N2+1: A review of FSA enforcement and discipline since N2
| Date | 01 June 2003 |
| DOI | https://doi.org/10.1108/13581980310810462 |
| Published date | 01 June 2003 |
| Pages | 146-150 |
| Author | Philip Parish |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
N2+1: A review of FSA enforcement and
discipline since N2
Philip Parish
Received: 3rd February, 2003
Linklaters, One Silk Street, London EC2Y 8HQ, UK; tel: +44 (0)20 7456 4282; fax: +44 (0)20 7456
2222; e-mail: philip.parish@linklaters.com
Philip Parish is a partner in the Litigation
Department at Linklaters. He specialises
in financial markets litigation, regulatory
investigations and proceedings.
ABSTRACT
KEYWORDS: enforcement, market abuse,
money laundering, listing rule breaches,
mis-selling
On 1st December, 2001, the Financial Services
Authority (FSA) became responsible for enfor-
cement and discipline in respect of the UK’s
financial services industry. At the same time, its
enforcement ‘teeth’ were strengthened. This
paper reviews the FSA’s first year of enforce-
ment activity, considers the cases and trends
which have emerged, and analyses whether the
FSA has lived up to expectations.
INTRODUCTION
On 1st December, 2001, the FSA formally
assumed power of discipline and enforce-
ment in respect of the financial services
industry in place of its nine predecessor
organisations (N2).
At the same time, the Financial Services
and Markets Act 2000 (FSMA 2000) also
gave the FSA a number of new enforce-
ment powers. For example, the Act con-
tained new powers to impose civil penalties
on both regulated and unregulated parties
in respect of market abuse. The FSA’s
fining powers were extended to new areas,
such as listing rule breaches and business
previously covered by the Banking Act
1979 and the Insurance Companies Act
1982, where previously there was no power
to fine. The Act introduced a uniform
regime of investigatory powers, including
the ability to interview witnesses under
compulsion, interview third parties or
appoint skilled persons to investigate. The
FSA was also given new powers to prose-
cute certain offences, such as insider dealing,
misleading statements and practices and a
range of other offences under FSMA 2000.
PRE-N2
In order to understand events since N2, it is
necessary to review developments during
the months immediately prior to N2. First,
Andrew Procter, previously of the Hong
Kong Securities and Futures Commission,
was appointed as the FSA’s new Head of
Enforcement. Secondly, with N2 on the
horizon, serious steps were made by the
predecessor regulators to clear the decks in
order to avoid unnecessary baggage being
transferred over via the transitional rules
into the new regime. The result of these
two developments was that great effort
was made to deal with existing cases prag-
matically. Smaller and less important cases
were discontinued. Other cases were
settled. While a rump of cases were trans-
ferred to the new regime, the intention
was that the FSA’s enforcement team
Page 146
Journal of Financial Regulation and Compliance Volume 11 Number 2
Journal of Financial Regulation
and Compliance, Vol. 11, No. 2,
2003, pp. 146–150
#Henry Stewart Publications,
1358–1988
To continue reading
Request your trial