The FSA publishes proposals for enforcing the perimeter

The paper covers the FSAs powers in relation to the following areas:

Investigating suspected breaches of the perimeter and connected offences;

Taking civil enforcement action including the application for injunctions, restitution orders or compulsory insolvency orders against those who have breached the perimeter;

Prosecuting criminal offences arising from breaches of the perimeter; and

Prohibiting individuals from taking part in regulated activities where they have been involved in a breach of the perimeter.

Dan Waters, the FSAs Director of Enforcement said:

"Those who breach the perimeter are a danger to consumers because they are unregulated and may be incompetent, financially unsound or fraudulent. In perimeter cases it is therefore vital that the FSA has the powers to act quickly and decisively, when necessary, to protect the interests of consumers. In these cases consumers are not able to apply for compensation under the Financial Services and Markets Compensation Scheme or pursue complaints through the Financial Services Ombudsman Scheme as these schemes are only open to customers of authorised firms."

Next steps

Comments on the consultation paper should be sent to the FSA by 17 September 1999. A summary of the responses to the consultation paper will then be published. The FSAs proposed policies in this area together with those relating to enforcement action against authorised firms, approved persons, and persons involved in market abuse will be consolidated and summarised in the draft Enforcement Manual. This is scheduled for publication in the fourth quarter of the year.

Notes for editors

The Government announced on 20 May 1997 that it would create a single regulator for all financial firms and markets and the FSA was formally launched on 28 October 1997. The FSA has assumed responsibility for the supervision of banks and supplies regulatory and other services under contract to the three Self-Regulating Organisations (SROs), the Building Societies Commission, the Friendly Societies Commission, HM Treasurys Insurance Directorate and the Registry of Friendly Societies. These arrangements will continue until the new legislation comes into force.

The FSAs new enforcement powers referred will not come into effect until the Financial Services and Markets Bill (FSMB) comes into force in the year 2000. Until then enforcement processes will operate under existing legislation.

The draft FSMB was introduced to Parliament on 17 June 1999 and sets out four statutory objectives for the FSA. These are: maintaining confidence in the financial system; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and reducing financial crime.

Copies of the consultation paper are available on the website www.fsa.gov.uk/pubs/cp/25.