MLR1PP11100 - Penalty Guidance: What to include in a pre-penalty notice: 1-5

A pre-penalty notice must consist of a standard covering letter, and a statement which explains in detail how the proposed penalty has been calculated, and the reasons for the penalty, unless:

• The penalty has been reduced to nil
• The penalty is for a registration breach

This statement will also form part of the penalty notice so it is important that it contains all the following details. The format of the examples in this guidance should be followed as closely as possible to ensure consistency. The exception is pre-registration penalty notices which do not require points 4,5,6,7 and 14.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000). (This text has been withheld because of exemptions in the Freedom of Information Act 2000)

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

Details which should be included 1 to 5:

1. Details of the Regulations that have been breached. This must state the Regulations which have been breached and the requirements of the Regulations.
2. Details of how we concluded that the Regulations were breached. This should explain what the business failed to do and how this has been identified. Reference should also be made to any advice given in warning letters or at earlier Compliance Visits.
3. Details of the period when the breaches took place (the relevant period). This must state the relevant period for each breach. If it is rounded down to a specific number of months for penalty purposes this should also be explained.
4. Details of the culpable turnover for the relevant period (MSBs and HVDs). When the starting penalty is based on the culpable turnover, and is not clearly subject to the penalty cap, the notice must state the culpable turnover. If the penalty has not been calculated separately for each breach, it should be the total of the culpable turnover for each breach. Care should be taken to ensure that the same slice of culpable turnover has not been included for each breach, and this should be explained in the notice. When the starting penalty has been calculated separately for each breach, the culpable turnover for each breach must be stated separately. There is no need to include details of the culpable turnover if the starting penalty based on culpable turnover is clearly in excess of the penalty cap. If the figures are close then it may be beneficial to include both calculations for clarification.
5. Details of how we arrived at this figure. When details of the culpable turnover have been included, the notice must include a full explanation about how the figure or figures (where the penalties are calculated separately) have been arrived at. When the details have been provided by the business and these have been verified by us, this should be explained in the notice. If a determination of this figure has been made full details of the basis for the determination should be included, together with any figures that have been used from an earlier period, and any adjustments that have been made to these figures.