News story

Government makes recommendations to strengthen financial regulators’ enforcement decisions

Recommendations published to ensure financial regulators continue to make fair, transparent and efficient enforcement decisions.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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The government has today published a number of recommendations to ensure that the way the financial regulators, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) make enforcement decisions continues to be fair, transparent and efficient, following a review.

A key part of the government’s long term economic plan is to strengthen Britain’s banking system so that it is better placed to support customers and businesses, with firms and individuals in the industry conducting themselves to the highest standards.

That is why we introduced a series of radical reforms to the banking sector, including creating the FCA and PRA and giving them stronger powers to protect customers and the stability and integrity of financial markets on which they depend.

The ability to take strong enforcement action is a key part of this work, and the government wants to ensure that the regulators continue to make enforcement decisions that are fair, transparent and efficient. That is why we announced a review of the institutional arrangements and processes used by the FCA and PRA to make enforcement decisions in May this year.

Following the conclusion of the review, the government is today publishing recommendations including:

  • new independent decision-making committee for the PRA, with a dedicated and independent chair
  • new, sign-posted, expedited procedure to access the Upper Tribunal so that those who wish to access this independent judicial process can do so directly
  • regular independent review of the regulators’ settlement processes
  • measures to enhance the accountability of the FCA and PRA’s decision makers, including by publishing annual reports and increasing their accountability to Parliament
  • removal of penalty discounts where those being investigated delay settlement
  • steps to encourage those being investigated to make early admissions to resolve cases more quickly
  • FCA and PRA should publish more information about their criteria for starting investigations, and their approaches to referring cases from supervision to enforcement, with more transparency around how the FCA and PRA co-operate with each other
  • more constructive communication between investigators and those being investigated, with greater senior involvement by the regulators

The Chancellor George Osborne said:

A key part of our long term economic plan is to build a stronger banking system that it is better placed to support customers and businesses, with firms and individuals in the industry conducting themselves to the highest standards.

That’s why we created new financial regulators and gave them stronger powers to protect customers and the integrity of financial markets on which they depend, and we’re committed to ensuring that these regulators can continue to act effectively and decisively.

Today’s recommendations will enhance the FCA and PRA’s capacity to deal with misconduct or tackle threats to financial stability swiftly, fairly and robustly.

The review sits alongside the significant steps that the government has already taken to improve standards in banking and financial services, including by replacing the failed tripartite regulatory system.

Published 18 December 2014