The two regulators have today published proposals which they said would improve transparency and effectiveness in the process.

Robert Dedman, head of the regulatory action division at the Bank of England said: “It is crucial that the process for taking enforcement action against individuals or firms is clear, transparent and reasonable.

“The HMT Enforcement Review and Andrew Green’s report propose important enhancements to the PRA’s enforcement process which we have considered carefully. Today’s proposals are the first in a package of measures by which the PRA intends to meet those recommendations.”

The FCA proposes to amend the Enforcement Guide and the Decision Procedure and Penalties Manual to provide a framework and incentives for partly contested cases.

This would allow enforcement proceedings to be resolved when an individual or firm agrees all relevant facts and the breaches which arise from those facts, but wishes to contest the appropriate regulatory outcome before the Regulatory Decisions Committee.

The FCA is not proposing any changes to the process for agreeing a full resolution of all issues – facts, liability and penalty – which will continue to have a 30% discount applied to the penalty at Stage 1.

Mark Steward, director of enforcement and market oversight at the FCA, said: “It is important that people have confidence in the enforcement process and that it is used fairly, efficiently and effectively. We believe that our proposals will achieve the aim of the recommendations, which was to enhance the FCA’s capacity to deal with misconduct swiftly, fairly and robustly, and we welcome any comments on our approach to implementation.”

The PRA will consult separately on the recommendations dealing with settlement and contested decision-making, once the Bank of England and Financial Services Bill has passed through Parliament. The PRA plans to publish more detail about its enforcement process alongside its implementation of the other HMT Enforcement Review recommendations.