Reed Smith Client Alerts

On 4 May 2023, the Bank of England (Bank) and Prudential Regulation Authority (PRA) published a consultation paper on their approach to enforcement (CP9/23). The consultation period will last until 4 August 2023.

Autoren: Romin Dabir Angelina Shum

Amongst other things, the consultation paper proposes changes to the Bank’s and PRA’s enforcement policies and procedures, as well as amendments to the way in which the PRA calculates financial penalties for firms and individuals.

While both the PRA and the Financial Conduct Authority (FCA) have investigatory and enforcement powers, currently there is no indication that the FCA’s policies will change. The PRA and FCA’s approach to enforcement are separate but share many similarities. For example, both share the same five-step penalty policy.

Despite the similarities in approach, the FCA has been much more active in the use of its enforcement powers. Since 2014, the FCA has issued fines of more than £4 billion and taken action against more than 200 firms. Over the same period, the PRA has fined firms around £200 million across 26 enforcement cases.

Elements of the Bank’s proposals, if implemented, could be seen as a sign of a lighter touch approach to regulation and in line with the Government’s efforts to make the City a more attractive place to do business. An example of this is the proposed increase in the early settlement discount from 30% to a potential 50%. This could increase incentives for firms to take greater risks in the way that they conduct their business, safe in the knowledge that any fine should action be taken against them will likely be less than before.