The formal powers include:
- to vary a PRA-authorised person’s permissions or to impose a requirement
- to refuse to authorise a firm, approve an individual to carry out a controlled function, approve an individual for a limited period or subject to conditions (or both), or to object to a change of control (or to approve it subject to conditions)
- to direct an unregulated parent undertaking
- to investigate a matter under Part XI of FSMA
- to impose a penalty, a public censure, a suspension or restriction.
When will the PRA use its powers?
The PRA approach documents set out what we expect of those subject to our regulatory requirements, and how we will deploy our powers.
The PRA's approach to insurance supervision
We have a variety of formal powers available to us under statute, which we can use in the course of supervision if deemed necessary to reduce risks. For example, we may use our power to require information from firms, or commission a report by a third party into specific areas of interest. We may also vary a firm’s permissions to undertake certain regulated activities, which may require a change to the firm’s business model or future strategy.
While we look to firms to cooperate with us to resolve supervisory issues, we will not hesitate to use formal powers where we consider them to be an appropriate means of achieving our desired supervisory outcomes. This means that, in certain cases, we will choose to deploy formal powers at an early stage and not merely as a last resort.
Our preference is to use our powers to address emerging risks. We do, however, have a set of disciplinary powers, including the power to impose financial penalties and publish public censures, for cases where such sanction is an appropriate response to the firm failing to meet our regulatory requirements. The intention in deploying these powers might include sending a clear signal to a firm – and to the regulated community more widely – about the circumstances in which we consider a firm’s behaviour to be unacceptable, and so deterring future misconduct.
We are required by FSMA to maintain a number of policies governing the conduct of enforcement investigations, including policies on:
- imposing penalties, including how we calculate financial penalties
- interviews and investigations at the request of overseas regulators.
Outsourcing enforcement investigations
While we may choose to carry out investigations using our own investigation teams, we may instead (or additionally) outsource those investigations (including the gathering and analysis of evidence and interviews of individuals) to third parties, including the Financial Conduct Authority (FCA).
This may mean that, in certain cases, the subject of the investigation, and others, may be contacted by the FCA and/or third parties authorised by us. This will usually take the form of us using our powers under sections 167 to 169 of FSMA to appoint the third party, and/or specified officers or members of staff of that third party, as investigators. We may also appoint members of our own staff as investigators in such cases.
Where we appoint a third party as an investigator, that person will have the full range of powers available to investigators under FSMA.
We will expect the subject of the investigation, and any person in relation to whom the investigator concerned exercises powers under FSMA, to provide the investigator with the same level of co-operation as it would provide us were we investigating the matter.
We will retain control over, and responsibility for, the scope of the investigation, and the third-party investigators will carry the investigation out under our direction.
Where we choose to outsource the conduct of an investigation, we will:
- inform the subject of the investigation that we have done so, and to whom the matter has been outsourced
- take reasonable steps to ensure that the investigator makes clear when making first contact with the subject of the investigation, or any other person in relation to whom FSMA powers are proposed to be exercised, that the investigation is being carried out on our behalf
- ensure that any Notice of Appointment of investigators required under section 170 of FSMA sets out who the investigators are and, if the investigators are individuals, of which organisations they are officers or employees.
As the end product from an outsourced investigation, the investigator provides us with a report setting out what evidence it has uncovered, and to what extent the evidence is indicative that one or more of our regulatory requirements has been breached.
We will then determine what, if any action we propose to take as a result of the investigation, including (but not limited to) the use of our supervisory or enforcement powers.
Our final statements of policy on our decision-making policy and procedure and on aspects of our disciplinary and other enforcement powers are available in our approach to enforcement statements.