Developments in FSA enforcement law: From N2 to the arrival of Callum McCarthy
| Published date | 01 March 2004 |
| DOI | https://doi.org/10.1108/13581980410810641 |
| Date | 01 March 2004 |
| Pages | 15-21 |
| Author | Graham O’Connell |
| Subject Matter | Accounting & finance |
Papers
Developments in FSA enforcement law:
From N2 to the arrival of Callum McCarthy
Graham O’Connell
Received: 25th November, 2003
DLA, 3 Noble Street, London EC2V 7EE, UK; tel: +44 (0)8700 111 111;
e-mail: graham.o’connell@dla.com
Graham O’Connell is a barrister at DLA in
the firm’s Financial Services Regulatory
practice and was previously Enforcement
Counsel at the Financial Services Author-
ity (FSA). He was part of the FSA team
that conducted the Eurolife case in 2001
(the first case to appear before the Finan-
cial Services and Markets Tribunal). He is
an editor of the Enforcement volume of the
‘Butterworths Financial Regulation Ser-
vice’ and currently conducts a mix of advi-
sory and contentious financial services
work, acting with DLA as a ‘skilled person’
appointed under s. 166 of the Financial
Services and Markets Act 2000 for corpo-
rate clients.
ABSTRACT
KEYWORDS: publicity, confidential infor-
mation, judicial review, due process, Reg-
ulatory Decisions Committee, tribunal,
Lloyds TSB
This paper reviews the major developments in
law and policy arising from cases involving the
FSA Enforcement Division in the two years
after N2. It considers how the FSA has reacted
to dealing with the expectations and pressures of
publicity which will lead to a change in the rules
affecting confidentiality; the Court of Appeal’s
ruling on the due process and safeguards within
the enforcement process; and the implications for
authorised firms arising from the largest disciplin-
ary case of 2003, Lloyds TSB, which resulted in
a settlement of approximately £100m.
INTRODUCTION
The year after N2 was marked more by an
absence of prominent regulatory enforce-
ment action than by the swathe of disci-
plinary cases or the taking of high profile
‘scalps’ which the regulated community
had anticipated. Few firms challenged the
regulator in the public forum of the Finan-
cial Services and Markets Tribunal. The
only attempt by an insurance company to
challenge a Financial Services Authority
(FSA) disciplinary action failed in a settle-
ment with the FSA which led to the effec-
tive removal of the Chairman and
Managing Director of that company.
1
As
the first case of its kind, it was reported in
all the national newspapers, and may have
had a significant deterrent effect on firms
weighing bad publicity and risk to their
reputation against challenging the actions
of the regulator which they consider to be
disproportionate or unfair.
Most firms settled their cases at the Reg-
ulatory Decisions Committee (RDC) stage
Page 15
Journal of Financial Regulation and Compliance Volume 12 Number 1
Journal of Financial Regulation
and Compliance, Vol. 12, No. 1,
2004, pp. 15–21
#Henry Stewart Publications,
1358–1988
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