Prudential Regulation Authority Rulebook

DEPP 6A sets out the FSA's statement of policy with respect to the imposition of suspensions or restrictions, and the period for which those suspensions or restrictions are to have effect, under the Act, as required by sections 69(1) and 210(1) of the Act.

For the purposes of DEPP 6A, "suspension" refers both to the suspension of any permission which an authorised person has to carry on a regulated activity (under section 206A of the Act), and the suspension of any approval of the performance by an approved person of any function to which the approval relates (under section 66 of the Act); and "restriction" refers both to limitations or other restrictions in relation to the carrying on of a regulated activity by an authorised person (under section 206A of the Act), and to limitations or other restrictions in relation to the performance by an approved person of any function to which any approval relates (under section 66 of the Act).

The power to impose a suspension or a restriction is a disciplinary measure which the FSA may use in addition to, or instead of, imposing a financial penalty or issuing a public censure. The principal purpose of imposing a suspension or a restriction is to promote high standards of regulatory and/or market conduct by deterring persons who have committed breaches from committing further breaches, helping to deter other persons from committing similar breaches, and demonstrating generally the benefits of compliant behaviour. Suspensions and restrictions are therefore tools that the FSA may employ to help it to achieve its regulatory objectives . Examples of restrictions that we may impose include:

As the power to impose a suspension or a restriction is a disciplinary measure, where the FSA considers it necessary to take action, for example, to protect consumers from an authorised person, the FSA will seek to cancel or vary the authorised person'spermissions. If the FSA has concerns with a person's fitness to be approved, and considers it necessary to take action, the FSA will seek to prohibit the approved person or withdraw its approval.

The FSA will consider the full circumstances of each case and determine whether it is appropriate to impose a suspension or restriction. The FSA will usually make this decision at the same time as it determines whether or not to impose a financial penalty or a public censure.

The FSA will take into account relevant factors in deciding whether it is appropriate to impose a suspension or restriction. These may include factors listed in DEPP 6.2. There may also be other factors, not listed in DEPP 6.2, that are relevant.

The FSA will consider it appropriate to impose a suspension or restriction where it believes that such action will be a more effective and persuasive deterrent than the imposition of a financial penalty alone. This is likely to be the case where the FSA considers that direct and visible action in relation to a particular breach is necessary. Examples of circumstances where the FSA may consider it appropriate to impose a suspension or restriction include:

The FSA expects usually to suspend or restrict a person from carrying out activities directly linked to the breach. However, in certain circumstances the FSA may also suspend or restrict a person from carrying out activities that are not directly linked to the breach, for example, where an authorised person's relevant business area no longer exists or has been restructured.

The FSA will consider all the relevant circumstances of a case when it determines the length of the period of suspension or restriction (if any) that is appropriate for the breach concerned, and is also a sufficient deterrent. Set out below is a list of factors that may be relevant for this purpose. The list is not exhaustive: not all of these factors may be applicable in a particular case, and there may be other factors, not listed, that are relevant.

The following factors may be relevant to determining the appropriate length of the period of suspension or restriction to be imposed on a person under the Act:

The FSA may delay the commencement of the period of suspension or restriction. In deciding whether this is appropriate, the FSA will take into account all the circumstances of a case. Considerations that may be relevant in respect of an authorised person include:

The FSA and the person on whom a suspension or restriction is to be imposed may seek to agree the length of the period of suspension or restriction and other terms. In recognition of the benefits of such agreements, DEPP 6.7 provides that the length of a period of suspension or restriction which might otherwise have been imposed will be reduced to reflect the stage at which the FSA and the person concerned reached an agreement.

The deterrent effect and impact on a person of a suspension or restriction, by itself or in combination with a financial penalty, may be greater than where only a financial penalty is imposed. The FSA will consider the overall impact and deterrent effect of the sanctions it imposes when determining the level of penalty and the length of suspension or restriction.

The FSA expects usually to take the following approach in respect of the interaction between a suspension or restriction and a financial penalty or public censure:

The FSA may depart from the approach set out in DEPP 6A.4.2 G. For example, the FSA may at the outset consider that a financial penalty is the only appropriate sanction for a breach but, having determined the appropriate level of financial penalty, may consider it appropriate to reduce the amount of the financial penalty for serious financial hardship reasons. In such a situation, the FSA may consider it appropriate to impose a suspension or restriction even if the FSA at the outset did not consider such a sanction to be appropriate. The FSA will take into account whether the person would suffer serious financial hardship in deciding the length of the period of suspension or restriction, and may decide not to impose a suspension or restriction if it considers such action would result in serious financial hardship.