Section 38430 Sep 2025 14:54
Key Aspects of Section 384
Regulatory Power: Section 384 empowers the FCA (or another appropriate regulator) to compel a financial firm to pay money to a fund for the benefit of those who suffered loss due to the firm's actions.
Purpose: Restitution: The goal is to provide restitution, or compensation, to investors who have been harmed by a firm's conduct.
Grounds for Action: The power can be exercised if:
An authorized person or recognized investment exchange breaches a relevant requirement.
A firm is knowingly involved in such a breach.
Profits resulted from the breach for the firm or another party.
One or more persons experienced loss or were otherwise negatively affected by the contravention.
Example Use Cases:
The FCA has used this power in cases of market abuse, requiring a firm to compensate investors for losses incurred due to the abuse.
In 2024, the FCA used Section 384 to require Link Fund Solutions Limited to pay restitution for losses in the LF Woodford Equity Income Fund, linking to breaches of its Principles for Businesses.
In essence, Section 384 is a crucial tool for the regulator to ensure that victims of serious regulatory breaches receive appropriate compensation.