the investigator is appointed as a result of section 168(2),
those persons may
also be required to provide all assistance to the investigator that they are
reasonably able to give.
- 01/12/2004
ENF 2.5.11
See Notes
In some cases, where the FSA has appointed investigators
into a firm or
an unauthorised incoming
ECA provider under
section 167 of the Act,
it may decide that it is appropriate to extend the appointment to cover matters
under section 168 of the Act as
well, if circumstances suggest that one of the specific contraventions, breaches
or offences listed in ENF
2.3.14 G may
have occurred. Where it does so, it will normally notify the person under investigation
that it has appointed the investigators to investigate under section 168 as
well (see ENF 2.12).
- 21/08/2002
Preliminary Findings Letter
ENF 2.5.12
See Notes
Unless it is not practicable to do so
(such as in cases of urgency), FSA staff
(or the investigator appointed by the FSA)
will generally send a preliminary findings letter to a firm, approved
person, individual involved in a firm, appointed
representative or a small
e-money issuer under
investigation (as the case may be) before considering whether to recommend
that enforcement action be initiated.
- 27/04/2002
ENF 2.5.13
See Notes
The letter will set out the facts which
the FSA staff
(or the investigator appointed by the FSA)
consider relevant to the matters under investigation, and will invite the
person concerned to confirm that those facts are complete and accurate. FSA staff (or the investigator
appointed by the FSA)
will allow a reasonable period (normally 28 days) for a response to this letter.
- 01/12/2004
ENF 2.5.14
See Notes
FSA staff
will take into account any response they receive within the period stated
in the preliminary findings letter. They are not obliged to take into account
any response received outside that period.
- 01/12/2004
ENF 2.5.15
See Notes
- 01/12/2004
ENF 2.6
The FSA's policy on investigations into suspected market misconduct
- 01/12/2004
ENF 2.6.1
See Notes
The FSA's power to investigate suspected market misconduct is contained in section 168(2) of the Act (Appointment of persons to carry out investigations in particular cases) (see ENF 2.3.14 G (2)). The FSA may appoint an investigator if circumstances suggest that insider dealing or market abuse may have taken place, or that misleading statements have been made or misleading practices may have been engaged in. Where it appears to the FSA that there are circumstances suggesting that a firm may have engaged in market abuse, the FSA will consider appointing an investigator under section 168(2) to investigate that particular matter, rather than under section 167 (Appointment of persons to carry out general investigations). ENF 2.6.2 G deals in more detail with the circumstances in which the FSA may appoint investigators, in relation to both authorised persons and unauthorised persons.
- 01/12/2004
ENF 2.6.2
See Notes
When considering whether to use its powers to conduct formal investigations into market misconduct, the FSA will take into account a number of factors. These will include:
- (1) the seriousness of its concerns, including the effect of the misconduct on consumers or market confidence;
- (2) the nature of the possible contravention, including the type of market involved, and the duration and frequency of the possible contravention;
- (3) the context of the possible contravention; for example, where the behaviour in question happened or is happening in the context of a takeover bid and, in the FSA's opinion, any investigation may materially affect the timetable or outcome of that bid, the FSA will consult the Takeover Panel and will give due weight to its views; and
- (4) whether another regulatory authority is in a position to investigate and deal with the matters of concern.
- (a) As far as a recognised investment exchange or recognised clearing house is concerned, the FSA will consider the extent to which the relevant exchange or clearing house has adequate and appropriate powers to investigate and deal with the matters of concern itself. The FSA will consult with the relevant exchange or clearing house and give due weight to its views. Where appropriate, the FSA may use its own powers under section 128 of the Act (Suspension of investigations) to prevent a recognised investment exchange or recognised clearing house from starting an investigation or to limit, stop or suspend an existing inquiry.
- (b) As far as the Takeover Panel is concerned, as regards market abuse, the cases in which the FSA expects to take action against a person with Takeover Code responsibilities are limited, as ENF 14.9 (Action involving other UK regulatory authorities) makes clear. The FSA does not therefore expect to use relevant investigative powers unless one of the circumstances in ENF 14.9.6 G applies. Further, unless one of the following exceptions applies, the FSA will not start any investigation into behaviour that has happened or is happening in the context of a takeover bid while that bid is current. The exceptions are where: (i) the case falls within ENF 14.9.7 G, or (ii) the person whose behaviour is to be investigated is not a person who has responsibilities under the Takeover Code.
- 01/12/2004
ENF 2.7
The FSA's policy on investigations into unauthorised business
- 01/12/2004
ENF 2.7.1
See Notes
The FSA may
appoint investigators into unauthorised
persons under section 168 of the Act (Appointment of persons to carry out investigations
in particular cases) (see ENF 2.3.14 G (2) and ENF 2.3.14 G (3)) where it appears
to it that circumstances suggest that:
(1) a person has
contravened the general
prohibition in section 19 of the Act against carrying on a regulated activity without authorisation or exemption; or
(3) a person has
committed a specified offence, including:
(a) Making a false claim to be authorised or exempt;
(b) Contravening the restriction on financial promotion; and
(c) Making a false or misleading statement
to induce an investment
agreement.
- 01/12/2004
ENF 2.7.2
See Notes
The FSA's primary
aim in using its investigation powers will be to protect the interests of consumers. The FSA's priority will be
to confirm whether or not a regulated
activity has been carried on in the United Kingdom by someone without authorisation or exemption,
and, if so, the extent of that activity and whether other related contraventions
have occurred. It will seek to assess the risk to consumers' assets and interests arising from
the activity as soon as possible.
- 01/12/2004
ENF 2.7.3
See Notes
The FSA may
be alerted to possible contraventions or breaches by complaints from the public
or firms,
by referrals from other prosecuting authorities or through its own enquiries.
It will assess on a case-by-case basis whether to carry out a formal investigation,
after considering all the available information. Factors it will take into
account are:
(1) the elements of the suspected contravention
or breach;
(3) whether obligations of confidentiality
inhibit individuals from providing information unless compelled to do so by
the FSA's use
of its formal powers.
- 01/12/2004
ENF 2.7.4
See Notes
At an early stage in the investigation
the FSA may
need to consider whether to take urgent enforcement action to protect consumers. Its investigators
will then use their powers to collect documentary and oral evidence for use
in support of that action. Nevertheless, even when it has commenced enforcement
proceedings, it may need to continue with its fact-finding investigations.
For instance, the FSA may
need further information to consider whether it should use any of its other
statutory powers, to apply for further civil remedies or to start criminal
prosecutions.
- 01/12/2004
ENF 2.7.5
See Notes
The FSA will
not always be the only investigating, enforcement or prosecuting authority
with an interest in investigating unauthorised business. From time to time
the Serious Fraud Office, the Department of Trade and Industry, the police
and the prosecuting authorities (both in the United Kingdom and overseas) may have an
interest in such cases.
- 01/12/2004
ENF 2.7.6
See Notes
The FSA has
agreed guidelines that will establish a framework for liaison and cooperation
in cases where one or more of these authorities has an interest in prosecuting
any aspect of a matter that the FSA is
considering for investigation, investigating or considering prosecuting. These
Guidelines are set out in ENF
2 Annex 1 G G.
- 01/12/2004
ENF 2.8
The FSA's policy for exercising its power to conduct investigations to assist overseas authorities
- 01/12/2004
ENF 2.8.1
See Notes
The FSA's power
to conduct investigations to assist overseas authorities is contained in section
169 of the Act (see ENF
2.3.16 G).
- 01/12/2004
ENF 2.8.2
See Notes
Section 169(1) states that at the request
of an overseas regulator,
the FSA may
use its power under section 165 of the Act (FSA's power to require
information) power to require information and documents, or appoint a person to investigate any matter. These are
referred to as the FSA's investigative
powers.
- 01/12/2004
ENF 2.8.3
See Notes
If the overseas regulator is a competent authority and makes a request under
any Community obligation, section 169(3) states that the FSA must, in deciding whether or not to exercise
its investigative power, consider whether it is necessary to use it to comply
with that obligation.
- 01/12/2004
ENF 2.8.4
See Notes
Section 169(6) states that, if the FSA considers that the
use of its investigative power is necessary to comply with a Community obligation,
the provisions of section 169(4) and (5) (set out in ENF
2.8.5 G and ENF
2.8.6 G)
do not apply.
- 01/12/2004
ENF 2.8.5
See Notes
Under section 169(4), in deciding whether
or not to use its investigative power, the FSA may take into account in particular the
following factors:
(1) whether, in the country or territory
of the overseas regulator concerned,
corresponding assistance would be given to a UK regulatory authority;
(2) whether the case concerns the breach
of a law, or other requirement, which has no close parallel in the United Kingdom or involves
the assertion of a jurisdiction not recognised by the United Kingdom;
(4) whether it is otherwise appropriate in
the public interest to give the assistance sought.
- 01/12/2004
ENF 2.8.6
See Notes
Section 169(5) states that the FSA may decide not to
use its investigative power unless the overseas
regulator agrees to make such contribution towards the cost
as the FSA considers
appropriate.
- 01/12/2004
ENF 2.8.7
See Notes
When it considers whether to use its
investigative power, and whether section 169(4) applies, the FSA will first consider
whether it is able to assist without using its formal powers, for example
by getting the information voluntarily. Where that is not possible, the FSA will take account
of all the factors in ENF
2.8.5 G,
but may give particular weight to the seriousness of the case and its importance
to persons in
the United Kingdom,
and to the public interest.
- 01/12/2004
ENF 2.9
The FSA's policy on investigations into collective investment schemes under section 284
- 01/12/2004
ENF 2.9.1
See Notes
The FSA may
appoint investigators into a collective
investment scheme if it appears to it that it is in the interests
of the participants or
potential participants to
do so or that the matter is of public concern (section 284(1) (Power to investigate)).
In most cases it expects that those involved (such as managers of schemes) will provide information without
the FSA having
to use its formal powers. In other cases, circumstances may be such that the FSA relies on its general
investigative powers. However, in some cases the use of the section 284 power
may be more appropriate.
- 01/12/2004
ENF 2.9.2
See Notes
The types of concern that may prompt
the FSA to
use its powers under section 284 cannot be listed exhaustively. They will
include any matters that could affect the interests of participants or potential participants or matters that could be of
public concern, including questions about the nature and propriety of assets
held by the scheme or the accuracy and propriety of valuation of units in
the scheme. When considering whether to use the powers, factors that the FSA will take into account
include:
(1) the seriousness, in the FSA's opinion, of the
matter of concern;
(2) the degree to which the interests of consumers may be affected;
(3) whether the FSA considers that the persons concerned are willing to cooperate
in giving information;
(4) whether confidentiality obligations may
inhibit individuals from giving information without the FSA having to use its formal powers.
- 01/12/2004
ENF 2.10
Protected items, banking confidentiality, and admissibility
- 01/12/2004
ENF 2.10.1
See Notes
This section sets out additional provisions
that apply to investigations generally.
- 01/12/2004
Protected items
ENF 2.10.2
See Notes
Section 413 of the Act relates to protected items.
(1) Under section 413(1), a person may not be required
under the Act to
produce, disclose or allow inspection of protected
items.
(2)
Protected
items are:
(a) Communications between a professional
legal adviser and his client or any person representing
his client which falls within section 413(3);
(b) Communications between a professional
legal adviser, his client or any person representing
his client and any other person that
falls within section 413(3) (as a result of paragraph (b) of that subsection);
(c) items which -
(i) Are enclosed with, or referred to in,
such communications;
(ii) Fall within section 413(3); and
(iii) Are in the possession of a person entitled to have
them.
(3) A communication or item falls within
section 413(3) if it is made:
(a) in connection with the giving of legal
advice to the client; or
(b) in connection with, or in contemplation
of, legal proceedings and for the purposes of those proceedings.
(4) However under section 413(4) a communication
or item is not a protected
item if it is held with the intention of furthering a criminal
purpose.
(5) Also, under section 175(4) of the Act (Information and documents:
supplemental provisions) a lawyer may be required to give the name and address
of his client.
- 01/12/2004
Banking confidentiality
ENF 2.10.3
See Notes
Under section 175(5) and section 284(8)
(Power to investigate) of the Act,
except in certain circumstances, no person may
be required under Part XI (Information Gathering and Investigations) or section
284 of the Act to
give information or produce a document in
respect of which he owes an obligation of confidence by carrying on banking
business. Those circumstances include, under section 175(5), circumstances
where:
(1) the person to
whom the obligation is owed is the person under
investigation, or a related company;
or
(2) the person to
whom the duty is owed consents to its disclosure; or
(3) the requirement to disclose has been
specifically authorised by the FSA.
- 01/12/2004
Admissibility of statements
ENF 2.10.4
See Notes
Section 174 of the Act (Admissibility of statements made to investigators)
relates to the admissibility of statements made by a person in compliance with information requirements
imposed under sections 171 (Powers of persons appointed under section 167),
172 (Additional power of persons appointed as a result of section 168(1) or
(4)), 173 (Powers of persons appointed as a result of section 168(2)), 175
or 284 of the Act,
to an investigator appointed under section 167 (Appointment of persons to
carry out general investigations), 168 (Appointment of persons to carry out
investigations in particular cases) or 284 of the Act.
(1) Under section 174(1) a statement made
to an investigator by a person complying
with an information requirement can, in general, be used as evidence in any
proceedings, so long as it also complies with any requirements governing the
admissibility of evidence in the circumstances in question.
(2) However, under section 174(2), such a
statement cannot generally be used as evidence in criminal proceedings in
which the person who
made the statement is charged with an offence, or in proceedings in relation
to action against a person under
section 123 of the Act (Penalties
for market abuse).
Nevertheless this does not apply to the offences listed in section 174(3),
such as making false statements or providing false or misleading evidence
to the FSA's investigators.
Where section 174(2) applies:
(a) no evidence relating to the statement
may be adduced; and
(b) no questions relating to it may be asked;
by the prosecution
or the FSA,
unless evidence relating to that statement is adduced, or a question relating
to it is asked, by that person or
on his behalf in the proceedings.- 01/12/2004
ENF 2.10.5
See Notes
Statements made by a person to an investigator other than in compliance
with an information requirement (such as statements made voluntarily) are
not covered by section 174 and can be used as evidence in any proceedings
subject to any requirements governing the admissibility of evidence in the
circumstances in question.
- 01/12/2004
ENF 2.11
The FSA's policy on investigators and control of investigations
- 01/12/2004
Powers of the investigators
ENF 2.11.1
See Notes
The FSA sees
its investigation powers as essentially fact-finding powers. Consequently,
it will ensure that its investigators use them primarily to obtain the information
it needs in order to decide what further action, if any, may be necessary
in a particular case.
- 01/12/2004
ENF 2.11.2
See Notes
In practice, investigators appointed
under sections 167 (Appointment of persons to carry out general investigations),
168 (Appointment of persons to carry out investigations in particular cases)
or 284 (Power to investigate) of the Act may
not always deem it necessary to use their statutory powers. However, where
they do so, they will at all times make this clear to those persons to whom their enquiries are addressed,
and will inform those persons of
the statutory requirements (see ENF 2.4)
and the possible penalties for failure to comply. (See also ENF
2.14.3 G on compulsory interviews and ENF 2.15 on enforcement of requirements).
- 01/12/2004
Control and direction of the investigation
ENF 2.11.3
See Notes
- 01/12/2004
ENF 2.11.4
See Notes
The FSA has
power under section 170(7) to direct an investigator so that it can control:
(1) the scope of the investigation;
(2) the period during which the investigation
is to be conducted;
(3) the conduct of the investigation; and
(4) the reporting of the investigation.
- 01/12/2004
ENF 2.11.5
See Notes
Under section 170(8) a direction may,
in particular:
(1) Confine the investigation to particular
matters;
(2) Extend the investigation to additional
matters;
(3) Require the investigator to stop the
investigation or to take only certain steps; and
(4) Require the investigator to make an interim
report or reports.
- 01/12/2004
ENF 2.11.6
See Notes
Section 170(5) to (9) also applies to
investigations into collective
investment schemes under section 284 of the Act.
- 01/12/2004
ENF 2.11.7
See Notes
Where the FSA has appointed an investigator in response
to a request from an overseas
regulator, it may under section 169(7) (Investigations etc.
in support of overseasregulator) direct the
investigator to allow a representative of
that regulator to attend, and take part in, any interview conducted for the
purposes of the investigation. However, the FSA may only use this power if it is satisfied
that any information obtained by an overseas
regulator as a result of the interview will be subject to safeguards
equivalent to those in Part XXIII of the Act (Public
Record, Disclosure of Information and Cooperation) (section 169(8)).
- 01/12/2004
ENF 2.11.8
See Notes
The factors that the FSA may take into account when deciding whether
to make a section 169(7) interview direction include the following:
(1) the complexity of the case;
(2) the nature and sensitivity of the information
sought;
(3) the FSA's own
interest in the case;
(4) costs, where no Community obligation
is involved, and the availability of resources; and
(5) the availability of similar assistance
to UK authorities
in similar circumstances.
- 01/12/2004
ENF 2.11.9
See Notes
Under section 169(9), the FSA is required to prepare
a statement of policy with the approval of the Treasury on the conduct of
interviews attended by representatives of overseas regulators. The statement is set
out in ENF
2 Annex 2 G G.
- 01/12/2004
ENF 2.12
The FSA's policy on notification to the person under investigation
- 01/12/2004
ENF 2.12.1
See Notes
Section 170(2) of the Act (Investigations: general) requires the FSA to give to the person who is the subject
of the investigation written notice that it has appointed an investigator,
except in relation to the cases set out in section 170(3) (see ENF
2.12.3 G). Under section 170(4), the notice must:
(1) specify the provisions under which, and
as a result of which, it appointed the investigator; and
(2) state the reason for the investigator's
appointment.
- 01/12/2004
ENF 2.12.2
See Notes
If there is a change in the scope or
conduct of the investigation and, in the FSA's opinion,
the person under
investigation is likely to be significantly prejudiced if not made aware of
this, that person must
be given written notice of the change (see section 170(9)). It is impossible
to give a definitive list of the circumstances in which a person is likely to be significantly prejudiced
by not being made aware of the change in the scope or conduct of an investigation.
However, this may include situations where there may be unnecessary costs
from dealing with an aspect of an investigation which the FSA no longer intends to pursue or where
a person may
inadvertently incriminate himself by not knowing of the change in scope.
- 01/12/2004
ENF 2.12.3
See Notes
However, under section 170(3), sections
170(2) and (9) (see ENF
2.12.1 G and ENF
2.12.2 G) do not apply if:
(1) the investigator is appointed as a result
of section 168(1) or (4) (Appointment of persons to carry out investigations
in particular cases) (see ENF 2.3.14 G (1) and ENF 2.3.14 G (3)) and the investigating
authority believes the notice required would be likely to result in the investigation
being frustrated; or
(2) the investigator is appointed as a result
of section 168(2) (see ENF 2.3.14 G (2)).
- 01/12/2004
ENF 2.12.4
See Notes
Where the Act does not require the FSA to give written notice of the appointment
of the investigators, for example where the investigation is into suspected
breaches of the general
prohibition or market misconduct, the FSA will nevertheless consider notifying
the person under
investigation when it becomes clear who that person is.
- 01/12/2004
ENF 2.12.5
See Notes
In investigations into possible insider dealing, market abuse, misleading statements and practices offences, or breaches of the general prohibition, the restriction on financial promotion, or the prohibition on promoting collective investment schemes, the investigator may not know the identity of the perpetrator or may be looking into market circumstances at the outset of the investigation rather than investigating a particular person. For example, market abuse investigations may often be prompted by concerns surrounding, for instance, movements in the market price of a particular investment. In those circumstances the FSA will give an indication of the nature and subject matter of the FSA's investigation to those who are required to provide information to assist with the investigation.
- 01/12/2004
ENF 2.12.6
See Notes
However, when it becomes clear who the person under investigation
is, the FSA will
normally notify him of that fact when it proceeds to exercise its statutory
powers to require information from them. But it will not notify the persons under investigation
if this would prejudice the FSA's ability
to conduct the investigation effectively.
- 01/12/2004
ENF 2.12.7
See Notes
Except where the FSA has issued a warning notice (See DEC 2 Statutory notice procedure: warning
notice and decision notice procedure) and the FSA has subsequently discontinued the proceedings,
the Act does
not require the FSA to
provide notification of the termination of an investigation or subsequent
enforcement action. However, where the FSA has
given a person written
notice that it has appointed an investigator and subsequently decides to discontinue
the investigation without any present intention to take further action, it
will confirm this to the person concerned
as soon as it considers it is appropriate to do so, having regard to the circumstances
of the case.
- 01/12/2004
ENF 2.13
Publicity
- 01/12/2004
ENF 2.13.1
See Notes
The FSA will
not normally make public the fact that it is or is not investigating a particular
matter, or any of the findings or conclusions of an investigation.
- 01/12/2004
Publicity during investigations
ENF 2.13.2
See Notes
Paragraphs ENF
2.13.3 G to ENF
2.13.6 G deal with exceptional circumstances in which the FSA may make a public announcement that it is or is not
investigating a particular matter.
- 01/12/2004
ENF 2.13.3
See Notes
Where the matter in question has occurred
in the context of a takeover
bid, and the following circumstances apply, the FSA may make a public announcement that
it is not investigating, and does not propose to investigate, the matter.
Those circumstances are where the FSA:
(1) has not appointed, and does not propose
to appoint, investigators; and
(2) considers (following discussion with
the Takeover Panel)
that such an announcement is appropriate in the interests of preventing or
eliminating public uncertainty, speculation or rumour.
- 01/12/2004
ENF 2.13.4
See Notes
Where it is investigating any matter,
the FSA will,
in exceptional circumstances, make a public
announcement that it is doing so if it considers such an announcement
is desirable to:
(1) maintain public confidence in the financial system; or
(2) protect consumers; or
(3) prevent widespread malpractice; or
(4) help the investigation itself, for example
by bringing forward witnesses.
In deciding
whether to make an announcement, the FSA will
consider the potential prejudice that it believes may be caused to any persons who are, or who
are likely to be, a subject of the investigation. - 01/12/2004
ENF 2.13.5
See Notes
The exceptional circumstances referred
to in ENF
2.13.4 G may arise where the matters
under investigation have become the subject of public concern, speculation
or rumour. In this case it may be desirable for the FSA to make public the fact of its investigation
in order to allay concern, or contain the speculation or rumour. Where the
matter in question relates to a takeover
bid, the FSA will
discuss any announcement beforehand with the Takeover Panel. Any announcement will be
subject to the restriction on disclosure of confidential information in section
348 of the Act (Restrictions
on disclosure of confidential information by FSA etc).
- 01/12/2004
ENF 2.13.6
See Notes
There will also be cases where publicity
is unavoidable. For example, investigations into suspected criminal offences
may often lead the FSA into
making enquiries amongst the general public which might attract publicity.
- 01/12/2004
ENF 2.13.7
See Notes
The FSA will
not normally publish details of the information found or conclusions reached
during its investigations. In many cases, statutory restrictions on the disclosure
of information obtained by the FSA in
the course of exercising its functions are likely to prevent publication (see
section 348 of the Act).
In exceptional circumstances, and where it is not prevented from doing so,
the FSA may
publish details. Circumstances in which it may do so include those where the
fact that the FSA is
investigating has been made public, by the FSA or otherwise, and the FSA subsequently concludes that the concerns
that prompted the investigation were unwarranted. This is particularly so
if the firm under
investigation wishes the FSA to
clarify the matter.
- 01/12/2004
Publicity following an investigation
ENF 2.13.8
See Notes
Section 391 of the Act (Publication) deals with publication of
regulatory action resulting in final
notices and effective supervisory
notices (see DEC).
(1) Under section 391(4) the FSA must publish such
information about the matter to which a final
notice relates as it considers appropriate.
(2) Similarly under section 391(5), where
a supervisory notice takes
effect the FSA must
publish such information about the matter to which the notice relates as it
considers appropriate.
- 01/12/2004
ENF 2.13.9
See Notes
Where the final notice relates to behaviour in the context of a takeover bid, and the FSA believes that publicity
may affect the timetable or outcome of that bid, the FSA will consult the Takeover Panel and will give due weight
to the Panel's views.
- 01/12/2004
ENF 2.13.10
See Notes
ENF 9.10 (Publication)
sets out the FSA's policy
on publishing details of applications to court for restitution or for the
use of its administrative power to require restitution. The FSA considers that it is generally appropriate
to publish details of successful applications to court or of the exercise
of its administrative powers to require restitution. However, in certain circumstances
it may decide not to publish, for example, if this could damage market confidence
or undermine market integrity in a way that could be damaging to the interests
of consumers.
Where the relevant behaviour has
occurred in the context of a takeover
bid, and the FSA believes
that publicity may affect the timetable or outcome of that bid, the FSA will consult the Takeover Panel and will
give due weight to the Takeover
Panel's views.
- 01/12/2004
ENF 2.13.11
See Notes
The FSA will
also normally publish the outcome of other civil actions, such as the obtaining
of injunctions prohibiting
further illegal activity, and of public hearings in criminal prosecutions.
Again, where the relevant behaviour has
occurred in the context of a takeover
bid, and the FSA is
of the opinion that publicity may materially affect the timetable or outcome
of that bid, the FSA will
consult the Takeover Panel and
will give due weight to the Takeover
Panel's views.
- 01/12/2004
ENF 2.14
The FSA's policy: interviews and interview procedures
- 01/12/2004
ENF 2.14.1
See Notes
As mentioned in ENF
2.11.2 G, the FSA may
not always use its statutory powers to require individuals to be interviewed.
If appropriate, the investigator will first seek to conduct interviews on
a voluntary basis.
- 01/12/2004
Voluntary Interviews
ENF 2.14.2
See Notes
If the interviewee is the subject of
the investigation, the investigator will make a record of the interview and
the FSA will
give a copy of the record to the interviewee. If the interviewee is not the
subject of the investigation, the FSA will
give the interviewee a record of the interview if one has been made by the
investigator. The interviewee may be accompanied by a legal adviser, if he
wishes.
- 01/12/2004
Compulsory interviews
ENF 2.14.3
See Notes
Where the FSA does require a person to answer questions in interview, using its compulsory powers, it will:
- (1) allow that person (whether or not he is the subject of the investigation) to be accompanied by a legal adviser, if he wishes;
- (2) give the person an appropriate warning and an explanation of the limited use that can be made of his answers in criminal proceedings against him, or in proceedings in which the FSA seeks a penalty for market abuse under Part VIII of the Act (Penalties for Market Abuse); and
- (3) give the person a record of the interview (in most cases this will be an audio tape recording).
- 01/12/2004
Interviews under caution
ENF 2.14.4
See Notes
Under sections 401 (Proceedings for offences)
and 402 (Power of the FSA to institute proceedings for certain other offences)
of the Act,
the FSA is
a prosecuting authority in England and Wales and Northern Ireland for a number
of criminal offences. When conducting interviews with suspects for the purpose
of obtaining evidence for use in criminal proceedings, investigators are subject
(with appropriate adaptations) to the statutory requirements of the Police
and Criminal Evidence Act 1984 (PACE) and its Codes, and of the Criminal Procedure
and Investigations Act 1996. Individuals suspected of a criminal offence may
therefore be interviewed under caution. These interviews will be subject to
all the safeguards of PACE Code C and are entirely voluntary on the part of
the suspects. The FSA will
warn the suspect at the start of the interview of his right to remain silent
(and the consequences of remaining silent) and will inform the suspect that
he is entitled to have a legal adviser present.
- 01/12/2004
ENF 2.14.5
See Notes
If a suspect has already been interviewed by the FSA under compulsory powers, before he is interviewed under caution, the investigators will give him the transcript or other record of the compulsory interview and an explanation of the difference between the two types of interview. They will also tell the individual about the limited use that can be made of his previous answers in criminal proceedings or in proceedings in which the FSA seeks a penalty for market abuse under Part VIII of the Act.
- 01/12/2004
ENF 2.14.6
See Notes
Also, where a suspect has been interviewed
under caution, and the FSA subsequently
wishes to conduct a compulsory interview with him, the FSA will again explain the difference between
the two types of interview, and will notify the individual of the limited
use that can be made of his answers in the compulsory interview.
- 01/12/2004
ENF 2.14.7
See Notes
Guidance on the admissibility of statements
made to investigators is set out at ENF
2.10.4 G to ENF
2.10.5 G.
- 01/12/2004
ENF 2.15
The FSA's powers to enforce requirements
- 01/12/2004
Search warrants
ENF 2.15.1
See Notes
The FSA and
its investigators may apply to a magistrate for a warrant to search for and
seize documents or
information. Under section 176 of the Act (Entry
of premises under warrant) a justice of the peace or sheriff may issue a warrant
if he is satisfied that there are reasonable grounds for believing that:
(1) a person has
failed to comply with a requirement to provide information or produce documents, and that the
required documents or
information are on the premises specified in the warrant (see section 176(2));
or
(2) the premises specified in the warrant
are those of a firm or
an appointed representative;
and that there are documents or
information on the premises which could be the object of an information requirement;
and that the requirement would not be complied with, or the documents or information would be removed,
tampered with or destroyed if such a requirement were made (see section 176(3));
or
(3) a serious offence has been or is being
committed; and that documents or
information relevant to that offence are on the specified premises; and that
an information requirement could be imposed on those documents or that information; and that the
requirement would not be complied with, or the documents or information would be removed,
tampered with or destroyed (see section 176(4)).
The offences
relevant to sub-paragraph (3) above are those mentioned in section 168 of
the Act (Appointment
of persons to carry out investigations in particular cases) (see ENF
2.3.14 G), for which the maximum
sentence on indictment is two years or more.- 01/12/2004
ENF 2.15.2
See Notes
The FSA will
consider using these powers to apply for a search warrant when it has concerns
about whether information requirements will be complied with and it believes
that the grounds listed in ENF
2.15.1 G are made out.
- 01/12/2004
ENF 2.15.3
See Notes
A search warrant issued under section
176 will authorise a constable to:
(1) Enter the premises specified in the warrant;
(2) Search the premises and take possession
of documents or
information relevant to the warrant, or take any other steps which may appear
to be necessary to preserve them or prevent interference with them;
(3) take copies of, or extracts from, any
such documents or
information;
- 01/12/2004
ENF 2.15.4
See Notes
- 01/12/2004
Prosecutions
ENF 2.15.5
See Notes
- 01/12/2004
ENF 2.15.6
See Notes
Under section 177(3), (4) and (6) a person commits an offence
if he:
(1) knows or suspects that an investigation
is being or is likely to be conducted, and:
(a) falsifies, conceals, destroys or otherwise
disposes of a document which
he knows or suspects is, or would be, relevant to the investigation; or
(b) causes or permits the falsification,
concealment, destruction or disposal of such a document;
unless he shows
that he had no intention of concealing facts disclosed by the documents from the investigator
(see section 177(3)); or(2) in purported compliance with a requirement
placed on him under Part XI of the Act (Information
Gathering and Investigations), gives information which he knows to be false
or misleading in a material particular, or recklessly gives information which
is false or misleading in a material particular (see section 177(4)); or
(3) intentionally obstructs the use of any
rights conferred by a warrant (see section 177(6)).
- 01/12/2004
Certification procedure
ENF 2.15.7
See Notes
Section 177(1) states that if a person other than the
investigator fails to comply with a requirement imposed on him under Part
XI of the Act,
the person imposing
the requirement may certify that fact in writing to the court. If the court
is satisfied that that person has
no reasonable excuse for failing to comply, it may deal with him as if he
were in contempt. If the person is
a body corporate,
the court may deal with any director or
officer as if he were in contempt (section 177(2)).
- 01/12/2004
ENF 2 Annex 1
Information gathering and investigation powers
- 01/12/2004
See Notes
Appendix to the guidelines on investigation
of cases of interest or concern to the Financial Services Authority and other
prosecuting and other investigating agencies
| Purpose, status and application of the guidelines | |||
| 1. | These guidelines have been agreed by the following bodies ("the
agencies"): • the Financial Services Authority ("the FSA"); • the Serious Fraud Office ("the SFO"); • the Department of Trade and Industry ("the DTI"); • the Crown Prosecution Service ("the CPS"); • the Association of Chief Police Officers in England, Wales and Northern Ireland ("ACPO"); • the Crown Office; • the Department of the Director of Public Prosecutions for Northern Ireland ("the DPP(NI)"); • the Association of Chief Police Officers in Scotland ("ACPO(S)"). | ||
| 2. | The guidelines are intended to assist the agencies when considering cases concerning financial crime and/or regulatory misconduct that are, or may be, of mutual interest to the FSA and one or more of the other agencies. Their implementation and wider points arising from them will be kept under review by the agencies who will liaise regularly. | ||
| 3. | The purpose of the guidelines is to set out some broad principles which the agencies agree should be applied by them in order to assist them to: | ||
| (a) | decide which of them should investigate such cases; | ||
| (b) | co-operate with each other, particularly in cases where more than one agency is investigating; | ||
| (c) | prevent undue duplication of effort by reason of the involvement of more than one agency; | ||
| (d) | prevent the subjects of proceedings being treated unfairly by reason of the unwarranted involvement of more than one agency. | ||
| 4. | The guidelines are intended to apply to the relationships between the FSA and the other agencies. They are not intended to apply to the relationships between those other agencies themselves where there is no FSA interest. They are not legally binding. | ||
| 5. | The guidelines are subject to the restrictions on disclosure of information held by the agencies. They are not intended to override them. | ||
| 6. | The guidelines are relevant to ACPO and ACPO(S) only in so far as they relate to investigations. Similarly, they are relevant to the CPS and the DPP(NI) only in so far as they relate to prosecutions. | ||
| Commencing Investigations | |||
| 7. | The agencies recognise that there are areas in which they have an overlapping remit in terms of their functions and powers (the powers and functions of the agencies are set out in the Appendix to this document). The agencies will therefore endeavour to ensure that only the agency or agencies with the most appropriate functions and powers will commence investigations. | ||
| 8. | The agencies further recognise that in certain cases concurrent investigations may be the most quick, effective and efficient way for some cases to be dealt with. However, if an agency is considering commencing an investigation and another agency is already carrying on a related investigation or proceedings or is otherwise likely to have an interest in that investigation, best practice is for the agencies concerned to liaise and discuss which agency or agencies should take action, ie investigate, bring proceedings or otherwise deal with the matter. | ||
| Indicators for deciding which agency should take action | |||
| 9. | The following are indicators of whether action by the FSA or one of the other agencies is more appropriate. They are not listed in any particular order or ranked according to priority. No single feature of the case should be considered in isolation, but rather the whole case should be considered in the round. | ||
| (a) | Tending towards action by the FSA | ||
| • | Where the suspected conduct in question gives rise to concerns regarding market confidence or protection of consumers of services regulated by the FSA. | ||
| • | Where the suspected conduct in question would be best dealt with by: | ||
| - criminal prosecution of offences which the FSA has powers to prosecute by virtue of the Financial Services and Markets Act 2000 ("the 2000 Act") (see Appendix paragraph 1.4) and other incidental offences; | |||
| - civil proceedings under the 2000 Act (including applications for injunctions, restitution and to wind up firms carrying on regulated activities); | |||
| - regulatory action which can be referred to the Financial Services and Markets Tribunal (including proceedings for market abuse); and | |||
| - proceedings for breaches of Part VI of the Act, of Part 6 rules or the Prospectus Rules or a provision otherwise made in accordance with the Prospectus Directive. | |||
| • | Where the likely defendants are FSA authorised or approved persons. | ||
| • | Where the likely defendants are issuers or sponsors of a security admitted to the official list or in relation to which an application for listing has been made | ||
| • | Where there is likely to be a case for the use of FSA powers which may take immediate effect (eg powers to vary the permission of an authorised firm or to suspend listing of securities). | ||
| • | Where it is likely that the investigator will be seeking assistance from overseas regulatory authorities with functions equivalent to those of the FSA. | ||
| • | Where any possible criminal offences are technical or in a grey area whereas regulatory contraventions are clearly indicated. | ||
| • | Where the balance of public interest is in achieving reparation for victims and prosecution is likely to damage the prospects of this. | ||
| • | Where there are distinct parts of the case which are best investigated with regulatory expertise. | ||
| (b) | Tending towards action by one of the other agencies | ||
| • | Where serious or complex fraud is the predominant issue in the conduct in question (normally appropriate for the SFO). | ||
| • | Where the suspected conduct in question would be best dealt with by: | ||
| - criminal proceedings for which the FSA is not the statutory prosecutor; | |||
| - proceedings for disqualification of directors under the Company Directors Disqualification Act 1986 (normally appropriate for DTI action); | |||
| - winding up proceedings which FSA does not have statutory powers to bring (normally appropriate for DTI action); or | |||
| - criminal proceedings in Scotland. | |||
| • | Where the conduct in question concerns the abuse of limited liability status under the Companies Acts (normally appropriate for DTI action). | ||
| • | Where powers of arrest are likely to be necessary. | ||
| • | Where it is likely that the investigator will rely on overseas organisations (such as law enforcement agencies) with which the other agencies have liaison. | ||
| • | Where action by the FSA is likely to prejudice the public interest in the prosecution of offences for which the FSA is not a statutory prosecutor. | ||
| • | Where the case falls only partly within the regulated area (or criminal offences for which FSA is a statutory prosecutor) and the prospects of splitting the investigation are not good. | ||
| 10. | It is also best practice for the agencies involved or interested in an investigation to continue to liaise as appropriate throughout in order to keep under review the decisions as to who should investigate or bring proceedings. This is particularly so where there are material developments in the investigation that might cause the agencies to reconsider its general purpose or scope and whether additional investigation by others is called for. | ||
| Conduct of concurrent investigations | |||
| 11. | The agencies recognise that where concurrent investigations are taking place, action taken by one agency can prejudice the investigation or subsequent proceedings brought by another agency. Consequently, it is best practice for the agencies involved in concurrent investigations to notify each other of significant developments in their investigations and of any significant steps they propose to take in the case, such as: | ||
| • | interviewing a key witness; | ||
| • | requiring provision of significant volumes of documents; | ||
| • | executing a search warrant; or | ||
| • | instituting proceedings or otherwise disposing of a matter. | ||
| 12. | If the agencies identify that particular action by one party might prejudice an investigation or future proceedings by another, it is desirable for the parties concerned to discuss and decide what action should be taken and by whom. In reaching these decisions, they will bear in mind how the public interest is best served overall. The examples provided in paragraph 9 above may also be used as indicators of where the overall balance of interest lies | ||
| Deciding to bring proceedings | |||
| 13. | The agencies will consider, as necessary, and keep under review whether an investigation has reached the point where it is appropriate to commence proceedings. Where agencies are deciding whether to institute criminal proceedings, they will have regard to the usual codes or guidance relevant to that decision. For example, agencies other than the DPP(NI) or the Crown Office will have regard to the Code for Crown Prosecutors (Note: Different guidance applies to the DPP(NI) and the Crown Office. All criminal proceedings in Scotland are the responsibility of the Lord Advocate. Separate arrangements have been agreed between the FSA and the Crown Office for the prosecution of offences in Scotland arising out of FSA investigations). Where they are considering whether to bring non-criminal proceedings, they will take into account whatever factors they consider relevant (for example, in the case of market abuse proceedings brought by the FSA, these are set out in paragraph 14.4 of the FSA Enforcement manual). | ||
| 14. | The agencies recognise that in taking a decision whether to commence proceedings, relevant factors will include: | ||
| • | whether commencement of proceedings might prejudice ongoing or potential investigations or proceedings brought by other agencies; and | ||
| • | whether, in the light of any proceedings being brought by another party, it is appropriate to commence separate proceedings against the person under investigation. | ||
| 15. | Best practice in these circumstances, therefore, is for the parties concerned to liaise before a decision is taken. | ||
| Closing Cases | |||
| 16. | It is best practice for the agencies, at the conclusion of any investigation where it is decided that no further action need be taken, or at the conclusion of proceedings, to notify any other agencies concerned of the outcome of the investigation and/or proceedings and to provide any other helpful feedback. | ||
| APPENDIX TO THE GUIDELINES ON INVESTIGATION OF CASES OF INTEREST OR CONCERN TO THE FINANCIAL SERVICES AUTHORITY AND OTHER PROSECUTING AND INVESTIGATING AGENCIES | |||
| 1. | The FSA | ||
| 1.1 | The FSA is the single statutory regulator for all financial business in the UK. Its regulatory objectives under the Financial Services and Markets Act 2000 ("the 2000 Act") are: | ||
| • | market confidence; | ||
| • | public awareness; | ||
| • | the protection of consumers; and | ||
| • | the reduction of financial crime. | ||
| (NOTE: The 2000 Act repealed and replaced various enactments which conferred powers and functions on the FSA and other regulators whose functions are now carried out by the FSA. Most notable in this context are the Financial Services Act 1986 and the Banking Act 1987. Transitional provisions under the 2000 Act permit the FSA to continue to investigate and bring proceedings for offences under the old legislation. Details of these transitional provisions are not set out in these guidelines) | |||
| 1.2 | The FSA's regulatory objectives as the competent authority under Part VI of the Act are: | ||
| • | the protection of investors; | ||
| • | access to capital; and | ||
| • | investor confidence. | ||
| 1.3 | Under the 2000 Act the FSA has powers to investigate concerns including: | ||
| • | *regulatory concerns about authorised firms and individuals employed by them; | ||
| • | *suspected market abuse under s.118 of the 2000 Act; | ||
| • | *suspected misleading statements and practices under s.397 of the 2000 Act; | ||
| • | *suspected insider dealing under of Part V of the Criminal Justice Act 1993; | ||
| • | suspected contraventions of the general prohibition under s.19 of the 2000 Act and related offences; | ||
| • | *suspected offences under various other provisions of the 2000 Act (see below); | ||
| • | suspected breaches of Part VI of the Act , of Part 6 rules or the prospectus rules or a provision otherwise made in accordance with the Prospectus Directive. | ||
| The FSA's powers of information gathering and investigation are set out in Part XI of the 2000 Act and in s.97 in relation to its Part VI functions. | |||
| 1.4 | The FSA has power to take the following enforcement action: | ||
| • | discipline authorised firms under Part XIV of the 2000 Act and approved persons under s.66 of the 2000 Act; | ||
| • | impose civil penalties in cases of market abuse under s.123 of the 2000 Act; | ||
| • | prohibit an individual from being employed in connection with a regulated activity, under s.56 of the 2000 Act; | ||
| • | apply to Court for injunctions (or interdicts) and other orders against persons contravening relevant requirements (under s.380 of the 2000 Act) or engaging in market abuse (under s.381 of the 2000 Act); | ||
| • | petition the court for the winding-up or administration of companies, and the bankruptcy of individuals, carrying on regulated activities; | ||
| • | apply to the court under ss.382 and 383 of the 2000 Act for restitution orders against persons contravening relevant requirements or persons engaged in market abuse; | ||
| • | require restitution under s.384 of the 2000 Act of profits which have accrued to authorised persons contravening relevant requirements or persons engaged in market abuse, or of losses which have been suffered by others as a result of those breaches; | ||
| • | (in England and Wales) prosecute offences under the Money Laundering Regulations 1993, Part V Criminal Justice Act 1993 (insider dealing) and various offences under the 2000 Act including (Note: The FSA may also prosecute any other offences which are incidental to those which it has express statutory power to prosecute): | ||
| - carrying on regulated activity without authorisation or exemption, under s.23; | |||
| - making false claims to be authorised or exempt, under s.24; | |||
| - promoting investment activity without authorisation, under s.25; | |||
| - breaching a prohibition order, under s.56; | |||
| - failing to co-operate with or giving false information to FSA appointed investigators, under s.177; | |||
| - failing to comply with provisions about influence over authorised persons, under s.191; | |||
| - making misleading statements and engaging in misleading practices, under s.397; | |||
| - misleading the FSA, under s.398; | |||
| - various offences in relation to the FSA'sPart VI function; | |||
| • | Fine, issue public censures, suspend or cancel listing for breaches of the Listing Rules by an issuer; and | ||
| • | Issue public censures or cancel a sponsor's approval. | ||
| 2 | DTI | ||
| 2.1 | The Secretary of State for Trade & Industry exercises concurrently with the FSA those powers and functions marked with an asterisk in paragraphs 1.3 above. The investigation functions are undertaken by Companies Investigation Branch ("CIB") and the prosecution functions by the Solicitors Office. | ||
| 2.2 | The principal activities of CIB are, however, the investigations into the conduct of companies under the Companies Acts and the Fair Trading Act. These are fact-finding investigations but may lead to follow-up action by CIB such as petitioning for the winding up of a company, disqualification of directors of the company or referring the matter to the Solicitors Office for prosecution. CIB may also disclose information to other prosecution or regulatory authorities to enable them to take appropriate action under their own powers and functions. Such disclosure is, however, strictly controlled under a gateway disclosure regime. | ||
| 2.3 | The Solicitors Office advises on investigation work carried out by CIB and undertakes criminal investigations and prosecutions in respect of matters referred to it by CIB, the Insolvency Service or other divisions of the DTI or its agencies. | ||
| 3 | SFO | ||
| 3.1 | The aim of the SFO is to contribute to: | ||
| • | reducing fraud and the cost of fraud; | ||
| • | the delivery of justice and the rule of law; | ||
| • | maintaining confidence in the UK's business and financial institutions. | ||
| 3.2 | Under the Criminal Justice Act 1987 the Director of the SFO may investigate any suspected offence which appears on reasonable grounds to involve serious or complex fraud and may also conduct, or take over the conduct of, the prosecution of any such offence. The SFO may investigate in conjunction with any other person with whom the Director thinks it is proper to do so; that includes a police force (or the FSA or any other regulator). The criteria used by the SFO for deciding whether a case is suitable for it to deal with are set out in paragraph 3.3. | ||
| 3.3 | The key criterion should be that the suspected fraud is such that
the direction of the investigation should be in the hands of those who would
be responsible for any prosecution. The factors that are taken into account include: | ||
| • | whether the amount involved is at least £1 million (this is simply an objective and recognisable signpost of seriousness and likely public concern rather than the main indicator of suitability); | ||
| • | whether the case is likely to give rise to national publicity and widespread public concern. That includes those involving government bodies, public bodies, the governments of other countries and commercial cases of public interest; | ||
| • | whether the case requires highly specialist knowledge of, for example, stock exchange practices or regulated markets; | ||
| • | whether there is a significant international dimension; | ||
| • | whether legal, accountancy and investigative skills need to be brought together; and | ||
| • | whether the case appears to be complex and one in which the use of Section 2 powers might be appropriate. | ||
| 4 | CPS | ||
| 4.1 | The CPS has responsibility for taking over the conduct of all criminal proceedings instituted by the police in England and Wales. The CPS may advise the police in respect of criminal offences. The CPS prosecutes all kinds of criminal offences, including fraud. Fraud cases may be prosecuted by local CPS offices but the most serious and complex fraud cases will be prosecuted centrally. | ||
| 5 | ACPO and ACPO(S) | ||
| 5.1 | ACPO represents the police forces of England, Wales, and Northern Ireland. ACPO(S) represents the police forces of Scotland. | ||
| 6 | The Crown Office | ||
| 6.1 | The investigation and prosecution of crime in Scotland is the responsibility of the Lord Advocate, who is the head of the Procurator Fiscal Service, which comprises Procurators Fiscal and their Deputes, who are answerable to the Lord Advocate. The Procurator Fiscal is the sole public prosecutor in Scotland, prosecuting cases reported not only by the police but all regulatory departments and agencies. All prosecutions before a jury, both in the High Court of Justiciary and in the Sheriff Court, run in the name of the Lord Advocate; all other prosecutions run in the name of the local Procurator Fiscal. The Head Office of the Procurator Fiscal Service is the Crown Office and the Unit within the Crown Office which deals with serious and complex fraud cases and with the investigation of cases of interest or concern to the Financial Services Authority is the Fraud and Specialist Services Unit: the remit of this Unit is directly comparable to that of the Serious Fraud Office. | ||
| 7 | The DPP(NI) | ||
| 7.1 | The DPP(NI) is responsible for the prosecution of all offences on indictment in Northern Ireland, other than offences prosecuted by the Serious Fraud Office. The DPP(NI) is also responsible for the prosecution of certain summary offences, including offences reported to it by any government department. | ||
- 01/07/2005
ENF 2 Annex 2
Statement of policy on section 169(7) interviews (see ENF 2.8)
- 01/12/2004
See Notes
| 1 | This annex applies when the FSA: | |
| (1) | has appointed, an investigator at the request of an overseas regulator , under section 169(1)(b) of the Act; and | |
| (2) | has directed, or is considering directing, the investigator, under section 169(7) of the Act , to permit a representative of the overseas regulator to attend, and take part in, any interview conducted for the purposes of the investigation. | |
| 2 | In this annex a "section 169(7) interview" means any interview conducted for the purposes of an investigation under section 169(1)(b) of the Act in relation to which the FSA has given a direction under section 169(7) of the Act. | |
| 3 | The purpose of this annex is to set out the statement of the FSA's policy on the conduct of interviews to which a direction under section 169(7) has been given or the FSA is considering giving. The FSA is required to prepare and publish this statement of policy by section 169(9) and (11) of the Act. As required by section 169(10) of the Act, the Treasury has approved the statement of policy. |
| 4 | The FSA is keen to promote co-operation with overseas regulators . It views assistance to overseas regulators as an essential part of the principles set out in section 2(3)(e) of the Act to which it must have regard in discharging its general functions. |
| 5 | Under section 169(1)(b) of the Act , the FSA may appoint an investigator to investigate any matter at the request of an overseas regulator . The powers of the investigator appointed by the FSA (referred to here as the ' FSA's investigator') include the power to require persons to attend at a specified time and place and answer questions (the compulsory interview power). |
| 6 | Where the FSA appoints an investigator in response to a request from an overseas regulator it may, under section 169(7) of the Act , direct him to permit a representative of that regulator to attend and take part in any interviews conducted for the purposes of the investigation. The FSA may only give a direction under section 169(7) if it is satisfied that any information obtained by an overseas regulator as a result of the interview will be subject to the safeguards equivalent to those contained in Part XXIII of the Act (Public Record, Disclosure of Information and Cooperation). |
| 7 | Part XXIII of the Act contains restrictions on the disclosure of confidential information. The restrictions are subject to exceptions contained in regulations made by the Treasury under section 349. |
| 8 | The FSA's policy on how it will use its investigative power, including its power to appoint investigators, in support of overseas regulators, is set out in ENF 2.8. | |
| 9 | The FSA may need to consider whether to use its direction power at two stages of an investigation: | |
| (1) | at the same time that it considers the request from the overseas regulator to appoint investigators; | |
| (2) | after it has appointed investigators, either at the request of the overseas regulator or on the recommendation of the investigators. | |
| 10 | Before making a direction under section 169(7) the FSA will discuss and determine with the overseas regulator how this statement of policy will apply to the conduct of the interview, taking into account all the circumstances of the case. Amongst other matters, the FSA will at this stage determine the extent to which the representative of the overseas regulator will be able to participate in the interview. The overseas regulator will be notified of this determination on the issuing of the direction. | |
| 11 | The direction will contain the identity of the representative of the overseas regulator that is permitted to attend any interview and the role that he will play in the interview. If the FSA envisages that there will be more than one interview in the course of the investigation, the direction may also specify which interview(s) the overseas representative is allowed to attend. | |
| 12 | In circumstances where an interview is to be conducted as part of the investigation, the FSA's investigator will have conduct of the interview. In general, the FSA's investigators will be employees of the FSA , but in appropriate cases the FSA may appoint persons who are not its employees. In those cases, the FSA may choose to require that an FSA employee is present at the interview and may choose to appoint that person as an investigator. | |
| 13 | The FSA's investigator will act on behalf of the FSA and under its control. He may be instructed to permit the representative of the overseas regulator to assist in preparation of the interview. Where the FSA considers it appropriate, it may permit the representative to attend and ask questions of the interviewee in the course of the interview. The interview will be conducted according to the terms of the direction and the notification referred to in ENF 2.4.3 Ann above. | |
| 14 | If the direction does permit the representative of an overseas regulator to attend the interview and ask the interviewee questions, the FSA's investigator will retain control of the interview throughout. Control of the interview means the following will apply: | |
| (1) | The FSA's investigator instigates and concludes the interview, introduces everyone present and explains the procedure of the interview. He warns the interviewee of the possible consequences of refusing to answer questions and the uses to which any answers that are given can and cannot be put. The FSA's investigator will always ask preliminary questions, such as those establishing the identity of the interviewee. | |
| (2) | The FSA's investigator determines the duration of the interview and when, if at all, there should be any breaks in the course of it. | |
| (3) | The FSA's investigator has responsibility for making a record of the interview. The record should note the times and duration of any breaks in the interview and any periods when the representative of the overseas regulator was either present or not present. | |
| (4) | Where the FSA's investigator considers it appropriate, he may either suspend the interview, ask the overseas representative to leave the interview, or terminate the interview and reschedule it for another occasion. In making that decision he will bear in mind the terms of the direction, any agreement made with the overseas regulator as to the conduct of the interview and the contents of this statement of policy. | |
| 15 | The FSA will in general provide written notice of the appointment of an investigator to the person under investigation pursuant to the request of an overseas regulator. Whether or not the interviewee is the person under investigation, the FSA's investigator will inform the interviewee of the provisions under which he has been appointed, the identity of the requesting authority and general nature of the matter under investigation. The interviewee will also normally be informed if a representative of the overseas regulator is to attend and take part in the interview. Notification of any of these matters may not be provided in advance of the interview if the FSA believes that the circumstances are such that notification would be likely to result in the investigation being frustrated. |
| 16 | The interviewee will normally be given a copy of the direction issued under section 169(7) in advance of the interview unless to do so would be likely to result in the investigation being frustrated. The interviewee will also be provided with a copy of this statement of policy. |
| 17 | The FSA's investigator will determine the venue and timing of the interview. The interviewee will be notified of the venue and timing of the interview in advance and in writing. |
| 18 | When the FSA's investigator has exercised the compulsory interview power, at the outset of the interview the interviewee will be given an appropriate warning as stated in ENF 2.14.3 G. The warning, amongst other things, must state that the interviewee is obliged to answer all questions put to them during the interview, including any put by the representative of the overseas regulator . It will also state that in criminal proceedings or proceedings for market abuse the FSA will not use as evidence against the interviewee any information obtained under compulsion during the interview. |
| 19 | The FSA's investigator may decide which documents or other information may be put to the interviewee, and whether it is appropriate to give the interviewee sight of the documents before the interview takes place. Where the overseas regulator wishes to ask questions about documents during the interview and the FSA's investigator wishes to inspect those documents before the interview, he will be given the opportunity to do so. If the FSA's investigator wishes to inspect them and has not been able to do so before the interview, he may suspend the interview until he has had an opportunity to inspect them. |
| 20 | When the FSA's investigator has exercised the compulsory interview power, the FSA's investigator will require the person attending the interview to answer questions. Where appropriate, questions may also be posed by the representative of the overseas regulator. The interviewee will also be required to answer these questions. The FSA's investigator may intervene at any stage during questioning by the representative of the overseas regulator. |
| 21 | Interviews will, in general, be conducted in English. Where the interviewee's first language is not English, at the request of the interviewee arrangements will be made for the questions to be translated into the interviewee's first language and for his answers to be translated back into English. If a translator is employed at the request of the representative of the overseas regulator then the translation costs will normally be met by the overseas regulator. Where interviews are being conducted in pursuance of a Community obligation these costs will be met by the FSA. In any event, the meeting of costs in relation to translators and, where applicable, the translation of documents will always be agreed in advance with the overseas regulator. |
| 22 | All compulsory interviews will be tape-recorded. The method of recording will be decided on and arranged by the FSA's investigator. Costs will be addressed similarly to that set out in the preceding paragraph. The FSA will not provide the overseas regulator with transcripts of the tapes of interviews unless specifically agreed to, but copies of the tapes will normally be provided where requested. The interviewee will be provided with a copy of tapes of the interview but will only be provided with transcripts of the tapes or translations of any transcripts if he agrees to meet the cost of producing them. |
| 23 | The interviewee may be accompanied at the interview by a legal adviser or a non-legally qualified observer of his choice. The costs of any representation will not be met by the FSA . The presence at the interview of a representative of the overseas regulator may mean that the interviewee wishes to be represented or accompanied by a person either from or familiar with that regulator's jurisdiction. As far as practical the arrangements for the interview should accommodate this wish. However, the FSA reserves the right to proceed with the interview if it is not possible to find such a person within a reasonable time or no such person is able to attend at a suitable venue. |
| 24 | In relation to the publication of investigations by overseas regulators, the FSA will pursue a policy similar to the policy that relates to its own investigations. The FSA's policy on publicity during investigations can be found at ENF 2.13. |
- 01/12/2004
ENF 2 Annex 3
Summary of the FSA's information-gathering and investigation powers referred to in ENF 2.5
- 01/12/2004
See Notes
| Section | 165 | 166 | 167 | 168 |
| Description of the power | FSA's power to require information. | Reports by skilled persons. | Appointment of persons to carry out general investigations. | Appointment of persons to carry out investigations in particular cases. |
| Grounds | The information and documents required must be reasonably required in connection with the exercise by the FSA of functions conferred on it by or under the Act. | The report must be on any matter about which the FSA has required or could require the provision of information or production of documents under section 165. | It must appear to the FSA that there is good reason for appointing investigators. | It must appear to the FSA that there are circumstances suggesting that specified breaches, contraventions, market abuse or offences may have occurred. |
| Persons who may be subject of the information requirement /report/investigation | Firm/former firm.Person connected with firm/former firm. Operator etc. of recognised CIS. RIE or RCH. | Firm ("A").Any other member of A's group.Partnership of which A is a member.Person who has at any relevant time been a person falling within any of the three categories mentioned above. | Firm or appointed representative.Former firm or appointed representative (in relation to certain matters).Member of the group of which the person under investigation ("A") is part (if investigator thinks it necessary). Partnership of which A is a member (if investigator thinks it necessary). | A range of persons depending on the circumstances or suspected breaches. |
| Type of person who may exercise or be authorised or appointed under the power | FSA (by notice in writing). FSA officer (i.e an officer of the FSA, including a member of FSA staff or agent of the FSA). | Skilled person nominated or approved by the FSA. | Competent person (including FSA member of staff). | Competent person (including FSA member of staff). |
| Powers of FSA/information-gatherers/skilled persons/ investigators | To require information. To require documents. To require information to be verified. To require documents to be authenticated. To require explanations of documents. |
No specific powers - but there is a duty on persons providing services to the subject of the report to provide all such assistance as the skilled person may reasonably require. | To require persons to attend and answer questions. To require information. To require documents. To require explanations of documents. |
To require persons to attend and answer questions. To require information. To require documents. To require explanations of documents. To require reasonable assistance (section 168(2) investigator only). |
- 01/12/2004