Regulation  

FCA warns ignoring investigators is ‘contempt of court’

FCA warns ignoring investigators is ‘contempt of court’

The Financial Conduct Authority has warned firms who fail to talk to appointed investigators that they could be found in ‘contempt of court’, as the regulator confirms it has the power to appoint investigators to look into you.

In finalised guidance, published today, (15 July), the regulator stated it can appoint investigators who can force a person to attend and answer questions, or to provide any information or document required.

The investigator can only impose these requirements if it reasonably considers the questions, or the provision of information or documents, to be relevant to the purpose of the investigation under Financial Services and Markets Act 2000.

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Failure to comply, without reasonable excuse, with an information requirement, or other requirement imposed by an investigator, may be treated as a contempt of court, the FCA stated.

A person could also be guilty of a criminal offence if, in purported compliance with a requirement, knowingly or recklessly provides information that is false or misleading, the regulator added.

The paper also clarifies powers given to the FCA in the Enterprise Act 2002.

They can give notice requiring any person to attend a specified place to give evidence to the FCA or nominated investigator, along with giving notice requiring any person to produce specified documents or categories of documents that are in that person’s custody or under their control.

Specified forecasts, estimates, returns or other information can also be requested by the regulator in a specified form and manner.

The FCA stated: “We can use these powers against any person, whether or not they carry out activities that we regulate.

“Where the FCA considers that a person has, without reasonable excuse, failed to comply with any requirement of a notice issued by the FCA using its EA02 investigatory powers or intentionally obstructed or delayed another person in copying documents produced to that other person, the FCA has the power to impose an administrative penalty.”

Administrative penalties may be imposed in the form of a fixed amount, by reference to a daily rate, or using a combination of the two.

Maximum penalty amounts are set by order and are, as at 1 April 2014, £30,000 (in the case of a fixed amount) and £15,000 (in the case of a daily penalty).

Persons committing a criminal offence are liable, on summary conviction, to an unlimited fine, and on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or to both.

The regulator also clarified it is a criminal offence for a person intentionally to alter, suppress or destroy any document which they have been required by notice to produce.

Where an act is capable of constituting both a failure warranting an administrative penalty and a criminal offence, the FCA stated it cannot impose a financial penalty if it has brought criminal proceedings against the person.

emma.hughes@ft.com