FCA Investigates Breaches of Section 21 of the Financial Services and Marketing Act 2000

The coronavirus crisis appears, somehow, to have stimulated the Financial Conduct Authority (FCA) into action, as demonstrated by FCA investigation.

A number of clients have received notification of investigations into suspected breaches of section 21 Financial Services and Marketing Act 2000 (FSMA). Such investigations are accompanied by the use of wide-ranging powers granted by section 173, in Part 11 of FSMA, but the intended exercise of those powers should be carefully scrutinised, particularly when the failure to comply may lead to a warrant under section 176 FSMA or criminal proceedings under section 177 FSMA.

The powers given to investigators by section 173 FSMA are wide-ranging but not without limit.

While the power under section 173 FSMA is to ‘require’ the recipient to produce documents, those documents should ‘relate to any matter relevant to the investigation’. It follows that the requests should be relevant to the scope of the investigation described in correspondence from the FCA. The powers given to investigators by section 173 FSMA are wide-ranging but not without limit. The Part 11 FSMA investigatory powers are subject to the general duty to act fairly and observe the rules of natural justice. So, on the receipt of such correspondence, we encourage each request to be considered separately, focusing on the scope of the FCA investigation described in correspondence and to do so quickly. Our experienced barristers can advise.

Any reply will be case-specific and very significant because of the potential sanction.

A recipient may feel the best way forward would be not to answer such correspondence without the benefit of FCA legal advice.

For FCA legal advice in regards to FCA investigation, FCA breaches, or FCA breach reporting, please contact our team of barristers. Please refer to our FCA Regulation page for further information.