The main substantive changes proposed by the FSA to DEPP and EG are:
• The introduction of a new chapter in EG which will describe the enforcement powers which the FSA has been given under legislation other than the Financial Services and Markets Act 2000 and how it proposes to use such powers. This will include statements about the policy and procedures that the FSA intend to apply when exercising the investigative and sanctioning powers provided to it under new anti-money laundering and covered bonds legislation.
• The FSA has power of its own initiative to vary a firm’s permission. Its current policy is to use an own initiative variation of permission where i) a firm is conducting its business in such a way it is judged necessary to enforce regulatory compliance or ii) where a firm refuses to address the FSA’s concerns. The FSA proposes amending this policy to clarify that in a supervisory and enforcement context it may vary a firm’s permission even in circumstances where a firm is prepared to take action. The FSA also proposed to broaden the circumstances in which it will publish notices relating to non-fundamental own initiative variations of permission (i.e. where a firm’s permission to write business has not been altered but a requirement has been imposed in relation to its permission). The FSA considers that by increasing the publishing of these notices firms will be more quickly aware of the FSA’s concerns as they arise.
• The FSA may take into account a number of factors when deciding whether to prosecute market misconduct offences. It is proposed that they should be able to exercise leniency for suspects who assist the FSA with their market misconduct investigations. It is hoped that leniency will encourage co-operation and assist the FSA in gathering the necessary evidence to take successful enforcement action.
The deadline for responses to the consultation paper is 29 August 2008. The full content of the discussion paper can be accessed by clicking here.