ENF 12
Discipline: public censures and public statements
ENF 12.1
Application
- 01/12/2004
ENF 12.1.1
See Notes
This chapter applies to any firm or person who may be the subject of public censure or a public statement. The Act empowers the FSA to issue a public censure or public statement in the following circumstances:
- (1) the FSA may issue a public censure on a firm under section 205 of the Act (Public censure) where it considers that the firm has contravened a requirement imposed on it by or under the Act;
- (2) the FSA may issue a public statement of misconduct on an approved person under section 66 of the Act (Disciplinary powers) where it considers that he is guilty of misconduct; misconduct is defined in the Act as failure to comply with a Statement of Principle issued by the FSA under section 64 of the Act (Conduct: statements and codes), or being knowingly concerned in a contravention by a firm of a requirement imposed on that firm by or under section 66 of the Act;
- (3) the FSA may issue a public statement under section 123 of the Act (Power to impose penalties in cases of market abuse) where a person has engaged in market abuse; this is considered separately in ENF 14 (Sanctions for market abuse);
- (4) the FSA may issue a public statement under section 87M (Public censure of issuer) and section 91 of the Act (Penalties for breach of Part 6 rules) where there has been a contravention of Part VI of the Act, the Part 6 rules or the prospectus rules, or a provision otherwise made in accordance with the Prospectus Directive or a requirement imposed under such provision (see ENF 21).
- 01/07/2005
ENF 12.1.2
See Notes
Where the FSA proposes to issue a public censure or public statement under the sections of the Act described in ENF 12.1.1 G, the firm or approved person in question will be given a warning notice setting out the terms of the statement or censure the FSA proposes to issue, as required by sections 207 (Proposal to take disciplinary measures), 67 (Disciplinary measures: procedure and right to refer to Tribunal), 126 (Warning notices) and 92 (Procedure). Further details of the procedure that the FSA will follow in these circumstances are set out in DEC.
- 01/12/2004
ENF 12.2
Purpose
- 01/12/2004
ENF 12.2.1
See Notes
The purpose of this chapter is to describe some of the factors which may be relevant to the FSA when it determines whether to issue a public censure or public statement. Public censures and public statements are among a variety of tools the FSA may use to help it achieve its regulatory objectives. Where the FSA considers that formal disciplinary action is appropriate, public censures and public statements may, in some cases, be an alternative to financial penalties.
- 01/12/2004
ENF 12.2.2
See Notes
The FSA regards the decision to issue a public censure or public statement as a serious sanction. The FSA is aware of the effect such a statement may have on the reputation or business of a firm or approved person. However, where it is not appropriate to impose a financial penalty, the FSA considers that a public censure or public statement may have particular value in enabling the FSA to pursue its regulatory objectives by highlighting the requirements and standards of conduct expected of firms and approved persons, and demonstrating that those standards are being effectively enforced, so helping to maintain confidence in the financial system. In addition, public censures and public statements promote public awareness of the standards of behaviour expected of firms and approved persons. Increased public awareness also contributes towards greater consumer protection.
- 01/12/2004
ENF 12.3
Factors in determining whether to issue a public censure or public statement
- 01/12/2004
ENF 12.3.1
See Notes
Where a breach of the Act or of the rules has occurred, the FSA may consider that formal disciplinary action is not warranted. For example, the proactive supervision and monitoring of firms is central to promoting compliance, and some instances of non-compliance may be addressed satisfactorily by a firm's supervisors, without the need for formal disciplinary action. Alternatively, where the FSA has concerns regarding the behaviour of a firm or approved person, but has made no determination that a breach has occurred, it may issue a private warning.
- 01/12/2004
ENF 12.3.2
See Notes
- 01/12/2004
ENF 12.3.3
See Notes
The criteria for determining whether it is appropriate to issue a public censure or public statement rather than impose a financial penalty are similar to those for determining the level of financial penalty listed in ENF 3 (Discipline of firms and approved persons: financial penalties). The starting point is that the FSA will consider all the relevant circumstances of the case. Some particular considerations may be relevant when the FSA determines whether to impose a public censure or public statement rather than a financial penalty. The following list is not exhaustive (not all of these factors may be relevant in a particular case, and there may be other factors that are relevant):
(1) if the firm or approved person has made a profit or avoided a loss as a result of the breach or misconduct, this may be a factor in favour of a financial penalty, on the basis that a firm or approved person should not be permitted to benefit from its breach or misconduct;
(2) if the breach or misconduct is more serious in nature or degree, this may be a factor in favour of a financial penalty, on the basis that the sanction should reflect the seriousness of the breach or misconduct; other things being equal, the more serious the breach or misconduct, the more likely the FSA is to impose a financial penalty;
(3) if the firm or approved person has admitted the breach or misconduct and provides full and immediate co-operation to the FSA, and takes steps to ensure that consumers are fully compensated for any losses arising from the contravention, this may be a factor in favour of a public censure or statement of misconduct, rather than a financial penalty, depending upon the nature and seriousness of the breach or misconduct;
(4) if the firm or approved person has a poor disciplinary record or compliance history (for example, where the FSA has previously brought disciplinary action resulting in adverse findings in relation to the same or similar behaviour), this may be a factor in favour of a financial penalty, on the basis that it may be particularly important to deter future cases;
(5) the FSA's approach in similar previous cases: the FSA will seek to achieve a consistent approach to its decisions on whether to impose a penalty or issue a public statement; and
(6) if the firm or approved person has inadequate means (excluding any manipulation or attempted manipulation of their assets) to pay the level of financial penalty which their breach or misconduct would otherwise attract, this may be a factor in favour of a lower level of penalty or a public statement. However, it would only be in an exceptional case that the FSA would be prepared to agree to impose a public statement rather than a financial penalty, if a financial penalty would otherwise be the appropriate sanction. Examples of such exceptional cases could include:
(a) verifiable evidence that an approved person would suffer serious financial hardship if the FSA imposed a financial penalty; and
- 01/12/2004