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    2006-07-07

SIFA 12.1 Reporting requirements

SIFA 12.1.1 G

We need timely and accurate information from firms so that we can carry out our required duties under FSMA. You are required to send some information as regular reports and some as notifications if and when a particular event occurs. You may be subject to enforcement action if you fail to submit the returns on time (ENF 13.5).

SIFA 12.1.2 G

We are able to build up a picture of firms' circumstances and behaviour by receiving regular reports and the information also helps us to identify where a firm or sector may be experiencing a particular problem.

SIFA 12.1.3 G

This is in line with Principle 11 (Relations with regulators) that requires a firm to deal with the FSA in an open and co-operative way and to disclose anything relating to the firm that we would reasonably expect notice of, and also Principle 4 (financial prudence).

Submission of reports

SIFA 12.1.4 G

The table below highlights the reports that your firm must send to us each year after 1 April 2005 - see SUP transitional provisions (SUP TP 1.1 12B) for details of your first reporting date. Firms that are required to submit an RMAR (Retail Mediation Activities Return) must do so by electronic means made available by FSA (SUP 16.7.6A R).

Report

Frequency report is required

Relevant section in the Handbook

Method of Reporting

RMAR

Adequate information relating to the following activities

  • Insurance mediation
  • mortgage mediation
  • retail investment

Half yearly - 30 business days after reporting period end. The reporting periods are the six months following and the six months preceding the firm's accounting reference date.

SUP 16.7.76 R

via Firms Online

Complaints report

Half yearly - 30 business days after reporting period end. The reporting periods are the six months following and the six months preceding the firm's accounting reference date.

A nil return is required.

DISP 1.5.6 R

Via Firms Online (see chapter 11.2)

SIFA 12.1.5 G

The information that we are requesting from firms in the RMAR includes:

  • financial (balance sheet, profit and loss account, client money and assets, regulatory capital, PII);
  • threshold conditions (resources, close links, approved persons, controllers);
  • training and competence (number of staff, advisers and supervisors);
  • conduct of business (sources of business, advertising, commission clawed back);
  • product sales data (data on sales of general insurance products); and
  • fees information.

Frequency and Timing of returns

SIFA 12.1.6 G

Generally firms will be required to submit returns to us electronically every six months. However the following exceptions apply.

  • For the first year after the requirements are implemented we do not require smaller firms to submit financial information at their half-year end (i.e. for the six month period following their accounting reference date). This will give these firms more time to adapt to the requirements. However they must still submit the remaining RMAR sections half-yearly. For this purpose, we have defined small firms as those with an annual income of £60,000 or less.
  • Larger firms will be required to report financial information quarterly. Larger firms are those with an annual income of more than £5 million.

SIFA 12.1.7 G

Firms are required to collect data from 1 April 2005 and report it twice each year based on the firm's accounting reference date (ARD). You will have to submit data to cover the two six-month periods before and after your firm's ARD. We require the information within 30 business days of the end of each period.

SIFA 12.1.8 G

For example, if a firm has an ARD of 31 December, it must report twice a year based on the following periods:

  • 1 January - 30 June, and
  • 1 July - 31 December.

A firm with an ARD of 31 March would have the following reporting periods:

  • 1 April - 30 September, and
  • 1 October - 31 March.

SIFA 12.1.9 G

As the reporting requirements do not come into effect until 1 April, the first reporting period may be less than a full six month period for some firms. For example, one of the returns for a firm with an ARD of 31 December would normally cover the period from 1 January - 30 June. However, the first return will cover the period from 1 April 2005 to 30 June 2005 only. You will be able to view your firm's submission timetable by accessing the reporting timetable on the Firms Online system from July 2005. You can access Firms Online at: www.fsa.gov.uk/Pages/Doing/Regulated/Firms/Index.shtml

SIFA 12.1.10 G

We will require the information within 30 business days of the end of each period. The reporting requirements are subject to strict time limits under our rules. If firms do not meet these time limits, we are proposing to charge firms an administration fee of £250.

Where Will You Find The Reports

SIFA 12.1.11 G

You will find the reports on our website under Integrated Regulatory Reporting. The IRR homepage is: www.fsa.gov.uk/Pages/Doing/Regulated/Returns/IRR/index.shtml

Other Reports

SIFA 12.1.12 G

You may also need to submit the following reports:

Report

Frequency report is required

Relevant section in the Handbook

Method of reporting

Pension transfer and opt-outs

Every six months - no specific start date.

  • A nil return not required.
  • There are related quarterly reports required.

COB 5.3.26 R (1) and COB 5.3.26 R (1A)

No standard form - please write to us

Pension Transfer and Opt-Out Report

SIFA 12.1.13 G

You will need to notify us every six months in writing of the number of pension opt-out and pension transfer transactions that you arranged during the previous six months. There is no specified start date but you would need to send us details every six months after your first report - unless there have not been any such arrangements.

SIFA 12.1.14 G

There are also related quarterly reports, which may apply to you. There are further details in COB 5.3.26 R.

SIFA 12.1.15 G

You are required to keep records indefinitely of any notifications of pension transfer and opt-out transactions required by COB 5.3.26 R (1) and COB 5.3.26 R (1A).

Where are the relevant Handbook sections?

SIFA 12.1.16 G

The following sections of the Handbook are relevant:

  • notifications to the FSA: SUP 15; and
  • reporting to the FSA: SUP 16.

How do you submit the reports to us?

SIFA 12.1.17 G

The RMAR must be submitted electronically via Firms Online. Each firm's return will be generated on the day following the end of the reporting period. The firm has 30 business days to complete and submit it.

SIFA 12.1.18 G

You may be required to send other reports to us in a particular way. However, the following methods may usually be used:

  • email;
  • post;
  • hand delivery; or
  • fax - (if you deliver by fax you must also send the report by one of the methods above within five working days, depending on the particular requirement for the report).

Other issues

SIFA 12.1.19 G

You should consider whether the following reporting requirements are relevant to your firm where it holds client money or assets:

  • SUP 3.10 details when an auditor would need to submit a client assets report.
  • You should also check the notification requirements in CASS Sch 2.

The following sections are also relevant:

'Complaints reporting to the FSA' - Chapter 11.2

'Notifications' - Chapter 12.2

PRIN 2.1 in the Handbook

If you do mortgage or general insurance business you should also refer to MIGI 11 .

SIFA 12.2 Notifications

SIFA 12.2.1 G

Your firm must make notifications in certain circumstances. The main circumstances are listed below.

A. Matters having a serious regulatory impact:

Your firm must let us know immediately when it becomes aware, or has information that reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

1.

If your firm fails to satisfy one or more of the threshold conditions (see paragraph 6.3.1 of the Guide).

2.

Any matter that could have a significant adverse impact on your firm's reputation.

3.

Any matter that could affect your firm's ability to continue providing adequate services to customers and which could result in serious detriment to a customer of the firm.

4.

Any matter in respect of your firm that could result in serious financial consequences to the financial system or to other firms.

B. Communications with us in line with Principle 11:

Compliance with Principle 11 includes but is not limited to giving the FSA notice of:

1. Any proposed restructuring, reorganisation or business expansion, which could have a significant impact on your firm's risk profile or resources, including but not limited to:

Starting to provide a new product or service (you may need to apply for a variation of Part IV permission).

Ceasing to undertake a regulated or ancillary activity, or significantly reducing the scope of such activities. (You may need to apply for a variation of Part IV permission).

Entering into, or significantly changing, a material outsourcing arrangement.

Any change in your firm's prudential category.

2. Any significant failure of your firm's systems or controls (including those reported to your firm by your auditor - if applicable).

3. Any action that your firm proposes to take which would result in a material change in its capital adequacy or solvency including, but not limited to:

Any action that would result in a material change in your firm's financial resources or financial resources requirement.

A material change resulting from the payment of a special or unusual dividend or the repayment of share capital or a subordinated loan.

4. Significant breaches of rules or other requirements under FSMA.

C. There are certain pieces of core information where we need you to give us reasonable advance notice if there is going to be a change:

Notification

Supervision sourcebook (SUP) reference

A change in your firm's name.

SUP 15.5.1 R

A change in address (to the principal place of business).

SUP 15.5.4 R

A change to the legal status of your firm.

(You may be required to send us a new application for Part IV permission).

SUP 15.5.5 R

A change to supervision by an overseas regulator.

SUP 15.5.7 R

D. General notification requirements:

Notification

Supervision sourcebook (SUP) reference

Breaches of rules and other requirements in or under FSMA.

SUP 15.3.11 R

Civil, criminal or disciplinary proceedings against a firm.

SUP 15.3.15 R

Fraud, errors and other irregularities.

SUP 15.3.17 R

Insolvency, bankruptcy and winding up.

SUP 15.3.21 R

E. Other notification requirements:

Notification

Handbook reference

Change of accounting reference date.

SUP 16.3.17 R

Change of controller.

SUP 11.3

Approved persons: employees who start performing controlled functions (CFs), those who change or add CFs or those who cease performing CFs.

(There are standard forms to use called 'Approved persons regime forms').

SUP 10.11 - SUP 10.13

Change of auditor.

SUP 3.3

Financial issues, such as professional indemnity insurance cover being refused or cancelled.

IPRU(INV) 13.1.9 R

When should you notify us?

SIFA 12.2.2 G

If a notification rule requires you to send a notification within a specified period, you must send it in time for us to receive it before the end of the period. If the end of the period falls on a weekend or bank holiday, you must make sure it is received no later than the first business day after the end of the period. If a notification rule does not require notification within a specified period, then your firm should act reasonably in deciding when to notify us.

How do you notify us?

SIFA 12.2.3 G

You must send a notification in writing stating your firm's FSA Reference Number (unless stated otherwise in the notification rule).

SIFA 12.2.4 G

You should have regard to the urgency and significance of the matter. You may need to contact your normal supervisory contact by telephone (or other prompt means of notification) before writing to us.

SIFA 12.2.5 G

As stated above, you should normally give or send a notification for the attention of your firm's usual supervisory contact, unless otherwise stated (SUP 15.7.4 R). Normally this will be the Firms Contact Centre.

SIFA 12.2.6 G

Through Firms Online you can access the forms to send us information quickly and reliably. There are electronic forms available for standing data, appointed representatives and other notifications.

Where are the relevant Handbook sections?

SIFA 12.2.7 G

The following Handbook sections are relevant:

  • notification requirements: SUP 15;
  • the methods of delivery: SUP 15.7.5 R; and
  • notifications required for particular products or services: SUP 15.8.

Other considerations

SIFA 12.2.8 G

You must take reasonable steps to ensure that all the information your firm sends to us is accurate, truthful, complete and not misleading.

SIFA 12.2.9 G

Firms registered for Firms Online are able to see and update their standing data electronically. Standing data includes such information as address, contact details, regulated activities, auditors and accounting reference date. From 1 July 2005 firms will be required to check the data that we hold about them once a year and to let us know via Firms Online if any changes are required within 30 business days of the firm's accounting reference date.

SIFA 12.2.10 G

If we do not have accurate information about your firm, we may not be able to calculate your fees accurately - for example, if we have inaccurate information on your regulated activities or number of approved persons.

The following sections are also relevant:

'Authorisation' - Chapter 6

'Complaints reporting to the FSA' - Chapter 11.2

'Reporting requirements' - Chapter 12.1

Threshold Conditions sourcebook (COND)

PRIN 2.1 in the Handbook

If you do mortgage or general insurance business you should also refer to MIGI 11 .

SIFA 12.3 Change of controller

SIFA 12.3.1 G

To monitor, and in some cases give prior approval to, a firm's controllers we must receive the information we need from firms. We also need to monitor the impact of any significant change in the circumstances of one or more of a firm's controllers - for example, in their financial standing. The full definition of 'controller' may be found in the Handbook Glossary. Broadly, it includes anyone with a shareholding of 10% or more or anyone who is able to exercise significant influence over the management of the firm.

SIFA 12.3.2 G

SUP 11 covers controllers and close links and applies to every firm apart from partnerships and sole traders. SUP 11.3 sets out the information which a controller must give us before becoming a controller or increasing the level of control held. The rules in SUP 11.4 to SUP 11.6 cover the notification requirements on firms. SUP 11.8 and SUP 11.9 require firms to notify us of changes in the circumstances of existing controllers and of changes in their close links.

SIFA 12.3.3 G

When an individual or corporate body is purchasing shares which take their holding over 10% of the shares in the firm, Part XII of FSMA requires the new controller to complete and submit a Controllers Form A. A change in control also occurs when an existing controller increases or decreases control through levels of 20%, 33% or 50% (SUP 11.3.7 D to SUP 11.3.9 D).

SIFA 12.3.4 G

If the proposed new controller is an individual they must also complete a Controllers Form B for approval. If the proposed new controller is a corporate body then the chief executive and one other director are each required to complete a Controllers Form B (SUP 11.3.7 D to SUP 11.3.9 D). These may not be required if these persons are approved persons who have completed an Approved Persons Form A within the previous 12 months.

SIFA 12.3.5 G

New controllers and increases in control through one of the above thresholds need to be approved by us before they happen. Applications should be submitted within 14 days of parties becoming aware of the planned change. Approval must be sought from us in advance of the change and can take up to three months. You can submit change in control forms using Firms Online.

SIFA 12.3.6 G

Should approval be granted, the new controller must also notify us when the change of control actually takes place (SUP 11.3.16 G).

SIFA 12.3.7 G

Firms are also required to notify a change in control (SUP 11.4.2 R). The rules about the content and timing of the notification are at SUP 11.4.7 R. A firm must also notify us when a change in control which was notified has actually taken place (SUP 11.6.4 R).

SIFA 12.3.8 G

In some cases separate notifications from both a firm and its controller would duplicate documentation. So we permit joint and shared notifications from both the firm and the controller (SUP 11.5.8 G to SUP 11.5.10 G and SUP 11.6.6 G).

SIFA 12.4 Change in legal entity

SIFA 12.4.1 G

FSA authorisation and the scope of permission granted attaches to each firm (the legal entity) individually. When a new firm is formed, it is a different legal entity and it is not possible for authorisation to move to the new firm. The new firm must apply for authorisation. There is a Simple Change of Entity Application Pack for use when the new firm is substantially the same as the old e.g. same staff and permission. This is available from our website.

SIFA 12.4.2 G

In the case of a two person partnership, if one partner leaves then the partnership is dissolved. If the firm wishes to continue in business the remaining partner will need to apply for authorisation as a sole trader. Other changes involving partners leaving a partnership could also result in a firm having to reapply for authorisation - such changes should be discussed with your usual supervisory contact.