EN-1.1 EN-1.1 The Agency's approach to enforcement
EN-1.1.1
The Agency favours an open, pragmatic and collaborative relationship with its licensees, within the boundaries set by the law and BMA regulations. Whilst the Agency wishes to avoid a legalistic and confrontational style of supervision, it believes that effective supervision requires effective enforcement of its requirements. Should licensees fail to cooperate, then the Agency will use the means described in this module to achieve compliance.
EN-1.1.2
In the Agency's view, it is generally neither practical nor effective to prescribe in detail the exact regulatory response for each and every potential contravention. There are a large number of potential contraventions. Moreover, individual circumstances are unlikely to be identical in all cases, and may warrant different responses.
EN-1.1.3
In deciding any given regulatory response, the Agency will nonetheless consistently assess the individual circumstance of each contravention against the principles described in this module. The Agency's overall approach is to take into account:
(a) the seriousness of the contravention concerned (including the risks posed to the licensee's customers and other market participants);(b) the compliance track record of the licensee concerned (including the extent to which the contravention reflects systemic weaknesses or reckless behaviour); and(c) which measures are most likely to achieve the desired result of remedying the contravention.EN-1.1.4
Such an approach reduces the risk of inappropriate enforcement actions, by allowing regulatory measures to be tailored to individual circumstances. By taking into account a licensee's compliance record and attitude, it also creates positive incentives and encourages an open and collaborative approach. By assessing individual cases against the same broad principles, the Agency also aims to achieve an overall consistency in its regulatory actions.
EN-1.1.5
Underlying the Agency's approach outlined in paragraph EN-1.1.3 is the fundamental principle of proportionality. The enforcement measures contained in this module are of varying severity, and will be used accordingly in keeping with the Agency's assessment of the contravention. Thus, the Agency will reserve its most serious enforcement measures — such as cancellation of license or withdrawal of "fit and proper" status — for the most serious contraventions.
EN-1.1.6
In keeping with the proportionality principle, and to the extent consistent with the Agency's enforcement approach in paragraph EN-1.1.3, the Agency will usually opt for the least severe of appropriate enforcement measures. In most cases, the Agency expects to use a Formal Notice before resorting to more severe measures; the need for further measures will then usually be dependent on the response of the licensee or individual concerned.
EN-1.1.7
Where a significant element of judgment is required to assess compliance with a requirement, then the Agency will usually discuss the matter with the licensee or individual concerned, before using one of this module's enforcement mechanisms. This is likely to be the case, for example, with respect to requirements for adequate systems and controls. Conversely, where there are clear-cut contraventions of the BMA's requirements, then the Agency will usually move immediately to one or more of the enforcement mechanisms outlined in this module. This is more likely to occur in cases where quantitative requirements — such as those relating to capital and/or large exposures — are concerned. In most such cases, though, the Agency also expects to continue an active dialogue with the licensee or individual concerned, aimed at remedying the contravention.
EN-1.1.8
Except in the limited circumstances outlined below, the Agency will usually only apply an enforcement measure after the licensee or person concerned has been given a suitable opportunity to make representations. In the case of measures described in chapters EN-8 to EN-10, certain procedures are set out in the 1973 BMA Decree — Law No. (23) of 1973.
