10-8 10-8 Using the Prohibition Power
Article 75(1)(a)(iv) of the Regulatory Law 2004 permits the
DFSAto prohibit an Authorised Personfrom using a particular name or description in relation to its business. It is a strong power that the DFSAwill use if it considers that a prohibition is necessary in order to ensure customers, Authorised Personsor the financial system are not adversely affected.
Before deciding whether to use of the Article 75(1)(a)(iv) power, the
DFSAwill generally try to resolve any concerns that it has with an Authorised Person'sname using informal channels, and would generally seek a voluntary undertaking by the firm to change its name. However, in urgent cases, the DFSAmay use the prohibition power without, or with very little, prior notice in accordance with paragraph 4(7) of Schedule 3 of the Regulatory Law 2004.
Ordinarily, if the
DFSAhas concerns about an Authorised Person's name, trading name or business description, it will write to the person explaining its concerns about the particular name and will provide the firm with a period in which to respond to its concerns. If, following receipt of any response, the DFSAremains dissatisfied with the continued use of the particular name, the DFSAwill write to the firm and ask the firm to agree to cease using the name. The DFSAwill give the person a reasonable period of time in order to change their name. If the person does not agree to change their name or continues to use the name after the time allowed to change the name, the DFSAwill use Article 75(1)(a)(iv) of the Regulatory Law in order to prohibit the use of the name. Where a person refuses to comply with an Article 75(1)(a)(iv) notice, the DFSAwould generally seek to enforce the notice in the DIFCCourt under Article 92 of the Regulatory Law.
DFSAwould take this naming policy into consideration when deciding whether to use its Article 75(1)(a)(iv) power and, in particular, relevant factors that it would consider prior to using the power would include:(a) whether the Authorised Personholds the required DFSAAuthorisations to carry on the relevant Financial Services;(b) the extent to which the Authorised Person'sname or description reflects the substance of the firm's Financial Services activities in or from the DIFC;(c) whether the use of certain words could mislead the public into thinking that the Authorised Firmis operating a banking or insurance business in or from the DIFCwhen the firm is not; and(d) whether the use of certain words could otherwise mislead consumers about the Authorised Person'sactivities in or from the DIFC.
DFSAwill adopt a similar process and approach when deciding to use its Article 75(1)(a)(v) power in relation to a Fund.
DFSAexercises its Article 75(1)(a)(v) power in relation to an Authorised Person, the person may refer the matter to the Financial Markets Tribunalfor review.