CP9/23 – The Bank of England’s approach to enforcement: proposed changes and clarifications

The Bank of England (BoE) has launched a public consultation (CP9/23) as regards its approach to enforcements. In this consultation, the BoE proposes several procedural alignments as regards its enforcement policies in an effort to increase efficiency and effectiveness of its enforcement policy and transparency to financial market participants. The consultation is relevant for all supervised entities by the BoE or its Prudential Regulation Authority (PRA), including banks, building societies, financial market infrastructures (FMIs), insurance companies, clearing houses, and several others. Specifically, the BoE proposes to make the following key changes in this context:
(1) Consolidate various existing enforcement policy provisions into one new document, namely the „Statement of Policy (SoP): The Bank of England’s approach to enforcement: statements of policy and procedure“ – the „Enforcement SoP“ – which would set out all enforcement tools available to the Bank of England (criminal enforcement, enforcement via the PRA, enforcement action regarding FMIs, and enforcement actions under special resolution regime) and describe them in detail. The proposed new document would basically include all four documents noted above (in the „Other regulatory spec. affected“) so long as their provisions relate to enforcements and include various other enforcement policy documents as outlined in the draft.
(2) Include in this newly created SoP all issues relevant as regards enforcement policies, including the BoE assessment of whether or not an enforcement decision shall be made, a warning be given, or a prohibition order be placed, the criteria that will be considered in this context, or the factors it will assess to derive a final fine, to name a few.
(3) Revise the above noted four documents (which will be part of the new „Enforcement SoP“) to implement
– a new incentive program that allows for discounts from penalties when early cooperation is sought by an entity or individual to be penalized;
– a revised computation methodology as regards financial penalties;
– a revised „serious financial hardship threshold“ for individuals to accommodate for changes in cost of living since 2013 (the new levels would be: gross income falls below £22,000 and capital falls below £83,133);
– clarifications as regards the PRA’s policy on prohibition orders;
– revisions to the appointment terms of the „Enforcement Decision Making Committee (EDMC)“ and the EDMC procedures when making final decisions of enforcements proposed by the Bank.
(4) create a new Statement of Policy, namely the „Statement of Policy (SoP): The PRA’s allocation of decision-making and approach to supervisory decisions“ to include the PRA’s policy and procedures for supervisory and non-enforcement related statutory notice decisions.