DEPP 2.5 Provision for certain categories of decision

Some of the decisions referred to in DEPP 2 Annex 1 and DEPP 2 Annex 2 share similar characteristics. For convenience, DEPP 2.5 sets out some of these and the particular features they have.

The decision to give a warning notice and a decision notice in a particular matter will often not be taken by the same decision maker. Certain types of action require that the warning notice decision be taken by FSA staff under executive procedures and the decision notice decision be taken by the RDC. Similarly, in enforcement cases the RDC might take the decision to give a warning notice, but the decision to give a decision notice could be taken by the settlement decision makers on the basis that the person concerned does not contest the action proposed (see DEPP 5).

FSA staff under executive procedures will take the decision to give a warning notice if the FSA proposes to:

1. (1)

   refuse an application for a Part IV permission or to refuse an application to cancel a Part IV permission;

2. (2)

   impose a limitation or a requirement which was not applied for, or specify a narrower description of regulated activity than that applied for, on the grant of a Part IV permission;

3. (3)

   refuse an application to vary a Part IV permission, or to restrict a Part IV permission on the grant of a variation (by imposing a limitation or a requirement which was not applied for or by specifying a narrower description of regulated activity than that applied for);

4. (4)

   refuse approved person status;

5. (5)

   refuse an application for a small e-money issuer certificate (see ELM 8 (Small e-money issuers));

6. (6)

   refuse an application for variation or rescission of a requirement imposed on an incoming EEA firm.

If no representations are made in response to a warning notice proposing the action set out at DEPP 2.5.3 G within the period specified, a decision notice will be given accordingly: see DEPP 2.3.2 G (Default procedures).

If representations are made in response to a warning notice proposing the action set out at DEPP 2.5.3G (1), DEPP 2.5.3G (4) or DEPP 2.5.3G (5), then the RDC will take the decision to give a decision notice.

If representations are made in response to a warning notice proposing the action set out at DEPP 2.5.3 G DEPP 2.5.3G (2), DEPP 2.5.3G (3) or DEPP 2.5.3G (6), then the RDC will take the decision to give a decision notice if the action involves a fundamental change(see DEPP 2.5.8 G) to the nature of a permission. Otherwise, the decision to give the decision notice will be taken by FSA staff under executive procedures.

The RDC will take the decision to give a supervisory notice exercising the FSA's own initiative power (by removing a regulated activity, by imposing a limitation or requirement or by specifying a narrower description of regulated activity) if the action involves a fundamental change (see DEPP 2.5.8 G) to the nature of a permission. Otherwise, the decision to give the decision notice will be taken by FSA staff under executive procedures.

A fundamental change to the nature of a permission means:

1. (1)

   removing a type of activity or investment from the firm's permission; or

2. (2)

   refusing an application to include a type of activity or investment; or

3. (3)

   restricting a firm from taking on new business, dealing with a particular category of client or handling client money by imposing a limitation or requirement, or refusing an application to vary or cancel such a limitation or requirement; or

4. (4)

   imposing or varying an assets requirement (as defined in section 48(3) of the Act (Prohibitions and restrictions)), or refusing an application to vary or cancel such a requirement.

FSA staff under executive procedures will take the following statutory notice decisions:

1. (1)

   the refusal of an application for listing of securities;

2. (2)

   the suspension of listing on the FSA's own initiative or at the request of the issuer;

3. (3)

   the suspension of trading in a financial instrument;

4. (4)

   the discontinuance of listing of securities at the issuer's request;

5. (5)

   the exercise of any of the powers in sections 87K or 87L of the Act in respect of a breach of any applicable provision;

6. (6)

   the cancellation of a person's approval as a sponsor at the sponsor's request; and

7. (7)

   the refusal of an application by an issuer for cancellation of a suspension of listing made under section 77 of the Act.

The RDC will take statutory notice decisions relating to the discontinuance of listing of securities on the FSA's own initiative.

If securities have matured or otherwise ceased to exist the FSA will remove any reference to them from the official list. This is a purely administrative process, and not a discontinuance of listing in the sense used in Part 6 of the Act.

FSA staff will usually inform or discuss with the person concerned any action they contemplate before they recommend to the RDC that the FSA takes formal action. The FSA may also be invited to exercise certain powers by the persons who would be affected by the exercise of those powers. In these circumstances if the person concerned has agreed to or accepted the action proposed then the decisions referred to in DEPP 2.5.13 G will be taken by FSA staff under executive procedures rather than by the RDC.

The decisions referred to in DEPP 2.5.12 G are:

1. (1)

   the decision to give a supervisory notice pursuant to section 259(3), (8) or 9(b) (directions on authorised unit trust schemes); section 268(3), 7(a) or 9(a) (directions in respect of recognised overseas schemes); or section 282(3), (6) or (7)(b) (directions in respect of relevant recognised schemes) of the Act;

2. (2)

   the decision to give a warning notice or decision notice pursuant to section 280(1) or (2)(a) (revocation of recognised investment scheme) of the Act;

3. (3)

   the decision to give a supervisory notice in accordance with regulation 27(3), (8) or 9(b) of the OEIC Regulations;

4. (4)

   the decision to give a warning notice or decision notice pursuant to regulation 24 or regulation 28 of the OEIC Regulations;

5. (5)

   the decision to give a direction under section 42B(1) of the Building Societies Act 1986 that a building society transfers all its engagements to one or more other building societies or that it transfers its business to an existing company (under section 94 or section 97 respectively of the Building Societies Act 1986); and

6. (6)

   the decision to give a decision notice under section 93(6) of the Building Societies Act 1986 (permission for successor society on amalgamation) where the terms of the permission have been agreed with the successor building society.

In determining whether there is agreement to or acceptance of the action proposed, an indication by the following persons will be regarded as conclusive:

1. (1)

   in relation to an authorised unit trust, the manager and trustee;

2. (2)

   in relation to an ICVC, the directors and the depositary;

3. (3)

   in relation to a recognised scheme, the operator and, if any, the trusteeor depositary.

A decision to give a warning notice or decision notice refusing an application for an authorisation order declaring a unit trust scheme to be an AUT will be taken by the RDC only if the application is by an authorised fund manager who is not the operator of an existing AUT or ICVC. Otherwise, the decision to give the warning notice or decision notice will be taken by FSA staff under executive procedures.

A notice under section 264(2) of the Act (notification of non-compliance with UK law) relating to a collective investment scheme constituted in another EEA State is not a warning notice, but the FSA will operate a procedure for a section 264(2) notice which will be similar to the procedure for a warning notice.

The FSA expects to adopt a procedure in respect of notices under enactments other than the Act which is similar to that for statutory notices under the Act, but which recognises any differences in the legislative framework and requirements. DEPP 2 Annex 1 and DEPP 2 Annex 2 therefore identify notices to be given pursuant to other enactments and the relevant FSA decision maker.

Some of the distinguishing features of notices given under enactments other than the Act are as follows:

1. (1)

   Building Societies Act 1986, section 36A: There is no right to refer a decision to issue a prohibition order under section 36A to the Tribunal. Accordingly, a decision notice under section 36A(5A) is not required to give an indication of whether any such right exists. A decision notice under section 36A(5A) may only relate to the issue of a prohibition order under section 36A. Where such a decision notice is given, no final notice is required under section 390 of the Act and the FSA may issue the order at the same time as or after giving the decision notice. For the purposes of section 391 of the Act (Publication), the decision notice is treated as if it were a final notice.

2. (2)

   Building Societies Act 1986, section 93(6): The FSA notifies the successor of the permission by giving it a decision notice. The decision notice is not preceded by the giving of a warning notice. No final notice is required under section 390 of the Act and for the purposes of section 391 of the Act (Publication), the decision notice is treated as if it were a final notice. The giving of permission is treated for the purposes of section 55 of the Act (Right to refer matters to the Tribunal) as if it were the determination of an application made by the successor under Part IV of the Act. Part IX of the Act (Hearings and appeals) accordingly applies, but with the omission of section 133(9), which would otherwise prevent the FSA from giving the permission on the terms notified in the decision notice until after any reference and appeal.

3. (3)

   Friendly Societies Act 1992, section 58A1: The warning notice and decision notice must set out the terms of the direction which the FSA proposes or has decided to give and any specification of when the friendly society is to comply with it. A decision notice given under section 58A(3) must give an indication of the society's right, given by section 58A(5), to have the matter referred to the Tribunal. A decision notice under section 58A(3) may only relate to action under the same section of the Friendly Societies Act 1992 as the action proposed in the warning notice. A final notice under section 390 of the Act must set out the terms of the direction and state the date from which it takes effect. Section 392 of the Act is to be read as if it included references to a warning notice given under section 58A(1) and a decision notice given under section 58A(3).

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