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FINANCIAL SERVICES
AND MARKETS
ACT 2000
REPEALS,
TRANSITIONAL PROVISIONS AND SAVINGS
DECEMBER 2000
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PART VI - DISCIPLINE
6.1
The existing law takes two quite different approaches to the way in
which firms that fail to comply with regulatory requirements may be
disciplined. The statutory regulators generally punish breaches of
specific requirements by prosecuting the person concerned. Others,
such as the SROs, have powers to impose financial penalties or make
public statements about a person's misconduct.
6.2
We have made it clear throughout that there will be no amnesty for
regulatory breaches before commencement. That is essential if the
changeover to the new regime is not to expose the industry and consumers
to undue risks.
Offences
under old law
6.3
Where a breach would have been punishable as a criminal offence under
old law, the Interpretation Act 1978 will permit prosecutions to be
continued in respect of such a breach after the repeal of the relevant
enactment. So, in the case of an old law restriction, breach of which
was punishable as a criminal offence, any breach committed before
commencement in respect of which proceedings have been started will
continue to be prosecuted as a criminal offence, even though the restriction
after commencement takes effect as a requirement imposed under section
43 and is therefore a disciplinary rather than a criminal matter.
By contrast any breach of the requirement committed after commencement
will be dealt with using the FSMA powers, and will not be a criminal
offence.
Discipline
by SROs
6.4
The same outcome will be achieved in relation to the sanctions available
in respect of breaches of restrictions imposed by SROs. This will
have to be done by express transitional provision because the Interpretation
Act 1978 will not bring about the desired effect given that the SROs
will no longer be in a position to take the necessary action.
6.5
In the case of a breach of an SRO restriction occurring prior to commencement,
the FSA will be given power to take action against the firm. The
power will however be subject to the express limit that disciplinary
action can only be brought in the circumstances where the relevant
regulator would have been able to act under the old arrangements and
any proposed punishment would be limited to the kind (and degree)
of sanction that would have been available at the time when the breach
was committed. Again, where the breach occurs after commencement then
the effect of the transitional provisions, as explained earlier, is
that the full range of disciplinary procedures will be available against
the firm since the breach is treated as a breach of a section 43 requirement.
Recognised
Professional Bodies and Lloyd’s
6.6
We do not intend to give the FSA powers to take disciplinary action
against professional firms authorised under the FS Act by virtue of
a certificate given by a Recognised Professional Body (RPB). The
relevant bodies will continue to exist after commencement, and we
believe it would be most straightforward for all concerned if responsibility
for pre-commencement breaches of their rules remains with the professional
body concerned. This approach will apply regardless of whether or
not a firm becomes an authorised person at commencement.
6.7
We propose to take a similar approach where the Council of Lloyd’s
has powers to discipline a member of the Society for pre-commencement
breaches of its rules. Taking action for such pre-commencement will
remain the responsibility of the Council.
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