Today the Bank of England (the Bank) and the Prudential Regulation Authority (PRA) have published consultation paper CP9/23 setting out proposed changes to their enforcement policies. The changes are mainly designed to provide greater clarity for ease of usage and introduce options for speedier investigatory outcomes, including through the creation of a new route for early cooperation for subjects of an investigation and enhanced settlement discount of up to 50% for early admissions. The CP also sets out proposed changes to the PRA’s policies and procedures for making supervisory and other statutory notice decisions, and to the Bank’s Enforcement Decision Making Committee’s (EDMC) procedures.
The proposal will establish two separate policy documents. The first is a consolidated statement of policy on the approach to enforcement and the second is on the PRA’s allocation of decision-making and approach to non-enforcement related supervisory decisions.
The proposed amendments are designed to:
- Provide a route for early cooperation in appropriate cases, enabling investigative outcomes to be reached more efficiently and quickly and engaging increased senior manager accountability in relation to such cooperation;
- Incentivise early admissions through the introduction of an enhanced settlement discount in appropriate cases of up to 50%;
- Set out the scope of the Bank’s enforcement powers more clearly, including in relation to individuals, and draw together all relevant enforcement policies and procedures in one more accessible and comprehensive document for ease of usage;
- Clarify the approach and procedures the Bank would adopt in Financial Market Infrastructure (FMI) enforcement investigations and introduce a route to settlement similar to the one used in PRA enforcement investigations;
- Change how we calculate the financial penalty for PRA-regulated firms to provide more consistency, and to better align our approach with the PRA’s approach to supervising firms, and change the serious financial hardship thresholds, which have not been updated since 2013, for individuals;
- Update and move the PRA’s policy and procedures for supervisory and non-enforcement related statutory notice decisions into a new separate document for clarity and ease of reference; and
- Update the EDMC remit and procedures to clarify roles and responsibilities of the EDMC to enhance further the operational efficiency of decision-making.
Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said:
“Since the PRA was established 10 years ago, we have delivered 25 enforcement outcomes against firms and individuals. This experience has allowed us to review the Bank’s enforcement policies to ensure they are clear and enable efficient, effective enforcement outcomes aligned with our statutory objectives. The changes we are consulting on include the creation of options for quicker investigatory outcomes, by providing a new route for early cooperation and increased incentives for earlier admissions by subjects”.
The Bank, including the PRA, is keen to receive feedback on these proposals. This consultation closes on 4 August 2023. Please address any comments or enquiries to firstname.lastname@example.org.
The Bank will also be holding a series of roundtable discussions on the proposals, providing an additional opportunity for external stakeholders to engage and provide feedback on the proposed changes
Notes to editors
- Consultation Paper (CP) 9/23: The Bank of England’s Approach to Enforcement: Proposed Changes and Clarifications: 4 May 2023.
- The CP is relevant to all PRA-regulated firms, financial market infrastructures (FMI) and qualifying parent undertakings. It also contains proposals that will apply to auditors, actuaries (where relevant) and senior employees of those entities. It is also relevant to professional advisers who represent firms, FMIs and individuals potentially subject to enforcement action taken by the Bank or the PRA.
- The current PRA approach to enforcement and details of past enforcement actions (including penalties) can be found here. The current FMI penalty policy and FMI procedures can be found here and here respectively.
- HM Treasury has drafted legislation (the Financial Services & Markets (FSM) Bill 2022) that will, if passed, supplement the Bank of England’s enforcement powers. The Bank will consult separately on the additional powers which are granted by the FSM Bill 2022 measures in due course.
- Bank of England Enforcement Decision Committee.
- These roundtable discussions will be held at the Bank of England in June and July. If you are interested in attending, please contact email@example.com by Wednesday 21 June (this date has been extended from Friday 9 June 2023).