December 2019 saw the Isle of Man FSA publish its new “Enforcement Decision Making Process” (DMP). The DMP is a staged process followed by the FSA when exercising its statutory powers of enforcement. The DMP does not apply to the investigative stage of a case, nor does it apply in non-enforcement decisions (e.g. the issuing of a licence). Significantly, the DMP introduces, for the first time, the idea of settlement in enforcement cases.
A full table of decisions to which the new DMP is applicable is provided in Section 2 of the publishedFSA document, which can be found here.
The document reaffirms the FSA’s expectation that regulated entities and their key persons will be open and honest in any dealings with the Authority. This expectation extends to enforcement action with the Authority placing further emphasis on co-operation. This co-operation can, as the Authority advises, lead to a 30% discount in any discretionary penalty imposed.
The new DMP also highlights that the Authority are “willing to consider settlement notwithstanding the commencement of an enforcement investigation”. This offers an avenue to settlement outside of action not previously stated in a public document. For licence holders, this means the introduction of a possibly more amicable resolution to potential enforcement actions.
The new DMP consists of the following stages:
Stage 1: Disclosure of Draft enforcement report. If a case is disclosed to the Case Review Panel and it is deemed appropriate to proceed under the DMP, then the Case Officer, as instructed by the Case Review Panel, will disclose a Draft Enforcement report to the subject.
Stage 2: Review of Final Enforcement Report by Case Review. After review and evaluation of Initial Representations, the Draft Enforcement Report will be updated where appropriate by the Case Officer.
Stage 3: First Meeting of the Board. If the matter is referred by the Case Review Panel to the Board, the Board shall receive the Final Enforcement Report and the Initial Representations and consider the matter at a meeting.
Stage 4: Issue of minded-to notice and invitation to Subject to make representations. The Subject will receive a copy of all documentation provided to the Board, including the Final Enforcement Report and any other material provided to the Board at Stage 3.
Stage 5: Second Meeting of Board (Decision). During this meeting, the Executive will present its case, the Subject may make oral submissions and the Executive and Subject can comment on any matters raised. The Board will have regard to all oral and written submissions when reaching its decision. Written notice of the Board’s decision will provided as soon as reasonably practicable. The notice will include a written statement of the reasons for the decision if that decision involves the exercising of one or more of the Authority’s statutory powers to impose regulatory sanction. If the Board has resolved to issue a public statement, the Board will send a copy of the public statement (along with the reasons for the public statement) to the Subject.
At DQ, we advise and assist on all aspects of Regulatory work, including FSA investigations. We have expert knowledge and experience in helping to ensure the best outcomes for our clients.
