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Investigation powers of regulators - Coggle Diagram
Investigation powers of regulators
Department for Business, Energy and Indsutrial Strategy Investigations
The Secretary of State for BEIS will either appoint inspectors, usually an accountant and a barrister, with power to examine witnesses under caution or require the production of documents and records for examination by BEIS officials
Power of entry
Inspectors appointed by the Secretary of State to enquire into the affairs of a company or to investigate company ownership have no right of entry or right to undertake a search of business or other premises without a search warrant
They may require the company and any officers/agent, past or present to be questioned by the inspectors
If a request for the production of documents is ignored, in part or in full or if there are reasonable grounds for believing that documents exist but which have not been produced, application may be made by the inspectors to a justice of the peace to issue a warrant for the entry and search of premises
A warrant authorises a police officer and any named persons with them to
Enter the specified premises
Search and take possession of documents appearing to be relevant
Take copies of any such documents
Require explanations concerning the documents from any persons in the premises
There are 6 categories of inspection
Appointment of inceptors to investigate the affairs of the compnay
Can be requested by company itself, a minimum or 200 shareholders or 1/5th of the company's members
If the court by order declares the affairs should be investigated, if it appears to them that there are circumstances to indicate that
Affairs undertaken with intent to defraud creditors or the creditors of another person, for fraudulent or unlawful purpose or in such a way that is unfairly detrimental to some of its members
Any act or intended act or omission whether by or on behalf of the company would be prejudicial to some part of the members, or that the company was formed for fraudulent or unlawful purpose
Persons forming the company or connected with its management have in that regard been guilty of fraud, misconduct or misfeasance towards the company or its members
The members have not been given information concerning the affairs of the company that they would reasonably expect
May stipulate that the report will not be made public
Have the power to extend their investigation to any subsidiary or holding company without the need for specific appointment
Once inspectors are appointed, it is the duty of all officers and agents and any person who is or may be in possession of information or documents to
Produce all documents relating to the company in their custody or power
Attend before the inspectors when required, inspectors may examine any person on oath
Give all assistance in connection with the investigation that they are reasonably able to give
The right to silence has been excluded and the inspectors may compel a witness to answer questions
The inspectors report to the Secretary of State on conclusion of their investigation
If matters come to light during the course of an investigation that suggest that a criminal offence has been committed, those facts are referred to the appropriate prosecuting authority
Investigations into ownership of compay
If it appears to the Secretary of State that there are good reasons for doing so, inspectors or BEIS officials may be appointed to investigate the true identify of those financially interested in the success or failure of a company or able to control or materially influence its management
May limit the investigation to matters connected with specified shares or holding
Such investigations ar usually used to investigate the circumstances where there is a potential takeover and there are circumstances to suggest the existence of undisclosed arrangements or undertakings between groups of shareholders
Investigations of directors share dealings
Production of documents
If the Secretary fo State may if they think there are good reasons, give a direction directly to the company or any person requiring the production of specified documents and records or provide information
The power to require the production of documents extends to the taking of copies and requesting explanation of any matter in those documents from any person
Failure to produce the documents or provide an explanation without good reason is an offence
Documents can be withheld if they are covered by professional privilege
Investigations to assist overseas regularity authorities
Permits investigation, interviews under oath and seeking documents and records
In deciding whether to provide assistance, regard must be given to whether reciprocal assistance would be forthcoming
Investigations under FSMA2000
HM Revenue and Customers Investigations
Criminal investigations
Usually reserved for the more serious offences or offenders
Organised criminal gangs attacking the tax system or systematic frauds where losses represent a serious threat to the tax based including conspiracy
Individuals that hold a position of trust or responsibility
Where materially false statements are made or materially false documents are provided in the course of a civil investigation
Where pursuing an avoidance scheme, reliance is placed on a false or altered document or such reliance or material facts are misrepresented to enhance the credibility of. scheme
Deliberate concealment, deception, conspiracy or corruption is suspected
Use of false or forged documents
Importation or exportation breaching prohibitions and restrictions
Money laundering offences
Repat offenders
Theft or misuse or unlawful destruction of HMRC documents
Assault on, threats to or the impersonation of HMRC officials
Links to suspected wider criminality, whether domestic or international
A limited number of HMRC officers have powers of arrest although this power is limited to HMRC offences and is not a general right of arrest
Direct Tax Investigations
HMRC can give notice requiring the production of documents and the provision of information
This must be complied with in a specified period of not less than 30 days
HMRC also has the power to review company PAYE and NI records
HMRC officials have no automatic right of entry. They may, obtain a warrants fined by a circuit judge to enter and search preises. The warrant is valid if served by a police office
To obtain a warrant, the circuit judge must be satisfied that there are reasonable grounds for suspecting that evidence of an offence involving serious tax fraud is to be found on the premises
Certain documents are privileged and cannot be seized, these include persons, medical or religious records and the property of any tax adviser
Indirect tax investigations
HMRC is moving away from the previous system of periodic VAT visits with visits now generated by
VAT returns showing an unusual level of sales or purchases compared to industry norms
Information received
Information obtained during the course of an inspection of other company's records
Information from other government departments
Unannounced visits do still take place and HMRC officers have the right of entry to premises to inspect records at any reasonable time
The right of entry to inspect records does not permit a search for records to be undertaken
Visits are usually by appointment and the HMRC officer has the right to call for any books and records
Where the visit is by appointment and the business owner is therefore on notice of the visit, they are obliged to answer the officer's questions. This is not the case for unannounced visits
Where there has been an unannounced visit, and for genuine business or personal reasons, it is inconvenient, the officers can be asked to leave. If the officers insist on their right of entry, they should be given access to a clear room and should be accompanied at all times. They should not be given uncontrolled access to business records
FCA/PRA
Production of documents
The FCA has authority under FSMA2000 to require or to give an officer of the FCA authority to require the production of specified documents and information of documents and information of a specified description from
An authorised or formerly authorised person
A person connected with an authorised person
The operator, trustee or depository of an open ended investment company
A recognised invesrtment exchange
A recognised clearing house
Following the financial crisis, FSMA2000 was extended to give similar authority to the PRA to require the production of document or information in connection with financial stability of one or more aspects of the UK financial system
Instead of requiring the production of documents, the FCA may require that an authorised, formerly authorised or connected person commission and provide a report into any relevant matter
Although the report is commissioned and paid for, by the person or organisation under review the FCA may direct and control the scope of the investigation, the length of the investigation, the conduct of the investigation and how the investigation is to be reported upon
Authorised persons and firms are required to co-operate with any person writing te report
The persons nominated to provide the report are required to co-operate with any person writing the report. The reports are often referred to as skilled person report
For more serious matters, the FCA has power to appoint a competent person to conduct a general investigation into the business or ownership or control of an authorised person or appointed represenative. Written notice of the appointment of an investigator must be given to the person or firm under investigation. The competent person appointed to carry out the investigation may be an employee of the FCA or some other person engaged for that purpose
The FCA may appoint a competent person to conduct an investigation where it appears there are circumstances to suggest that specific contravention or offence may have taken place. Such specific investigations would include breaches of the general prohibition to provide investment advice, breaches of any rules or regulations made under the FSMA2000, commission of misleading statements and practices in terms of FSMA2000, market abuse, insider dealing or suspected breach of money laundering regulations
Enable FCA to enable it to investigate authorised persons and firms operating in the UK on behalf of an overseas regulator
Investigators appointed under FSMA2000 s.167 have power to require persons to attend before them and answer questions, provide information and to provide documents. This power is restricted to information relevant to the investigation and to the person under investigation or a connected person of that person
investigators appointed by the FCA under FSMA2000 s.168 have additional powers set out in FSMA2000 ss. 172 and 173. These powers do not generally in all cases and care must be taken to establish the appropriate power in any given case. Generally the investigators power of interview and information gathering are extended to persons not under investigation themselves but who might have any relevant documents or infromation
Investigators appointed by the FCA or the Secretary of State under FSMA2000 s.175 have powers to compel the production of relevant documents from person, together with any explanation of the document where needed
Where an individual does not possess a document or fails to produce it they may be required to state to the best of their knowledge where that document is.
Where any person fails without good reason to comply with a request made under Part XI of the FSMA2000 to provide information or to produce documents, that fact may be certified to the court. On enquiry the court may punish the person as if they were guilty of contempt of court
A person who recklessly provides false or misleading information or who falsifies, withholds or destroys any documents or information is guilty of an offence and on conviction is liable to a fine of up to £5,000 or up to six months imprisonment
Power of entry
An investigatory appointed by the FCA has no right of entry or search, accordingly entry may be refused. The investigator may obtain a warrant to enter and search premises from a justice of the peace.
A warrant to enter and search must be executed by a police officer
To obtain a warrant, the justice of the peace or sheriff must be satisfied that there are grounds for believing that
A request for the production of documents has not been complied with and that the documents are on the premises
There are grounds to believe that any request to provide documents found on the premises would not be complied with or the documents would be moved, altered or destroyed
A serious offence has been or is being committed and that there is information or documents on the premises relevant to the offence and that a request for their production would not be complied with or might result in the documents being removed, altered or destroyed
Competition and Markets Authority
Production of documents
EA2002 gives the CMA power to require persons to attend interviews or to provide documents or other written evidence
The power under EA2002 s.193 relates to the investigation of cartels and EA2002 ss.224 and 225 relate to consumer protection
CA1998 s.26 gives power to the CMA to issue a written notice requiring the production of documents or information. The notice must state the subject matter and purpose of the investigation, describe the documents or information (specifically or in general terms) and set out the nature of the offences that may be committed if the information are not provided. The notice will also set out the appropriate timescale for the delivery of the documents or information and the recipient may also be asked to provide an explanation of any documents delivered either at the same time or subsequently
Power of entry
Allows the CMA to obtain a warrant from the High Court to allow a named CMA officer to enter premises and conduct searches for documents or other evidence in connection with investigations into cartels
This power is for use where the CMA believes that
A request for the production of documents has not been complied with and that the documents are on the premises
There are grounds to believe that any request to provide documents found on the premises would not be complied with or the documents would be moved, altered or destroyed
A serious offence has or is being committed and there is information or documents on the premises relevant to the offence and that a request for their production would not be complied with or might result in the documents being removed, altered or destroyed
The powers in respect of the CMAs investigations into mergers and abuse of market dominance give the CMA authority to require the production of specified documents or to require individuals to attend interviews and to give evidence
The CMA has the power to launch competition investigations and in carrying out those investigations CMA officials have the power to enter and in some circumstances search premises for relevant documents
CMA officials can obtain a warrant fro the High Court or the Competition Authority Tribunal to enter, by force, if necessary, business premises and search and take possession of documents
CMA officials have power to enter business and residential premises without a warrant and require production of documents or provision of information and to take copies of documents.
The CMA has similar powers of entry without or with a warrant where it is acting on behalf of another EU member state
The Panel on Takeovers and Mergers
An independent body whose main functions are to issue and administer the City Code and to supervise and regulate takeovers and other matters to which the Code applies in accordance with the rules set out in the Code
Production of docuemnts
The Panel to require, by notice in writing, a person to produce specified or described documents and/or to provide in such form or manner as may be species such information
The requirement to produce documents or information must be supplied at a specified place and within a reasonable period specified by the Panel and may be required to be authenticated in such manner as the Panel may reasonably require
The documents or information that the Panel may require are those that they may reasonably require to enable its functions
The Panel may authorise any person to exercise its power to require the production of documents or ifnroamtion
The Panel or their authorised representative cannot require the production of documents or information in respect of which a claim for legal professional privilege could be maintained in legal proceedings
CA2006 prohibits the Panel from disclosing documents or information other than those already in the public domain, provided to it in the exercise of its functions that relate to a private individual during their lifetime or a business for as long as the business continues, without their consent
The Panel and their representatives have no right of entry to premises