FCA Powers Used At The Request Of Overseas Regulators: A Practical Summary

It was recently reported that the UK's Financial Conduct Authority (FCA) has experienced a notable increase in the number of requests for assistance from foreign enforcement agencies over the course of the last five years.1 Given London's place as a global financial centre, and the levels of enforcement activity that have existed across the globe since the financial crisis, it is perhaps unsurprising that cooperation amongst regulators is on the rise. In addition to increasing the compliance burden on businesses, the effect of this has been to highlight particular areas of risk for those who find themselves the subject of FCA processes on behalf of foreign regulators.

The FCA has a broad discretion to assist its foreign counterparts and exercises that discretion liberally.2 The scope for challenging the FCA's decision to assist is therefore limited. However, the legal and policy framework does present some avenues through which individuals and companies, who find themselves subject to requests on behalf of overseas regulators, can better manage the process and protect themselves. This article aims to be a short guide on this area of regulatory practice. It will consider the topic in four parts:

i. The scope of the FCA's discretion to exercise its powers on behalf of an overseas regulator; ii. The powers available to the FCA when assisting an overseas regulator; iii. The conduct of interviews; and iv. The restrictions on the use and onward transfer of any information provided in discharge of that assistance.

The FCA's authority for conducting investigations in support of an overseas regulator is enshrined in section 169 of the Financial Services and Markets Act 2000 ("the Act"), as supplemented by the relevant FCA policy which can be found in the Decision Procedure and Penalties Manual ("DEPP"). Both the Act and DEPP are referenced extensively throughout this article.

Scope of the FCA's discretion to assist

The FCA has a statutory discretion, under section 169 of the Act, to exercise its powers at the request of an overseas regulator. This discretion is broad and relatively unfettered. The FCA is not under any duty either to investigate or verify the information provided by the overseas regulator, or to second-guess the overseas regulator's application of its own domestic law, and is therefore not required to examine the request critically.3 However, in considering the exercise of its discretion it may take into account:

whether corresponding assistance would be given by the foreign state to the UK regulatory authority; whether the matter concerns a breach of a law or requirement which has no "close parallel" in the UK, or involves the assertion of a jurisdiction not recognised in the UK; the seriousness of the case and importance to the UK; and whether it is otherwise appropriate in the public interest to provide the assistance sought. In addition to the FCA's statutory power to assist, there are a number of Memoranda of Understanding (MoU) in existence between UK and overseas regulators (most notably the SEC and other US regulators) concerning cooperation and information-sharing in relation to both their enforcement and supervisory functions. However, any ostensible incompatibility between the provisions of a...