2.7.9 Other measures, including disqualification

The Financial Services Authority (FSA) can send best practice letters to listed companies and does so regularly. It can write public letters for disclosure breaches as it did in the cases of Eurodis Electron and Sportsworld.1 The FSA may suspend or cancel a stock exchange listing or issue penalties. The investigation is not public. The FSA did not punish the directors of RBS for their alleged mistakes in the acquisition of ABN AMRO.2 The FSA did say they would consider that these mistakes would have influence if these persons should aspire to new board positions in a bank.

There is also the measure of disqualification, which means that a director can be forbidden to act as director of any company for a period of 2 to 5 years. This often happens in the case of insolvency, e.g. all the directors of Barings were disqualified for 15 years.3 Of some 1,300 director disqualification orders made in 2004/5, over 1,100 followed an insolvency.4 In most cases this happens in small companies.

The Department of Business Investigation Services (BIS), formerly Business Enterprise and Regulatory Reform (BERR), and before that DIT, has the right to investigate companies.