FSA uses enforcement powers to protect consumers

Figures published today in the FSAs Annual Report 2000/01 show that enforcement activity against unauthorised business during the year to end-March 2001 included:

• preliminary inquiries in 763 suspected cases a 15% increase compared to 1999/2000;

• 226 formal investigations of suspected contraventions of the Financial Services Act 1986, the Banking Act 1987 and the Insurance Companies Act 1982 a 42% increase on last year;

• concluding nine sets of High Court cases against 27 defendants and obtaining Court Orders for repayments in favour of 366 investors and depositors - in the course of the year the FSA has collected over 1.5million for onward distribution to investors and depositors;

• instigating criminal proceedings in three separate cases for offences under the Banking Act 1987 with one defendant receiving a jail sentence of two years and nine months.

Christine Farnish, Director, Consumer Division at the FSA, said:

We publish the results of any enforcement activity as soon as we can. Publicising unauthorised scams can help alert consumers to the need to be careful. Consumers have no right to compensation if they deal with unauthorised firms. If they have any doubt about the credentials of a firm, they should contact the FSA consumer helpline on 0300 500 5000 to check whether it is allowed to take their money.

In addition to combating unauthorised activity, the FSA currently undertakes enforcement work against regulated investment firms on behalf of IMRO, the PIA and the SFA. From later this year the FSA will undertake all enforcement work in its own name. In the year to end-March 2001:

• 38 SFA cases were concluded. Of these, 14 cases warranted no further action, a warning was issued in 2 cases, disciplinary action was settled in 20 and 2 cases went to Tribunal. In one case the SFA concluded disciplinary proceedings against Nomura International plc and two of its registered individuals in connection with dealing irregularities. One was expelled from the Register of Directors and the Register of Representatives and the other severely reprimanded and fined 60,000. Nomura agreed to a settlement involving a severe reprimand and a fine of 350,000.

• 198 PIA cases were concluded. Of these, 100 warranted no further action, a warning was issued in 20, disciplinary action was settled in 54, and 24 went to Tribunal. In one case Royal Scottish Assurance was fined 2 million for serious deficiencies in its endowment mortgage product, serious and widespread compliance failings, and failings in how it carried out its pensions review. Around 30,000 consumers may be affected and approximately 50m has been set aside for compensation;

• 26 IMRO cases were concluded. Of these, 4 warranted no further action, a warning was issued in 10, disciplinary action was settled in 11, and 1 went to Tribunal. In one case National Westminster Bank Plc was fined 250,000 for breaches of the rules governing the administration of unit trust business. 4,500 investors were affected by these breaches and the firm paid compensation totalling 2.3 million to the customers affected;