The Bank of England’s approach to enforcement (2024)

• Related links

  • PS1/24 - The Bank of England's approach to enforcement
  • The Bank's investigation referral criteria
  • The Bank's regulatory investigations guide

What is the role of enforcement?

Through regulation, the Bank sets out rules, and develops standards and policies that set out what we require and expect of PRA-authorised firms, financial market infrastructures (‘FMIs’) and those involved in their management. Through supervision, the Bank monitors and assesses whether PRA -authorised firms and FMIs are meeting our requirements and expectations. See the Bank’s approach to supervision of FMIs.

Where firms are not meeting our requirements and expectations, the Bank can take action – supervisory or enforcement – to reduce the risks that might arise. This can be by way of imposing a financial penalty or public censure. The Bank can also prohibit an individual from working in the regulated financial services sector.

The Bank’s approach to enforcement supports and supplements our regulatory and supervisory tools by ensuring that we have credible mechanisms for holding our regulated community to account where they do not meet our requirements and expectations and providing a wider deterrent effect. We are committed to holding individuals to account and, where appropriate, taking regulatory and/or enforcement action against those individuals who breach our standards.

This way we clearly set out, for the benefit of the whole regulated community, the actions and standards of behaviour we consider unacceptable.

• The Bank’s approach to Financial Market Infrastructures supervision

How do we exercise our investigation and enforcement powers?

Our Approach to Enforcement explains what we expect of PRA-authorised firms and FMIs and how we use our powers.

The Bank has a number of investigatory and enforcement powers under the various statutory regimes for which it has regulatory responsibility, specifically:

• Prudential supervision by the PRA;
• Supervision of FMIs;
• Resolution; and
• The Scottish and Northern Ireland banknotes regime

The Approach to Enforcement provides an overview of the Bank’s enforcement powers under the Financial Services and Markets Act 2000 (‘FSMA’), the Banking Act (‘BA09’) and any other legislation under which the Bank has civil or criminal enforcement powers.

Before taking disciplinary action against a firm or an individual, we usually investigate whether (and if so, which) regulatory requirements have been breached. Our Approach to Enforcement includes statements of policy and procedure relating to:

• statutory notices and decision making
• financial penalties
• suspensions and restrictions
• settlement
• publicity of regulatory action
  the conduct of interviews pursuant to section 169(7) FSMA.

For more information on the Bank’s Statement of Policy and procedure which applies to contested PRA enforcement cases please see the Enforcement Decision Making Committeepage.

How have our investigation and enforcement powers developed?

The Bank have a number of investigatory and enforcement powers under various statutory regimes.

To date the Bank has only taken enforcement action in its capacity as the Prudential Regulation Authority.

A summary of the PRA’s approach to enforcement was provided in a speech ‘The PRA’s approach to enforcement’ by Miles Bake, former Head of Enforcement and Litigation published on 31 July 2019. This speech covered: the rationale for enforcement; examples of enforcement by the PRA’s in action; and the PRA’s enforcement ‘agenda’. It also explains how enforcement is aligned with and supports the PRA’s objectives and strategic goals.

The Bank also has enforcement and investigatory powers where the Bank (rather than the PRA) is the relevant regulator – for example in relation to FMIs. The relevant policy statements in relation to the enforcement powers of the Bank were published separately to the PRA Approach to Enforcement.

• creating a new early account scheme (EAS) for appropriate cases. This would provide a mechanism for subjects of PRA and FMI investigations to provide a full account, and all relevant material, to use at the outset of investigations;
• incentivising early admissions by subjects through the introduction of an enhanced settlement discount in appropriate cases of up to 50%;
• changing how the Bank calculates financial penalties for PRA firms to provide more consistency, and to better align with our approach with the PRA’s approach to supervising firms; and
• updating the serious financial hardship thresholds at which we will consider a reduction in fines for individuals.

Following the consultation, the Bank published its Policy Statement – PS 1/24 – and Approach to Enforcementon 30 January 2024.

How has the Bank used its enforcement powers?

Below are details of the enforcement actions that we have taken to date, with links to the underlying Final or Decision Notices.

Open investigations

We also provide details of how many investigations are open at any time. For the purposes of these statistics, an investigation is considered open from the time that we have appointed investigators until either it is closed, or a Settlement Agreement is entered into or, in contested cases, a Final Notice under the Financial Services and Markets Act 2000 or a Notice under the Banking Act 2009 is issued.

Each firm or individual under investigation is counted for these purposes, even if they are related (eg if we are investigating a firm and two individuals at said firm, that would count as three investigations).

Total open investigations at the end of each year – previous five years

* This includes one matter which was referred to the Upper Tribunal. Previous versions of this table included only investigations conducted by the Bank in its capacity as the PRA. The table now also includes investigations conducted by the Bank into FMIs and service providers specified by His Majesty’s Treasury in relation to a recognised payment system.

We do not usually make public the fact that we are investigating a particular firm or individual.

Statutory supervisory powers

The Bank of England also has various supervisory powers under relevant legislation.

For example, the Financial Services and Markets Act 2000 also grants the PRA formal powers, which can be used in a supervisory context. For example, we can vary a PRA-authorised firm’s permissions to undertake regulated activities or require a firm to undertake or stop an action. We can also approve (subject to conditions) an application for an individual to perform a senior (insurance) management function. Our approach to deploying these powers is set out in the PRA's approach documents.

Use of these powers does not mean that a firm has breached our rules or requirements.

We have used these powers in a number of instances. In certain circ*mstances, in line with legal requirements, these are made public. For example, we have made the following uses of its statutory powers public: