Referrals to Enforcement

The FSA published the conclusions of the Enforcement Process Review, which was a response to criticisms of its approach in the Legal & General case (see Compliance Monitor February 2005) in July 2005. The Report contained over 40 recommended changes and focused on two areas - the way that cases are referred to the Enforcement Division, and the operation of the Regulatory Decisions Committee (RDC). Philip Ryley , solicitor, and John Virgo , barrister examine the process of referral to Enforcement.

The Enforcement Process Review (EPR) and resulting Report have given regulated firms further insight into how the FSA uses and proposes to use its enforcement tools. The Report both sets out the Review recommendations and contains some interesting feedback on the March 2005 Issues Paper. The Report explains very clearly, not only the process of decision making at the RDC level but also how the various divisions in the FSA liaise with the Enforcement Division and how referrals are made. This is particularly helpful since, in order for firms to react effectively to FSA’s concerns, they need to know precisely how Supervision and Enforcement reach their decisions. One of the key principles behind the Review’s recommendations is that FSA should clearly articulate its overall approach to enforcement.