FSA consults on use of certain new powers granted by the Financial Services Act 2010

The consultation paper includes proposed Handbook changes in relation to the following areas:

• To redraft the provisions requiring disclosure of short-selling positions and place them in a new part of the Handbook covering financial stability and market confidence;
• The imposition of financial penalties or censure on those who breach short-selling rules;
• The power to suspend firms or individuals by stopping them undertaking some or all of the activities which they are permitted to carry on for a period of time, and to use this new power in conjunction with other enforcement tools;
• The power to impose financial penalties on individuals who have carried out controlled functions without the necessary approval from the FSA;
• The ability to gather information in relation to financial stability from both authorised and unauthorised persons to help identify potential threats to the UK financial market;
• To enable the Financial Services Compensation Scheme (FSCS) to recoup its management costs, when acting on behalf of other compensation schemes, from FSCS levy payers if it is unable to recoup those costs from the relevant compensation scheme. Another new rule will reflect Treasury’s new power to recoup interest costs from the FSCS in the event of it requiring the FSCS to contribute to the costs incurred in applying the stabilisation powers of the Special Resolution Regime established under the Banking Act 2009.

The consultation closes on 25 June 2010.