FCA moves ahead with changes to its decision making process

Back in July, the FCA issued a consultation paper on proposed changes to its decision-making process that would enable it to make faster and more effective decisions on firms that fail to meet its required regulatory  standards. 

The FCA has now confirmed the changes it intends to make in Policy Statement PS21/16: Issuing statutory notices – a new approach to decision makers. 

The consultation proposed transferring some decision-making from its Regulatory Decisions Committee (RDC) to its Authorisations, Supervision and Enforcement Divisions, to move decision-making responsibility closer to senior FCA staff with the most relevant knowledge and experience.

The vast majority of those responding to the consultation paper agreed with the proposals’ aims but not their proposed implementation. There was concern that speed and efficiency were being emphasised at the potential expense of decision-making fairness and objectivity.

Despite giving careful consideration to whether it should adapt its proposals in light of the concerns expressed, the FCA has now announced that it intends to implement them without amendment.

The FCA accepts that it needs to balance its aim of intervening more quickly with the need to ensure procedural fairness, but argues that its Executive Procedures – through which a number of decisions on authorisations and interventions are currently made – already provide a fair process

As a result, more decisions will now be taken by the FCA’s senior managers rather than the RDC. The regulators says the new process will ensure decisions to prevent or stop consumer harm are taken more quickly.

Matters on which senior managers will now be able to take decisions include:

  • The authorisation of firms and the approvals of individuals
  • Taking action in straightforward cases to cancel a firm’s permissions where that action is contested 
  • Initiating civil proceedings, such as seeking an injunction
  • Initiating criminal proceedings, such as prosecutions for insider dealing
  • Using the FCA’s powers to vary or limit a firm’s permissions
  • Using the FCA’s powers to impose requirements on a firm. 

FCA executive director of authorisations Emily Shepperd said ‘We are taking a fresh approach to tackling firms and individuals who do not meet the required standards. Our new streamlined decision-making process will allow us to be more assertive in stopping harm.’

The FCA has said it will carry out a post-implementation review after six months to assess the effectiveness of the reforms.

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