SUP 15.11 Notification of COCON breaches and disciplinary action1
Reasons for making a notification to the FCA
1Under section 64A of the Act, the FCA may make rules about the conduct of approved persons and persons who are employees of relevant authorised persons.
COCON sets out rules and guidance about the conduct of conduct rules staff.
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Under section 64C of the Act, a firm must notify the FCA if it takes disciplinary action against any conduct rules staff and the reason for this action is a reason specified in rules made by the FCA in SUP 15.11.6R.
Disciplinary action is defined in section 64C of the Act as the issuing of a formal written warning, the suspension or dismissal of a person who is a member of a relevant authorised person's conduct rules staff or the reduction or recovery of any of such person's remuneration.
A firm should make a separate notification about a person under section 64C of the Act where:
If, after a firm has made a notification for a person (A) pursuant to section 64C of the Act,2 it becomes aware of facts or matters which cause it to change its view that A has breached COCON, or cause it to determine that A has breached a provision of COCON other than the provision to which the notification related, the firm should inform the FCA of those facts and matters and its revised conclusion in line with a firm’s obligation to comply with Principle 11, SUP 15.6.4R and, if applicable, SUP 10C2.
If a firm takes disciplinary action as a result of a conduct breach (see SUP 15.11.6R) against an employee but the employee has appealed or plans to appeal, the firm should still report the disciplinary action under section 64C of the Act but should include the appeal in the notification. The firm should update the FCA on the outcome of any appeal.2
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Timing and form of notifications: SMF managers
Where a firm is required to notify the FCA pursuant to2 section 64C of the Act and that notification relates to an SMF manager, SUP 10C sets out how and when the notification must be made, and the relevant notification rules in SUP 10C apply.
Timing and form of notifications: certification employees and other conduct rules staff
A firm must make any notifications required pursuant to2 section 64C of the Act relating to a certification employee or other conduct rules staff annually. That notification should be made in October each year and cover the year up to the first day of that month.
A firm must make any notifications required pursuant to2 section 64C of the Act relating to a certification employee or other conduct rules staff on Form H (SUP 15 Annex 7R).
A firm must make notifications pursuant to2 section 64C of the Act relating to a certification employee or other conduct rules staff in accordance with the rules and guidance in SUP 15.7.
General guidance on notifications of rule breaches and disciplinary action
A firm is not required to submit nil return notifications pursuant to section 64C of the Act2.
When considering whether to make a notification pursuant to2 section 64C of the Act, a firm should also consider whether a notification should be made under any notification rules, including, without limitation, any notification rules that require a notification to be made to the PRA.
The obligations to make a notification pursuant to2 section 64C of the Act apply notwithstanding any agreement (for example a 'COT 3' Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS)) or any other arrangements entered into by a firm and an employee upon termination of the employee's employment. A firm should not enter into any such arrangements or agreements that could conflict with its obligations under this section.
Failing to disclose relevant information to the FCA may be a criminal offence under section 398 of the Act.