RPP 5-15 RPP 5-15 Settlement Guidance
A settlement is a resolution, between the
DFSAand a Personwho is subject to potential enforcement action, to agree an outcome resulting from an investigation. A Personwho is or may be the subject of any form of enforcement action arising out of, or during the course of, an investigation may enter into settlement discussions with the DFSA.
Settlement discussions are possible at any stage of the enforcement process, either before or after enforcement action has commenced. However, to be eligible for a discount on the amount of a financial penalty, settlement must be agreed within the period specified by the DFSA (see section 6-8). When considering whether or not to enter into negotiations for settlement, or a settlement agreement, the
DFSAwill consider its objectives.
DFSAgenerally considers that settlement of an investigation advances its objectives in that it may result in, for example, consumers obtaining compensation sooner, the saving of DFSAand industry resources, and the promotion of good business and regulatory practices.
DFSA'sgeneral view is that settlement discussions should take place as early as possible. However, the DFSAwill only be able to settle when it is confident it has sufficient understanding of the nature and gravity of the suspected misconduct to make a reasonable assessment of the appropriate outcome.
DFSAconducts settlement discussions on a "without prejudice" basis; namely, that no party to the discussions may subsequently rely upon any admissions or statements made during the course of the settlement discussion or on any document recording those discussions.
DFSAwill only settle when the agreed terms result in what the DFSAconsiders to be an appropriate regulatory outcome.
Settlement in particular circumstances should not be regarded as binding precedent for future settlement discussions.
Where appropriate, the
DFSAwill provide the other party to a settlement discussion with copies of relevant material which it has relied upon in making findings in an investigation. However, some information may not be provided at the settlement stage. This would include information which is privileged, or information which the DFSAdoes not have the right or authority to disclose to the other party, such as information provided to the DFSAin confidence by another regulator.
Settlement Decision Makers
The process for reaching a settled outcome is different to the process for the DFSA to exercise formally a discretionary power. For example, most of the DFSA’s formal decision making policy in chapter 7 of RPP and many of the requirements in Schedule 3 to the Regulatory Law do not apply.
The decision about whether to accept a settlement offer will be taken by a senior member of DFSA staff who has not been directly involved in establishing the evidence on which the decision to take the action is based. That person is referred to as a Settlement Decision Maker.
Settlement Decision Makers will generally come from the same pool of staff as persons who may be on a Decision Making Committee (DMC) (see section 7-7). The DMC is the DFSA’s decision maker for enforcement decisions in cases that have not been resolved through settlement. If a Settlement Decision Maker has been involved in considering a matter which ultimately does not result in agreement, then that person will generally not be a member of the DMC for that matter.
The case team will conduct the settlement negotiations with the Person(s) concerned. If agreement is reached, the case team will recommend to the Settlement Decision Maker that the settlement be approved. It will be for the Settlement Decision Maker to decide, on behalf of the DFSA, whether to accept the settlement on the agreed terms. If approved, the agreed terms will then be included in the appropriate form of settlement as set out in the following paragraphs.
Form of Settlement
DFSAwill generally only settle an enforcement matter on the basis of either:(a) a notice of decision setting out the action taken (see 5-15-14); or(b) an Enforceable Undertaking (EU) (see 5-15-15).
In appropriate cases, the
DFSAmay settle a matter on the basis of both a notice of decision and an EU. Any settlement entered into by the DFSA, which results in a notice of decision, will be documented in the form of a legally enforceable agreement executed by all parties.
Notice of Decision
DFSAagrees to settle an enforcement matter, the outcome of the settlement may result in an agreed notice of decision. The issue of such a notice promotes consistency of regulatory outcomes and transparency of approach to enforcement decision making.
An EU is a written promise, made under Article 89, to do or refrain from doing a specified act or acts. It is an alternative mechanism for addressing the
DFSA'sconcerns, including regulating contraventions of the Law. It may, amongst other things, include remedial actions that are not otherwise available under a notice of decision.
Acceptance of an Enforceable Undertaking
An EU may be given by a
Personand accepted by the DFSAat any time, either before, during or after an investigation, the making of a decision or the commencement of litigation or proceedings in the Court. The DFSAdoes not have the power to require a Personto enter into an EU nor can a Personcompel the DFSAto accept an EU. This does not mean, however, that the DFSAcannot propose an EU to a Person, during the course of settlement negotiations, or provide a Personwith a draft EU to provide guidance as to the terms of an EU that the DFSAwould be willing to accept.
DFSAmay accept an EU that it considers necessary or desirable in pursuit of its objectives. Article 89 does not prescribe a particular structure or format to an EU or the circumstances in which an EU would be acceptable to the DFSA. The DFSAwill consider all the relevant circumstances of a matter when deciding whether to accept an EU including whether other regulatory tools, for example a notice of decision, might achieve a more appropriate outcome in the particular matter. However, in the context of an enforcement matter, the DFSAwill generally only accept an EU that:(a) contains an admission or acknowledgement of any contraventions of the Law or the DFSA'sconcerns;(b) contains undertakings that address the DFSA'sconcerns; and(c) contains an agreement to make the EU public, and an agreement not to make public statements that conflict with the spirit of the EU.
Personoffering an EU to the DFSAmay also undertake in the EU to pay a pecuniary penalty and/or the DFSA'scosts, including any costs associated with compliance with the EU.
An EU will not take effect until it is formally accepted by the
Chief Executiveof the DFSAor his delegate.
Variation or Withdrawal
Once accepted by the
DFSA, an EU can only be withdrawn or varied with the consent of the DFSAin writing. The DFSAwill only consider a request to vary an undertaking if:(a) the variation will not alter the spirit of the original undertaking;(b) compliance with any one or more terms of the undertaking is subsequently found to be impractical or impossible; or(c) there has been a material change in the circumstances which led to the undertaking being given.
Compliance with an EU or Decision
DFSAconsiders that a Personhas not complied with a term of the EU or a decision, the DFSAmay apply to the Courtfor appropriate orders. The DFSAmay publish the fact of the application to the Courtand any subsequent orders of the Court. The DFSAwill also seek the costs of the application.