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Financial Services Act 2010

FSA’s disciplinary powers

Section 11: Performance of controlled function without approval

158.Section 59 of FSMA requires an authorised person (‘A’) to take reasonable care to ensure that no person (‘P’) performs a controlled function under an arrangement entered into by A or A’s contractor in relation to the carrying on by A of a regulated activity, unless P has been approved by the FSA to do so. There is currently no prohibition on a person performing a controlled function without FSA approval.

159.This section inserts new sections 63A to 63D into FSMA. New section 63A(1) enables the FSA to impose a financial penalty on a person if it is satisfied that that person has performed a controlled function without approval and that the person knew or could reasonably be expected to have known that he or she was performing a controlled function without approval.

160.New section 63B sets out the procedure for imposing a financial penalty, namely issuing a warning notice followed by a decision notice. There is a right of referral to the Tribunal.

161.New section 63C requires the FSA is required to consult on and publish a statement of its policy on the imposition of penalties and the amount of such penalties.

162.New section 63D sets out the procedure to be followed by the FSA before issuing such a policy statement.

163.Section 168 of FSMA enables the FSA to carry out investigations in particular cases, including the circumstances listed in subsection (4). Paragraph 16 of Schedule 2 makes a consequential amendment to subsection (4) to provide for the FSA to appoint an investigator if it thinks that a person may have performed a controlled function without approval.

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