Attestations are the latest regulatory tool in the Financial Conduct Authority’s (FCA) compliance toolkit and both companies and individuals need to be aware of the implications of signing them.
An Attestation is similar to an undertaking or a guarantee in that it is a written confirmation that a company is successfully adhering to particular regulatory requirements. The Attestation is usually signed by the company’s chief executive (CEO) or another individual in a position of significant influence (SIF) for example company directors or compliance officers. They are an important instrument used by the FCA to hold senior individuals to account for a company’s regulatory compliance.
This is part of a recent shift in the regulatory regime as a result of the financial crisis and the expectation that senior company management be held accountable, which has seen the FCA take a tougher stance against individuals. In turn this may lead to an increase in individual criminal prosecutions.
The FCA has said that the purpose of an Attestation is to draw the attention of senior company personnel to issues of regulatory compliance. Subsequently, following any breach of the signed attestation it is simpler for the FCA to prosecute an individual or a company for non compliance. The FCA has stated that ‘Attestations are a way of focussing minds and an important tool as we hold those who make decisions personably accountable’.
Reports show that Attestations are primarily being requested of medium and larger sized businesses but can also be issued against small companies and independent advisors. There are currently two main situations where Attestations are being used. Firstly where a specific issue has been identified by the FCA during a thematic review of an industry sector, multiple companies within that sector may be required to provide an Attestation. This can apply to a company that has not yet breached any particular issue but can be used as a preventative measure so that senior individuals are aware that, if the problem should arise in the future, they will be responsible and may be prosecuted.
The second most common scenario is where the FCA has identified a specific problem at an individual company. As part of the action taken by the company to resolve any regulatory issues and to prevent a reoccurrence of the matter, the FCA may request an attestation. The FCA director of supervision, Clive Adamson has said ‘If we find a particular problem has not been addressed, the Attestation would make it easier to take enforcement action’.
The FCA has faced some criticism over the clarity of issued Attestations. There have been reports that some Attestations are not drafted clearly enough for the signatory to comprehend fully the scope of what is being asked of them. In March 2014 two FCA panels voiced their concern over the use of Attestations. At a meeting of the FCA board, Clive Adamson stated that ‘Attestations were a key part of the supervisory toolkit although in response to concerns expressed by the industry, the FCA intended to communicate more clearly their purpose and use and would be putting in place Quality Assurance to ensure the use of Attestations was consistent’.
The consequences of signing an Attestation can be significant for the individual concerned. Any breach of an attestation can lead to criminal liability for the signatory, for example through providing false or misleading information either intentionally or recklessly or to a lesser extent committing fraud by false representation. If liable for the latter offence an individual may face a sentence of up to 10 years’ custody. It is important to be aware that the individual signatory may still be liable even after having left the company.
Although the use of Attestations is still in its infancy, the FCA is increasingly requiring companies to give these compliance guarantees and it is predicted there will be increased enforcement action taken in the coming months.
Due to the importance of understanding exactly what is required by the Attestation and the potential severity of the consequences for any individual following a breach, it is imperative that any individual or company who may have been approached by the FCA to sign an attestation obtains independent legal advice.
Slater and Gordon Lawyers have over 30 years experience and are acknowledged independently as leaders in this field. We can assist both individuals and businesses if:
- You have been requested to sign an FCA attestation
- You are under investigation by the FCA
- The FCA, or other enforcement agency, has brought proceedings against you.
Slater and Gordon offer a free initial consultation for business crime and regulatory issues and can assist businesses 24 hours a day 7 days a week. Please call freephone 0800 916 9054 or contact us online and we'll be happy to help.
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