FCA investigation process and settlement agreements | FCA Lawyers


Following a review into enforcement action conducted by the Treasury in November 2015, the Financial Conduct Authority (‘FCA’) has set out a number of proposals on how it is to enact the recommendations made as a result of that review.

Depending on the outcome of the review and the forthcoming consultation paper it is proposed to radically alter the way in which discounts for early settlements are made.

Dean Phillips of Kangs Solicitors considers some of the proposals.

The current position | Kangs FCA Solicitors

The current Guidelines, set out in the Decision Procedure and Penalties Manual ,indicate that the FCA will typically apply a 30% discount to any settlement reached between the start of an investigation and its conclusion.

The conclusion of the investigation occurs when the FCA has:

“sufficient understanding of the nature and gravity of the breach to make a reasonable assessment of the appropriate penalty, has communicated that assessment and allowed a reasonable opportunity to reach agreement about the amount of the penalty”.

After the conclusion date, the available discount reduces in later stages of the proceedings to 20% prior to written representations being made to the Regulatory Decisions Committee and 10% prior to the receipt of a Decision Notice.

After that date no discount is available.

Proposals to encourage settlements | Kangs FCA Solicitors

  1. It is being considered whether widening the circumstances in which  the 30% discount would be available to include a “Focused Resolution Agreement” (‘FRA’) would act as a ‘carrot’ to encourage an early settlement.

A FRA , while falling short of a full settlement as currently accepted, would still have to include an acceptance of all relevant facts and the issue of whether those facts amounted to breaches of the relevant rules.

However, any disagreement as to the appropriate penalty payable would remain outstanding outside of the FRA.

Such an approach would be similar to the lodging of a basis of plea  in a criminal matter or the “carecraft” procedure used within Director Disqualification proceedings.

  1. It is proposed to allow extensions to the “reasonable opportunity to reach agreement” (typically 28 days) by, where appropriate, re-issuing a stage 1 letter following assessment of the new facts that justified any such extension.
  2. It is also proposed to allow additional opportunities for “without prejudice” meetings where preliminary representations can be made prior to the conclusion of the 1st Stage of investigations.
  3. Detailed studies indicate that only a few people settled after the conclusion of Stage 1. Accordingly, the FCA is proposing to remove any discounts where the settlement is reached following the conclusion of the stage 1 period.

How can we help you with a FCA Investigation? | Kangs Solicitors

The FCA is still currently considering the responses to its proposals as the consultation process only ended in July 2016.

However, it is clear that the FCA continues to push a hard-line approach in order to achieve early settlements and that important decisions will need to be taken at that early stage.

Should you receive notice of an FCA investigation, it is imperative that you seek expert advice as a matter of priority.

Kangs Solicitors has an extensive track record of dealing with FCA enquiries, investigations and prosecutions. We are ranked in Band 1 nationally by Chambers & Partners for our work in financial crime and fraud.

If you are the subject of an investigation by the FCA we are here to assist you.

Please feel free to call any of our specialist lawyers listed below who will be happy to deal with your initial enquiry and arrange a no obligation meeting at our offices in London, Birmingham or Manchester.

Contact Specialist FCA Lawyers at Kangs Solicitors:

Mr Hamraj Kang
07976 258171 / 020 7936 6396

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Dean Phillips of Kangs Solicitors represented a client sentenced in respect of VAT and Excise fraud in relation to the importation of £5 million worth of high end watches. As our client had admitted the offence from the outset, Kangs Solicitors sought to ensure that he was placed in the most favourable position possible when […]

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