The Financial Services Bill – On 19 November 2009, the UK Government published the Financial Services Bill (FS Bill) that it has introduced to Parliament.  The Financial Services Bill contains some new enforcement powers. These include a power to enable the FSA to suspend a firm’s permission to carry on regulated activities. The power is triggered if the FSA considers that a firm has contravened a “relevant requirement” (so is very broad), and the suspension can last up to twelve months. This power expands on the FSA’s current “own initiative variation of permission” (OIVOP) power.

There is also a new power to impose a penalty on a person who has performed a controlled function without approval. There is a defence if the person “did not know, and could not reasonably be expected to have known” that he was at the time performing a controlled function without approval. So it will not be sufficient to prove subjectively that a person did not realise he was performing a controlled function, if, in fact, objectively he should have known.  How would this apply, for example, to a situation where a senior management member held a particular controlled function (for example, a compliance officer or money laundering reporting officer (MLRO)), but in practice delegated virtually all the duties to a more junior member of staff, so that the latter was effectively performing the function? Would liability attach to the junior delegate in that situation? These new powers can only be used in conjunction with the normal warning and decision notice procedure, and there is a right of referral to the Financial Services and Markets Tribunal. The FSA is required to issue a statement of policy about how it will use these new powers (and consult on it), so there will be an opportunity to raise concerns about how these new powers may be used.