PART 5

Inquiries and investigations

Investigations

Duty of FCA to investigate and report on possible regulatory failure
73
1
Subsection (3) applies where it appears to the FCA that—
a
events have occurred in relation to a regulated person or collective investment scheme which—
i
indicated a significant failure to secure an appropriate degree of protection for consumers,
ii
had or could have had a significant adverse effect on the integrity of the UK financial system, as defined by section 1D of FSMA 2000 (the integrity objective), or
iii
had or could have had a significant adverse effect on effective competition in the interests of consumers in the markets for the services described in paragraphs (a) and (b) of section 1E(1) of FSMA 2000 (the competition objective), and
b
those events might not have occurred, or the failure or adverse effect might have been reduced, but for a serious failure in—
i
the system established by FSMA 2000 for the regulation of authorised persons and their activities, for the listing of securities or for the regulation of collective investment schemes, so far as it relates to the functions of the FCA, or
ii
the operation of that system, so far as it relates to those functions.
2
Subsection (3) also applies where the Treasury direct the FCA that it appears to the Treasury that the conditions in subsection (1) are met in relation to specified events.
3
The FCA must carry out an investigation into the events and the circumstances surrounding them and report to the Treasury on the result of the investigation.
4
Subsection (3) does not apply by virtue of subsection (1) if the Treasury direct the FCA that it is not required to carry out an investigation into the events concerned.
5
“Regulated person” means—
a
an authorised person,
b
a recognised investment exchange,
c
any other person lawfully carrying on a regulated activity,
d
a person carrying on business in contravention of the general prohibition in section 19 of FSMA 2000, or
e
an issuer of listed securities.