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Howard Davies, chairman of the nascent Financial Services Authority (FSA), has defended his proposed enforcement regime in the wake of criticism from Clifford Chance (CC).The FSA, as currently envisaged, will rely on Chinese walls to keep its operational staff, the investigators and prosecutors, separate from the enforcement committee that will rule on disciplinary matters.But in its submission to the FSA’s consultation on the make-up of the new body, CC calls for a statutory division between its prosecution and disciplinary functions.“The proposals in the Bill do place a significant amount of power in the hands of the authority,” conceded Davies in a speech to the Chancery Bar Association the day after CC’s 30-page submission to the authority landed on his desk.“The Government’s position is that we should have the power to fine, with no upper limit, and the power to disqualify individuals from conducting authorised business.“It is therefore vital that our procedures incorporate safeguards to ensure fairness, efficiency and effectiveness in our internal decision making.” But he added: “We must seek to avoid unnecessary expense from the public purse.”George Staple, senior CC partner and former head of the Serious Fraud Office, said the new model could still be seen as unfair as the FSA would act as prosecutor and judge. The firm wants a statutory division between the two functions.

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