The Human Rights Act 1998 (the Act), in force since October
2 2000, requires UK courts to apply the European Convention on
Human Rights (ECHR) to actions of public authorities. (It is
possible that courts may widen the application of the
Convention to encompass private rights of action between
As a result, the Act may have an impact on the enforcement
of the financial services regulatory regime in the UK under the
Financial Services Act 1986 (FSAct), and the Financial Services
and Markets Act 2000 (FSMA), which will replace the FSAct and
is set to be implemented in 2001.
The Convention provides several guarantees of human rights,
including the right to a fair trial in the determination of
civil rights and obligations or criminal charges. The
Convention prescribes minimum rights for those charged with a
criminal offence, including the presumption of innocence, the
right to examine witnesses and the right to receive full
disclosure of the nature and cause of the accusation.
The disciplinary powers under the existing regulatory regime
and that proposed by the FSMA may be inconsistent with the
ECHR. For example, the enforcement powers at present allow the
Financial Services Authority (FSA) to apply to a court for
injunctions and restitution orders based on the civil standard
of proof only; and the FSMA will bestow a wide power on the FSA
to impose a non-criminal penalty "of such amount as it
considers appropriate" on a person who has engaged in "market
abuse" (section 123).
Enforcement proceedings under the FSMA do not provide
protection against self-incrimination, and the FSA is required
to apply only the civil standard of proof, instead of the
standard of evidence required in criminal proceedings.
If the courts decide that the civil penalties under the
regime or that of the FSMA are criminal in nature, then the
full protection of Article 6 of the ECHR may apply to those
proceedings, requiring the defendant to be provided with the
protections afforded to the accused in criminal trials.
The FSMA does provide for a multi-stage process before
making an adverse decision, and for the establishment of an
independent administrative tribunal to hear appeals from
adverse decisions. However, it remains to be seen whether the
courts will consider these administrative procedures to be
sufficient to meet the level of protection required by the