# = pounds sterling
HM Treasury News Release
217/98 22 December 1998
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FAIR AND JUST ENFORCEMENT PROCEDURES ANNOUNCED
FOR THE FINANCIAL REGULATOR
Measures to ensure the enforcement procedures of the new
financial regulator are fair and transparent, and that it is not
seen to be 'prosecutor, judge and jury', were announced today by
the Chief Secretary, Stephen Byers.
The measures are being introduced in the light of the
consultation on the Financial Services and Markets Bill, which
will establish the Financial Services Authority (the FSA) as the
new single regulator. Today's announcement clarifies the role
of the FSA and the new tribunal. The FSA is responsible for
conducting fair internal procedures before reaching a decision
on a case that can, if the individual concerned wishes, be
referred to the independent tribunal.
In addition, Mr Byers disclosed that the Lord Chancellor's
Department is to publish draft rules of procedure for the
tribunal in the new year.
Mr Byers announced 4 changes to the Bill to clarify and support
the basis on which the process would work:
a statutory duty on the FSA to establish publish and
procedures and to act in accordance with such procedures;
an explicit right to request to see the evidence on which
a case rests and a duty on the FSA to disclose such
evidence;
an explicit bar on the FSA publicising enforcement action
until the full process, including any tribunal
procedures, has been completed; and
dropping the power to make rules on when relevant
evidence might be inadvisable before the tribunal.
Mr Byers said:
"The consultation has been truly open and we are taking
on board comments received. There is support for the
basic model of effective, open and fair administrative
procedures, backed up by the opportunity to refer cases
to a fully independent tribunal.
"These measures will further clarify the role of the
tribunal and reinforce the transparency of the FSA
procedures, which must be simple and fair.
"Concern has been expressed that the FSA could act as
'prosecutor, judge and jury'. This would clearly be
unacceptable. I hope that the changes I've announced
today will meet with broad approval and demonstrate that
we are responding positively to the consultation
process."
NOTES TO EDITORS
1. Under the Bill, the FSA will have a range of enforcement
powers, ranging from public statements about misconduct and
fines to withdrawal of permissions or authorisation. The
Bill sets out the basic framework for these decisions to be
taken by the FSA, which requires the FSA to issue warning
notices, disclose the reasons for their intended action etc.
2. As with any body exercising statutory functions, the FSA must
exercise those functions in accordance with general
principles of fairness and reasonableness. Last week the FSA
issued a consultative paper, Financial Services regulation:
Enforcing the new regime, which sets out how they propose to
operate their internal enforcement procedures in order to
meet these obligations.
3. The Bill also establishes an independent, external tribunal,
run as part of the Court service, which provides the
opportunity for challenging and reviewing the FSA's
decisions. The tribunal is to be able to consider cases de
novo (ie looking afresh at the merits of the case). It will
also be able to substitute its own conclusions for those of
the FSA. In line with normal practice for Court Service
tribunals the detailed procedural rules for the new tribunal
will be set through rules made by the Lord Chancellor.
4. Consideration is being given to comments on other areas of
the Bill and further announcements will be made in due
course.
5. If you have access to the Internet, you can find this news
release and other Treasury information at http://www.hm-
treasury.gov.uk