The Financial Services Authority (FSA) is to recruit two or three in-house lawyers in a bid to develop a separate legal capability to assist its enforcement regime.
The creation of the new legal function, which will service the Regulatory Decisions Committee (RDC), has been proposed as part of a raft of reforms unveiled by the FSA in a bid to improve the transparency of the way the regulator investigates and prosecutes breaches of its rules.
A spokeswoman for the FSA said that the reforms will cost about £2.5m a year, however the percentage assigned to the legal capability had yet to be clarified.
The new legal capability will be expected to assist the RDC, which issues sanctions, in its decision-making process and take some of the pressure off the Enforcement Division’s legal capability (previously shared by the RDC), while also keeping the process autonomous.
The spokeswoman said that legal support for the RDC was likely to include two or three full-time lawyers, with external advisers (which have yet to be assigned) instructed when further resources were required.
Other reforms recommended by the review include an end of the privileged access the enforcement team has to the RDC compared to those accused, and a penalty discount scheme of up to 30 per cent for company’s that settle their cases early in proceedings.
The review, which was first commissioned in February, followed scathing criticism by the Financial Services & Markets Tribunal over the FSA’s handling of allegations of widespread mis-selling at Legal & General.