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Financial law services and FCA disciplinary procedures

There are four objectives that are required to achieve by the FCA:

  • The Financial Law Services should maintain confidence in the UK financial system
  • The Financial Law Services should also promote public understanding of the financial system
  • The Financial Law Services should secure an appropriate degree of protection for customers whilst recognising their own responsibilities
  • The Financial Law Services should reduce the scope for financial crime the FCA’s practical aim is: “To maintain efficient, orderly and clean financial markets and help retail customers achieve a fair deal.”

How does the FCA proceed with enforcement action in accordance with the Financial Law Services?

The procedure by which the FCA investigates a problem in order to proceed down the enforcement and disciplinary route, could be quite complex. There are a number of different stages and bodies involved in this process. This can take months or years  from start to finish especially if the investigated organisation exercises its right of appeal from the FCA’s internal disciplinary process and goes on to appeal to the Financial Services and Markets Tribunal.

Below are summery of the stages that the FCA follows when investigating a problem:

Stage One: Investigation

If the FCA decided to investigate an issue or an organisation’s behaviour, then the first step in the enforcement procedure is for the FCA to appoint investigators.

The investigators will initially call for documents and will then probably interview, amongst others, the officers and employees of the organisation. They can also call for

information from third parties, such as an organisation’s auditors or bankers. A report then will be prepared that is usually sent to the organisation, who then has the opportunity to comment upon and respond to it.

Stage Two: the RDC

If, notwithstanding the organisation’s response, the FCA still believes there is an issue to be resolved, the FSA investigation staff recommends a course of action to the FCA’s Regulatory Decisions Committee (“RDC”), if still minded to take disciplinary action. The RDC is the FSA’s decision maker.

Stage Three: the Tribunal

If the organisation disagrees with the content of the Decision Notice, then it has the right to refer the matter to the Tribunal. If it does not, the RDC will issue a Final Notice which sets out the FCA’s findings and the penalty. It is the Final Notice that is the first FCA document in this process that is public (the Warning Notice and the Decision Notice are private).

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