SFA Update: SFA confirms changes to penalty policy and enforcement rules

United Kingdom
In Board Notice 490 SFA has issued guidance to firms who are forced to deal, through agents, with undisclosed principals. This guidance is necessary given SFA's responsibility to ensure that the European directives on credit management and large exposures are complied with.

To ensure that firms are able to comply with good practice in relation to credit risk management, they should encourage agents to provide full disclosure whenever possible. To the extent that this cannot occur, SFA encourages firms to request the confidential disclosure of the principal's identity to the firm's credit and regulatory capital departments.

In addition, firms are encouraged to adopt a conservative approach to their large exposures responsibilities by, for example, taking a 100% capital charge against individual, undisclosed exposures, or by treating all undisclosed exposures as an exposure to a single counterparty.