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Defence of regulatory enforcement action

This matter involved an entity regulated by the Financial Services Authority (now Financial Conduct Authority) which had been subject to a monitoring visit by FSA in relation to redress for mis-selling of personal pension policies from defined benefit schemes. 

The approach of the regulator was as hostile as it was inappropriate. As can be expected in many reviews of that nature, shortcomings were identified but many of these were without foundation. Rather than give the company proper transparency of the issues which had been identified, with proper opportunity of comment, the monitoring team gave notice that the matter had been referred to the FSA Enforcement Division whose initial view was that disciplinary action would be taken.

This was clearly a case not only of the regulator jumping the gun, but also of it acting capriciously and in a manner contrary to accepted principles of natural justice. 

Whilst no regulated firm should seek confrontation with its regulator, the circumstances of this matter necessitated a letter of complaint was sent to the person at the FSA responsible for that review with a request that a meeting be held at which we could go through each area of concern highlighted by its review team and we could then follow up with a letter of response. A lengthy meeting then ensued which involved a through review of all files which had been inspected by the monitoring team.  This meeting met its objectives; the regulator later accepting in correspondence that any shortcomings were not of such a material nature to merit enforcement action. An undertaking was given in relation to various further remedial actions and the matter was later closed off.