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 non-public bodies.)
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 ECHR.
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