Beyond the fringe is no laughing matter: some aspects of perimeter enforcement

Enforcing the perimeter of the financial services market is one of the most challenging aspects of regulation facing the Financial Services Authority and its effectiveness in this role is a key to the Authority achieving its statutory objectives and maintaining credibility. John Virgo and Philip Ryley briefly examine two recent cases brought under the Financial Services Act 1986 and reflect on how such enforcement will be approached after N2.

In December 1998 the FSA published Consultation Paper 17 “Enforcing the New Regime”, followed in July 1999 by Consultation Paper 25 “Enforcing the Perimeter” and in August 2000 by Consultation Paper 65a “The draft Enforcement Manual”. One important aspect of these materials concerns the exercise of regulatory power at and beyond the perimeter of authorised activity. The policy identified in these consultation papers foreshadows the statutory objectives now enshrined in the Financial Services and Markets Act 2000 (FSMA) in the Authority’s duty to promote: (a) market confidence; (b) public awareness; (c) the protection of consumers; and (d) the reduction of financial crime. One way of serving these objectives is to take of prompt, decisive and appropriate action against unauthorised investment trading.