EG 8.6 3Exercising the power under section 55Q to vary or cancel a firm’s Part 4A permission or to impose requirements on a firm in support of an overseas regulator: the FCA’s policy

3The FCA has a power under section 55Q to vary, or alternatively cancel, a firm’s Part 4A permission, or to impose requirements on a firm, in support of an overseas regulator. Section 55Q(4), (5) and (6) set out matters the FCA may, or must, take into account when it considers whether to exercise these powers. The circumstances in which the FCA may consider varying a firm’s Part 4A permission or imposing requirements in support of an overseas regulator depend on whether the FCA is required to consider exercising the power in order to comply with a Community obligation. This reflects the fact that under section 55Q, if a relevant overseas regulator acting under prescribed provisions has made a request to the FCA for the exercise of its own-initiative power to vary or cancel a Part 4A permission or to impose requirements, the FCA must consider whether it must exercise the power in order to comply with a Community obligation.

3Relevant Community obligations which the FCA may need to consider include those under the Capital Requirements Directive, the Solvency II Directive1, the Investment Services Directive/Markets in Financial Instruments Directive,2 the Insurance Mediation Directive and the Market Abuse Regulation2. Each of these legislative acts2 imposes general obligations on the relevant EEA competent authority to cooperate and collaborate closely in discharging their functions under the legislative acts2 .

3The FCA views this cooperation and collaboration as essential to effective regulation of the international market in financial services. It will therefore exercise its own-initiative powers wherever:

1. (1)

   an EEA Competent authority requests it to do so; and

2. (2)

   it is satisfied that the use of the power is appropriate (having regard to the considerations set out at paragraphs 8.2.1 to 8.2.6) to enforce effectively the regulatory requirements imposed under the Single Market Directives or other Community obligations.

3The FCA will actively consider any other requests for assistance from relevant overseas regulators (that is requests in relation to which it is not obliged to act under a Community obligation). Section 55Q, which sets out matters the FCA may take into account when it decides whether to vary or cancel a firm’s Part 4A permission or to impose requirements on a firm in support of the overseas regulator, applies in these circumstances.

3Where section 55Q(5) applies and the FCA is considering whether to vary a firm's Part 4A permission or to impose requirements on a firm, it may take account of all the factors described in paragraphs 8.6.1 to 8.6.8 but may give particular weight to:

1. (1)

   the matters set out in paragraphs (c) and (d) of section 55Q(5) (seriousness, importance to persons in the United Kingdom, and the public interest); and

2. (2)

   any specific request made to it by the overseas regulator to impose requirements or to vary, rather than cancel, the firm's Part 4A permission.

3The FCA will give careful consideration to whether the relevant authority's concerns would provide grounds for the FCA to exercise its own-initiative powers to vary, impose requirements or cancel if they related to a UK firm. It is not necessary for the FCA to be satisfied that the overseas provisions being enforced mirror precisely those which apply to UK firms. However, the FCA will not assist in the enforcement of regulatory requirements or other provisions that appear to extend significantly beyond the purposes of UK regulatory provisions.

3Similarly, the FCA will not need to be satisfied that precisely the same assistance would be provided to the United Kingdom in precisely the same situation. However, it will wish to be confident that the relevant authorities in the jurisdiction concerned would have powers available to them to provide broadly similar assistance in aid of UK authorities, and would be willing properly to consider exercising those powers. The FCA may decide, under section 55Q(6), not to exercise its own-initiative powers to vary or cancel in response to a request unless the regulator concerned undertakes to make whatever contribution towards the cost of its exercise the FCA considers appropriate.

3Paragraphs 8.4.2 and 8.4.4 set out some examples of limitations and requirements the FCA may impose when exercising its section 55Q powers.