Purpose of enforcement
In most circumstances, our policy and supervision functions are effective in achieving our purposes and objectives. However, the effectiveness of these functions depends on regulated entities knowing that we will take firm action where non-compliance is identified and risks are not being properly addressed. Where serious non-compliance is identified, our legislation allows us to take enforcement responses where appropriate. The enforcement responses available to us depend on the relevant legislation and include warnings, enforceable undertakings and civil/criminal proceedings. We will determine the appropriate response based on our enforcement approach and our Enforcement Framework.
Our Enforcement Framework provides guidance on how we act, or propose to act, in relation to our regulated entities, when using our enforcement discretion. The Enforcement Framework consists of several pieces of public guidance which should be read alongside each other to provide an understanding of our enforcement process.
Principles and Criteria
Our Principles and Criteria describe the fundamental considerations for the Enforcement Framework that we will work through and weigh when deciding on the appropriate enforcement response.
The enforcement principles are a set of values that guide the direction of our investigation and enforcement strategy and inform our approach to applying our enforcement discretion. Our 3 enforcement principles are:
The enforcement criteria are specific considerations which will be worked through and weighed against the available evidence when deciding on the appropriate enforcement response to non-compliance. Our 4 enforcement criteria are:
- seriousness of conduct
- public trust and confidence
Enforcement Guidelines outline our regulatory response model for enforcement and add further detail on how we apply the Enforcement Principles and Criteria when selecting the appropriate response.
Investigation Guidelines describe our approach to investigations and how we apply the Enforcement Principles and Criteria throughout the lifecycle of an investigation. The Investigation Guidelines also describe our use of information gathering powers under our legislation when used as part of an investigation.
We generally discover non-compliance with legal obligations through our supervision of our regulated entities. Employees of regulated entities may also report potential failures to us (known as ‘whistleblowing’).
How we have used our enforcement powers
Our Enforcement Register lists the enforcement actions we have taken, both in relation to entities we regulate and other organisations operating in the financial system.