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SUP 15.1 Application

Who?

SUP 15.1.1 G RP

This chapter applies to every firm except that:

  1. (1)

    only SUP 15.10 applies to2 an ICVC or a UCITS qualifier; and3

  2. (2)

    SUP 15.3.22 D to SUP 15.3.25 D apply only to the Society.3

SUP 15.1.2 R RP

The application of this chapter to an incoming EEA firm or an incoming Treaty firm is set out in SUP 15 Annex 1.

SUP 15.1.3 G RP

In some cases, the application of provisions set out in SUP 15 Annex 1 depends on whether responsibility is reserved to a Home State regulator. SYSC App 1 contains guidance on this.

What?

SUP 15.1.4 R RP

This chapter:

  1. (1)

    applies with respect to the carrying on of both regulated activities and unregulated activities; and

  2. (2)

    takes into account any activity of other members of a group of which the firm is a member.

Where?

SUP 15.1.5 G RP

Firms are reminded that, unless expressly stated otherwise, where a rule or guidance includes a reference to a firm this includes all UK and overseas branches and representative offices of that firm, whether or not those branches or offices carry on any regulated activities.4

4
SUP 15.1.6 R RP

4This chapter does not apply to an incoming ECA provider acting as such.

SUP 15.2 Purpose

SUP 15.2.1 G RP

A firm is required to provide the FSA with a wide range of information to enable the FSA to meet its responsibilities for monitoring the firm's compliance with requirements imposed by or under the Act. Some of this information is provided through regular reports, including those set out in SUP 16 (Reporting requirements) and SUP 17 (Transaction reporting). In addition, other chapters in the Handbook set out specific notification and reporting requirements. Principle 11 includes a requirement for a firm to disclose to the FSA appropriately anything relating to the firm of which the FSAwould reasonably expect notice.

SUP 15.2.2 G RP

This chapter sets out:

  1. (1)

    guidance on the type of event or change in condition which a firm should consider notifying in accordance with Principle 11; the purpose of this guidance is to set out examples and not to give comprehensive advice to firms on what they should notify in order to be in compliance with Principle 11;

  2. (2)

    rules on events and changes in condition that a firm must notify; these are the types of event that the FSA must be informed about, usually as soon as possible, if it is to be able to carry out its monitoring function effectively and react in good time to developments that may require a regulatory response;

  3. (3)

    rules on the core information that a firm must provide to the FSA, for example its name and address and the names of its other regulators, so that the FSA is able to maintain a relationship with the firm and with those regulators;

    1
  4. (4)

    rules requiring a firm to ensure that information provided to the FSA is accurate and complete; section 398 of the Act makes it an offence knowingly or recklessly to provide the FSAwith information which is false or misleading in a material particular, in purported compliance with any requirement imposed by or under the Act; the purpose of the rules in SUP 15.6 is to ensure that firms take due care to ensure the accuracy of information and to require them to ensure that information is not only accurate but also complete; and1

    1
  5. (5)

    material (in SUP 15.10 (Notification of suspicious transactions (market abuse))) to implement the provisions of the Market Abuse Directive for the reporting of transactions about which there is reasonable suspicion of market abuse.1

SUP 15.2.3 G RP

Rules and guidance have also been included to set out how firms should make a notification and to determine when it may be appropriate to discuss matters with their usual supervisory contact by telephone (SUP 15.7).

SUP 15.2.4 G

Schedule 2 contains a consolidated summary of all the notification rules applicable to firms set out in the Handbook.

SUP 15.3 General notification requirements

Matters having a serious regulatory impact

SUP 15.3.1 R RP

A firm must notify the FSA immediately it becomes aware, or has information which reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

  1. (1)

    the firm failing to satisfy one or more of the threshold conditions; or

  2. (2)

    any matter which could have a significant adverse impact on the firm's reputation; or

  3. (3)

    any matter which could affect the firm's ability to continue to provide adequate services to its customers and which could result in serious detriment to a customer of the firm; or

  4. (4)

    any matter in respect of the firm which could result in serious financial consequences to the UK financial system8 or to other firms.

    8
SUP 15.3.2 G RP

The circumstances which may give rise to any of the events in SUP 15.3.1 R are wide-ranging and the probability of any matter resulting in such an outcome, and the severity of the outcome, may be difficult to determine. However, the FSA expects firms to consider properly all potential consequences of events.

SUP 15.3.3 G RP

In determining whether an event that may occur in the foreseeable future should be notified to the FSA, a firm should consider both the probability of the event happening and the severity of the outcome should it happen.

SUP 15.3.4 G RP

Guidance on satisfaction of the threshold conditions is given in COND.

SUP 15.3.5 G RP

A firm making a notification in accordance with SUP 15.3.1 R should consider the guidance in SUP 15.7.2 G and notify the FSA by telephone if appropriate.

SUP 15.3.6 G

An insurer or friendly society making a notification under SUP 15.3.1 R (1) relating to satisfaction of threshold condition 4 (Adequate resources) should be aware of the requirements in SUP App 2 (Scheme of operations).

Communication with the FSA in accordance with Principle 11

SUP 15.3.7 G RP

Principle 11 requires a firm to deal with its regulators in an open and cooperative way and to disclose to the FSAappropriately anything relating to the firm of which the FSA would reasonably expect notice. Principle 11 applies to unregulated activities as well as regulated activities and takes into account the activities of other members of a group

SUP 15.3.8 G RP

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

  1. (1)

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

    1. (a)

      setting up a new undertaking within a firm'sgroup, or a new branch (whether in the United Kingdom or overseas); or

    2. (b)

      commencing the provision of cross border services into a new territory; or

    3. (c)

      commencing the provision of a new type of product or service (whether in the United Kingdom or overseas); or

    4. (d)

      ceasing to undertake a regulated activity or ancillary activity, or significantly reducing the scope of such activities; or

    5. (e)

      entering into, or significantly changing, a material outsourcing arrangement (a bank1,7 a building society and a dormant account fund operator7should also see 1SYSC 3.2.4 G and4S+YSC 83, and an insurer should also see SYSC 13.94 for further details); or

      3413141
    6. (f)

      a substantial change or a series of changes in the governing body of an overseas firm (other than an incoming firm); or

    7. (g)

      any change to the firm's prudential category or sub-category, as used in the Interim Prudential sourcebooks and SUP and on which guidance is given in SUP App 1; or2

    8. (h)

      any proposed change which limits the liability of any of the members or partners of a firm such as a general partner becoming a limited partner or re-registration as a limited liability company of a company incorporated with unlimited liability;2or7

    9. (i)

      in relation to a dormant account fund operator, notify the FSA when the operator intends to rely on a third party for the performance of operational functions which are critical or important for the performance of relevant services and activities in connection with operating a dormant account fund on a continuous and satisfactory basis;7

  2. (2)

    any significant failure in the firm's systems or controls, including

    those reported to the firm by the firm's auditor;

  3. (3)

    any action which a firm proposes to take which would result in a material change in its capital adequacy or solvency, including, but not limited to:

    1. (a)

      any action which would result in a material change in the firm's financial resources or financial resources requirement; or

    2. (b)

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

    3. (c)

      for firms which are subject to the rules on consolidated financial supervision, any proposal under which another group company may be considering such an action; or

    4. (d)

      significant trading or non-trading losses (whether recognised or unrecognised).

SUP 15.3.9 G RP

The period of notice given to the FSA will depend on the event, although the FSA expects a firm to discuss relevant matters with it at an early stage, before making any internal or external commitments.

SUP 15.3.10 G RP

A notification under Principle 11 may be given orally or in writing (as set out in SUP 15.7.1 R and SUP 15.7.2 G), although the FSA may request written confirmation of a matter. However, it is the responsibility of a firm to ensure that matters are properly and clearly communicated to the FSA. A firm should provide a written notification if a matter either is complex or may be such as to make it necessary for the FSA to take action. A firm should also have regard to Principle 11 and the guidance in SUP 15.7.2 G in respect of providing important information promptly.

Breaches of rules and other requirements in or under the Act

SUP 15.3.11 R RP
  1. (1)

    A firm must notify the FSA of:

    1. (a)

      a significant breach of a rule (which includes a Principle, or a Statement of Principle ; or

    2. (b)

      a breach of any requirement imposed by the Act or by regulations or an order made under the Act by the Treasury (except if the breach is an offence, in which case (c) applies);

      6
    3. (c)

      the bringing of a prosecution for, or a conviction of, any offence under the Act;

    4. (d)

      a breach of a directly applicable provision in the MiFID Regulation; or6

    5. (e)

      a breach of any requirement in regulation 4C(3) (or any successor provision) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007;6

    by (or as regards (c) against) the firm or any of its directors, officers, employees, approved persons, or appointed representativesor, where applicable, tied agents.6

  2. (2)

    A firm must make the notification in (1) immediately it becomes aware, or has information which reasonably suggests, that any of the matters in (1) has occurred, may have occurred or may occur in the foreseeable future.

SUP 15.3.11A G RP

6 SUP 15.3.11 R (1)(e) relates to the standard requirement in the permission of those firms which fall outside MiFID because of the Treasury's implementation of Article 3 of MiFID. Guidance on how the Treasury has exercised the Article 3 exemption for the United Kingdom is given in Q48 and the following questions and answers in PERG 13.5 (Exemptions from MiFID).

SUP 15.3.12 G RP

In SUP 15.3.11 R(1)(a), significance should be determined having regard to potential financial losses to customers or to the firm, frequency of the breach, implications for the firm's systems and controls and if there were delays in identifying or rectifying the breach.

SUP 15.3.13 G RP

In assessing whether an event that may occur in the foreseeable future should be notified to the FSA, a firm should consider the guidance in SUP 15.3.3 G.

SUP 15.3.14 G RP

A notification under SUP 15.3.11 R should include:

  1. (1)

    information about any circumstances relevant to the breach or offence;

  2. (2)

    identification of the rule or requirement or offence; and

  3. (3)

    information about any steps which a firm or other person has taken or intends to take to rectify or remedy the breach or prevent any future potential occurrence.

Civil, criminal or disciplinary proceedings against a firm

SUP 15.3.15 R RP

A firm must notify the FSA immediately if:

  1. (1)

    civil proceedings are brought against the firm and the amount of the claim is significant in relation to the firm's financial resources or its reputation; or

  2. (2)

    any action is brought against the firm under section 71 of the Act (Actions for damages) or section 150 (Actions for damages); or

  3. (3)

    disciplinary measures or sanctions have been imposed on the firm by any statutory or regulatory authority, professional organisation or trade body (other than the FSA) or the firm becomes aware that one of those bodies has started an investigation into its affairs; or

  4. (4)

    the firm is prosecuted for, or convicted of, any offence involving fraud or dishonesty, or any penalties are imposed on it for tax evasion; or

  5. (5)

    it is an OPS firm, which is a trustee, and is removed as trustee by a court order.

SUP 15.3.16 G RP

A notification under SUP 15.3.15 R should include details of the matter and an estimate of the likely financial consequences, if any.

Fraud, errors and other irregularities

SUP 15.3.17 R RP

A firm must notify the FSA immediately if one of the following events arises and the event is significant:

  1. (1)

    it becomes aware that an employee may have committed a fraud against one of its customers; or

  2. (2)

    it becomes aware that a person, whether or not employed by it, may have committed a fraud against it; or

  3. (3)

    it considers that any person, whether or not employed by it, is acting with intent to commit a fraud against it; or

  4. (4)

    it identifies irregularities in its accounting or other records, whether or not there is evidence of fraud; or

  5. (5)

    it suspects that one of its employees may be guilty of serious misconduct concerning his honesty or integrity and which is connected with the firm's regulated activities or ancillary activities.

SUP 15.3.18 G RP

In determining whether a matter is significant, a firm should have regard to:

  1. (1)

    the size of any monetary loss or potential monetary loss to itself or its customers (either in terms of a single incident or group of similar or related incidents);

  2. (2)

    the risk of reputational loss to the firm; and

  3. (3)

    whether the incident or a pattern of incidents reflects weaknesses in the firm's internal controls.

SUP 15.3.19 G RP

The notifications under SUP 15.3.17 R are required as the FSA needs to be aware of the types of fraudulent and irregular activity which are being attempted or undertaken, and to act, if necessary, to prevent effects on consumers or other firms. A notification under SUP 15.7.3 G should provide all relevant and significant details of the incident or suspected incident of which the firm is aware.

SUP 15.3.20 G RP

In addition, the firm may have suffered significant financial losses as a result of the incident, or may suffer reputational loss, and the FSA will wish to consider this and whether the incident suggests weaknesses in the firm'sinternal controls.

Insolvency, bankruptcy and winding up

SUP 15.3.21 R RP

A firm must notify the FSA immediately of any of the following events:

  1. (1)

    the calling of a meeting to consider a resolution for winding up the firm; or

  2. (2)

    an application to dissolve the firm or to strike it off the Register of Companies; or

  3. (3)

    the presentation of a petition for the winding up of the firm; or

  4. (4)

    the making of, or any proposals for the making of, a composition or arrangement with any one or more of its creditors; or

  5. (5)

    an application for the appointment of an administrator or trustee in bankruptcy to the firm; or

  6. (6)

    the appointment of a receiver to the firm (whether an administrative receiver or a receiver appointed over particular property); or

  7. (7)

    an application for an interim order against the firm under section 252 of the Insolvency Act 1986 (or, in Northern Ireland, section 227 of the Insolvency (Northern Ireland) Order 1989); or

  8. (8)

    if the firm is a sole trader:

    1. (a)

      an application for a sequestration order on the firm; or

    2. (b)

      the presentation of a petition for bankruptcy; or

  9. (9)

    anything equivalent to (1) to (8) above occurring in respect of the firm in a jurisdiction outside the United Kingdom.

Lloyd's of London

SUP 15.3.22 D RP

3 SUP 15.3.23 D to SUP 15.3.25 D are given in relation to the exercise of the powers of the Society and of the Council generally, with a view to achieving the objective of enabling the FSAto:

  1. (1)

    comply with its general duty under section 314 of the Act (Authority's general duty);

  2. (2)

    determine whether underwriting agents, or approved persons acting for them or on their behalf, are complying with the requirements imposed on them by or under the Act;

  3. (3)

    enforce the provisions of the Act, or requirements made under the Act, by enabling the FSA to consider, where appropriate, whether it should use its powers, for example, to:

    1. (a)

      vary or cancel the permission of an underwriting agent, under section 45 of the Act (Variation etc on the Authority's owninitiative );

    2. (b)

      withdraw approval from an approved person acting for or on behalf of an underwriting agent, under section 63 of the Act (Withdrawal of approval) (see EG 95);

      5
    3. (c)

      prohibit an individual acting for or on behalf of an underwriting agent from involvement in regulated activities, under section 56 of the Act (Prohibition orders) (see EG 95);

      5
    4. (d)

      require an underwriting agent to make restitution, under section 384 of the Act (Power of Authority to require restitution) (see EG 115);

      5
    5. (e)

      discipline an underwriting agent, or an approved person acting for it or on its behalf, for a breach of a requirement made under the Act, including the Principles, Statements of Principle and rules (see DEPP 6 and EG 75);

      5
    6. (f)

      apply to court for an injunction, restitution order or insolvency order (see EG 10, EG 11 and EG 135); and

      5
    7. (g)

      prosecute any criminal offence that the FSA has power to prosecute under the Act (see EG 125).

      5
SUP 15.3.23 D RP

3The Society must immediately inform the FSA in writing if it becomes aware that any matter likely to be of material concern to the FSA may have arisen in relation to:

  1. (1)

    the regulated activities for which the Society has permission; or

  2. (2)

    underwriting agents; or

  3. (3)

    approved persons or individuals acting for or on behalf of underwriting agents.

SUP 15.3.24 D RP

3The Society must inform the FSA if it commences investigations or disciplinary proceedings relating to apparent breaches:

  1. (1)

    of the Act or requirements made under the Act, including the threshold conditions or the Principles or other rules, by an underwriting agent; or

  2. (2)

    of the Statements of Principle by an individual or other person who carries out controlled functions for or on behalf of an underwriting agent.

SUP 15.3.25 D RP

3The Society must inform the FSA if it commences investigations or disciplinary proceedings which do not fall within the scope of SUP 15.3.24 D but which:

  1. (1)

    involve an underwriting agent, or an approved person who carries out controlled functions for it or on its behalf; or

  2. (2)

    may indicate that an individual acting for or on behalf of an underwriting agent may not be a fit and proper person to perform functions in relation to regulated activities.

SUP 15.4 Notified persons

SUP 15.4.1 R RP
  1. (1)

    An overseas firm, which is not an incoming firm, must notify the FSA within 30 business days of any person taking up or ceasing to hold the following positions:

    1. (a)

      the firm's worldwide chief executive (that is, the person who, alone or jointly with one or more others, is responsible under the immediate authority of the directors for the whole of its business) if the person is based outside the United Kingdom;

    2. (b)

      the person within the overseas firm with a purely strategic responsibility for UK operations (see SUP 10.7.4 G);

    3. (c)

      for a bank or an ELMI: the two or more persons who effectively direct its business in accordance with SYSC 4.2.2 R and ELM 5.3.1 R, respectively;

      1
    4. (d)

      for an insurer: the authorised UK representative.

  2. (2)

    The notification in (1) must be submitted in the form set out in2 Form F (SUP 15 Ann 2). However, if the person is an approved person, notification giving details of his name, the approved person'sFSA individual reference number and the position to which the notification relates, is sufficient.

    2
SUP 15.4.2 G RP

SUP 15.4.1 R is not made under the powers conferred on the FSA by Part V of the Act (Performance of Regulated Activities). A person notified to the FSA under SUP 15.4.1 R is not subject to the Statements of Principle or Code of Practice for Approved Persons, unless he is also an approved person.

SUP 15.4.3 G RP
  1. (1)

    A firm other than a credit union must submit the form in SUP 15 Ann 2 R online at www.fsa.gov.uk using the FSA's ONAsystem.2

  2. (2)

    A credit union must submit the form in SUP 15 Ann 2 R in the way set out in SUP 15.7.4 R to SUP 15.7.9 G (Form and method of notification).2

  3. (3)

    Where a firm is obliged to submit an application online under (1), if the FSA'sinformation technology systems fail and online submission is unavailable for 24 hours or more, until such time as facilities for online submission are restored, a firm must submit the form in SUP 15 Ann 2 R, in the way set out in SUP 15.7.4 R to SUP 15.7.9 G (Form and method of notification).2

SUP 15.4.3A G RP
  1. (1)

    If the FSA's information technology systems fail and online submission is unavailable for 24 hours or more, the FSA will endeavour to publish a notice on its website confirming that online submission is unavailable and that the alternative methods of submission set out in SUP 15.4.3R(3) and SUP 15.7.4R to SUP 15.7.9G (Form and method of notification) should be used.2

  2. (2)

    Where SUP 15.4.3R (3) applies to a firm, GEN 1.3.2 R (Emergency) does not apply.2

SUP 15.4.4 G RP

If adverse information is revealed about a person notified to the FSA under SUP 15.4.1 R, the FSA may exercise its own-initiative power against the firm (see SUP 7 (Individual requirements)).

SUP 15.5 Core information requirements

Change in name

SUP 15.5.1 R RP

A firm must give the FSA reasonable advance notice of a change in:

  1. (1)

    the firm's name (which is the registered name if the firm is a body corporate);

  2. (2)

    any business name under which the firm carries on a regulated activity or ancillary activity either from an establishment in the United Kingdom or with or for clients in the United Kingdom.

SUP 15.5.2 G RP

A notification under SUP 15.5.1 R should include the details of the proposed new name and the date on which the firm intends to implement the change of name.

SUP 15.5.3 G RP

Firms are reminded that certain name changes (for example, to include 'Limited') may also require a notification under SUP 15.5.5 R.

Change in address

SUP 15.5.4 R RP

A firm must give the FSA reasonable advance notice of a change in any of the following addresses, and give details of the new address and the date of the change:

  1. (1)

    the firm's principal place of business in the United Kingdom;

  2. (2)

    in the case of an overseas firm, its registered office (or head office) address.

SUP 15.5.5 R RP

[deleted]1

1
SUP 15.5.6 G RP

[deleted]1

1

Other regulators

SUP 15.5.7 R RP

A firm must notify the FSA immediately if it becomes subject to or ceases to be subject to the supervision of any overseas regulator (including a Home State regulator).

SUP 15.5.8 G RP

The FSA's approach to the supervision of a firm is influenced by the regulatory regime and any legislative or foreign provisions to which that firm, including its branches, is subject.

Submitting notifications to the FSA

SUP 15.5.9 R RP
  1. (1)

    2A firm other than a credit union must submit any notice under

    SUP 15.5.1R, SUP 15.5.4R and SUP 15.5.7R by submitting the form in SUP 15 Ann 3R online at www.fsa.gov.uk.

  2. (2)

    A credit union must submit any notice under SUP 15.5.1R, SUP 15.5.4R and SUP 15.5.7R by submitting the form in SUP 15 Ann 3R in the way set out in SUP 15.7.4R to SUP 15.7.9G (Form and method of notification).

  3. (3)

    Where a firm is obliged to submit a notice online under (1), if the FSA's information technology systems fail and online submission is unavailable for 24 hours or more, until such time as facilities for online submission are restored, a firm must submit any notice under SUP 15.5.1R, SUP 15.5.4R and SUP 15.5.7R in the form in SUP 15 Ann 3R and in the way set out in SUP 15.7.4R to SUP 15.7.9G (Form and method of notification).

SUP 15.5.10 G RP
  1. (1)

    If the FSA's information technology systems fail and online submission is unavailable for 24 hours or more, the FSA will endeavour to publish a notice on its website confirming that online submission is unavailable and that the alternative methods of submission set out in SUP 15.5.9R(3) and SUP 15.7.4R to SUP 15.7.9G (Form and method of notification) should be used.

  2. (2)

    Where SUP 15.5.9R(3) applies to a firm, GEN 1.3.2 R (Emergency) does not apply.

SUP 15.6 Inaccurate, false or misleading information

SUP 15.6.1 R RP

A firm must take reasonable steps to ensure that all information it gives to the FSA in accordance with a rule in any part of the Handbook (including Principle 11) is:

  1. (1)

    factually accurate or, in the case of estimates and judgments, fairly and properly based after appropriate enquiries have been made by the firm; and

  2. (2)

    complete, in that it should include anything of which the FSA would reasonably expect notice.

SUP 15.6.2 G RP

SUP 15.6.1 R applies also in relation to rules outside this chapter, and even if they are not notification rules. Examples of rules and chapters to which SUP 15.6.1 R is relevant, are:

  1. (1)

    Principle 11, and the guidance on Principle 11 in SUP 2 (Information gathering by the FSA on its own initiative);

  2. (2)

    SUP 15 (Notifications to the FSA):

  3. (3)

    SUP 16 (Reporting requirements);

  4. (4)

    SUP 17 (Transaction reporting);

    1
  5. (5)

    any notification rule (see Schedule 2 which contains a consolidated summary of such rules);1

    2
  6. (6)

    DISP 1.9 (Complaints record rule); and21

  7. (7)

    DISP 1.10 (Complaints reporting rule).2

SUP 15.6.3 G RP

If a firm is unable to obtain the information required in SUP 15.6.1 R(2), then it should inform the FSA that the scope of the information provided is, or may be, limited.

SUP 15.6.4 R RP

If a firm becomes aware, or has information that reasonably suggests that it has or may have provided the FSA with information which was or may have been false, misleading, incomplete or inaccurate, or has or may have changed in a material particular, it must notify the FSA immediately. Subject to SUP 15.6.5 R, the notification must include:

  1. (1)

    details of the information which is or may be false, misleading, incomplete or inaccurate, or has or may have changed;

  2. (2)

    an explanation why such information was or may have been provided; and

  3. (3)

    the correct information.

SUP 15.6.5 R RP

If the information in SUP 15.6.4 R (3) cannot be submitted with the notification (because it is not immediately available), it must instead be submitted as soon as possible afterwards.

SUP 15.6.6 G RP

The FSA may request the firm to provide revised documentation containing the correct information, if appropriate.

SUP 15.6.7 G RP

Firms are reminded that section 398 of the Act (Misleading the Authority: residual cases) makes it an offence for a firm knowingly or recklessly to provide the FSA with information which is false or misleading in a material particular in purported compliance with the FSA'srules or any other requirement imposed by or under the Act. An offence by a body corporate, partnership or unincorporated association may be attributed to an officer or certain other persons (section 400 of the Act (Offences by bodies corporate etc)).

SUP 15.7 Form and method of notification

Form of notification: oral or written

SUP 15.7.1 R RP

A notification required from a firm under any notification rule must be given in writing, and in English, and must be submitted on the form specified for that notification rule, or if no form is specified, on the form inSUP 15 Ann 4 R3 (Notification form), and must give the firm'sFSA Firm Reference Number unless:2

3
  1. (1)

    the notification rule states otherwise; or

  2. (2)

    the notification is provided solely in compliance with Principle 11 (see SUP 15.3.7 G).

SUP 15.7.2 G RP

A firm should have regard to the urgency and significance of a matter and, if appropriate, should also notify its usual supervisory contact at the FSA by telephone or by other prompt means of communication, before submitting a written notification. Oral notifications should be given directly to the firm's usual supervisory contact An oral notification left with another person or left on a voicemail or other automatic messaging service is unlikely to have been given appropriately.2

SUP 15.7.3 G RP

The FSA is entitled to rely on any information it receives from a firm and to consider any notification received as being made by a person authorised by the firm to do so. A firm should therefore consider whether it needs to put procedures in place to ensure that only appropriate employees make notifications to the FSA on its behalf.

Method of notification

SUP 15.7.4 R RP

Unless stated in the notification rule, or on the relevant form (if specified), a written notification required from a firm under any notification rule must be:2

  1. (1)

    given to or addressed for the attention of the firm's usual supervisory contact at the FSA; and

  2. (2)

    delivered to the FSA by one of the methods in :

SUP 15.7.5 R

Methods of notification

22

Method of delivery

1.

Post to the appropriate address in SUP 15.7.6 G 1

2.

Leaving the notification at the appropriate address in SUP 15.7.6 G and obtaining a time-stamped receipt 1

3.

Electronic mail to an address for the firm's usual supervisory contact at the FSA and obtaining an electronic confirmation of receipt

4.

Hand delivery to the firm's usual supervisory contact at the FSA

5.

Fax to a fax number for the firm's usual supervisory contact at the FSA and receiving a successful transmission report for all pages of the notification. 2

6. 2

Online submission via the FSA's website at www.fsa.gov.uk. 2

SUP 15.7.6 G

The current published address of the FSA for postal submission or hand delivery of notifications is:1

  1. (1)

    The Financial Services Authority

    25 The North Colonnade

    Canary Wharf

    London E14 5HS

    if the firm's usual supervisory contact at the FSA is based in London, or

  2. (2)

    The Financial Services Authority

    Quayside House

    127 Fountainbridge

    Edinburgh EH3 8DJ

    if the firm's usual supervisory contact at the FSA is based in Edinburgh.

SUP 15.7.7 G RP

If the firm or its group is subject to lead supervision arrangements by the FSA, the firm or group may give or address a notice under SUP 15.7.4 R(1) to the supervisory contact at the FSA, designated as lead supervisor, if the firm has chosen to make use of the lead supervisor as a central point of contact (see SUP 1.5).

SUP 15.7.8 G RP

If a firm is a member of a group which includes more than one firm, any one undertaking in the group may notify the FSA on behalf of all firms in the group to which the notification applies. In this way, that undertaking may satisfy the obligation of all relevant firms in the group to notify the FSA. Nevertheless, the obligation to make the notification remains the responsibility of the individual firm itself. See also SUP 15.7.3 G.

SUP 15.7.9 G RP

Firms wishing to communicate with the FSA by electronic mail or fax should obtain the appropriate address or number from the FSA

Timely notification

SUP 15.7.10 R RP

If a notification rule requires notification within a specified period:

  1. (1)

    the firm must give the notification so as to be received by the FSAno later than the end of that period; and

  2. (2)

    if the end of that period falls on a day which is not a business day, the notification must be given so as to be received by the FSA no later than the first business day after the end of that period.

SUP 15.7.11 G RP

If a notification rule does not require notification within a specified period, the firm should act reasonably in deciding when to notify.

Underwriting agents: notification to the Society of Lloyd's

SUP 15.7.12 R
  1. (1)

    Paragraph (2) applies in relation to notifications required under this chapter within the scope of any arrangements made by the FSAwith the Society of Lloyd's under paragraph 6(2) of Schedule 1 to the Act.

  2. (2)

    An underwriting agent must submit the notifications in (1) to the Society of Lloyd's rather than to the FSA.

SUP 15.7.13 G

Paragraph 6(2) of Schedule 1 to the Act enables the FSA to make arrangements which provide for monitoring functions to be performed by any body or person who, in its opinion, is competent to perform them. Arrangements made under this provision are published by the FSA.

SUP 15.7.14 G RP

The FSA has made arrangements with the Society of Lloyd's with respect to the monitoring of underwriting agents. Underwriting agents should check whether these arrangements provide for any notifications required under this chapter to be sent to the Society instead of to the FSA. [For further details see the FSA website.]

Consequences of breach of form and method rules

SUP 15.7.15 G RP

If a firm fails to comply with the rules in this section then the notification is invalid and there may be a breach of the rule that required the notification to be given.

Service of Notices Regulations

SUP 15.7.16 G RP

The Financial Services and Markets Act 2000 (Service of Notices) Regulations 2001 (SI 2001/1420) contain provisions relating to the service of documents on the FSA. They do not apply to notifications required under notification rules because of the specific rules in this section.

SUP 15.8 Notification in respect of particular products and services

Management of occupational pension scheme assets

SUP 15.8.1 R RP

7 3A firm which manages the assets of an occupational pension scheme must notify the FSA as soon as reasonably practicable if it receives any request or instruction from a trustee which it:

  1. (1)

    knows; or

  2. (2)

    on substantial grounds:

    1. (a)

      suspects; or

    2. (b)

      has cause reasonably to suspect;

is at material variance with the trustee's duties.1

Individual Pension Accounts

SUP 15.8.2 R RP

If a firm begins or ceases to administer individual pension accounts, it must notify the FSA as soon as reasonably practicable that it has done so.52

Insurers' commission clawback

SUP 15.8.3 R RP
  1. (1)

    An insurer must notify the FSAin respect of any firm (the "intermediary") as soon as reasonably practicable if:

    1. (a)

      any amount of commission due from the intermediary to the insurer in accordance with an indemnity commission clawback arrangement remains outstanding for four months after the date when the insurer gave notice to the intermediary that the relevant premium had not been paid; or

    2. (b)

      any amount of commission due from the intermediary to the insurer as a result of either the cancellation of an investment agreement or overpayment of commission remains outstanding for four months after the date on which the insurer gave notice to the intermediary that cancellation or overpayment had occurred.

  2. (2)

    A notification in (1):

    1. (a)

      need not be given unless the total amounts outstanding under (1)(a) and (b) in respect of the intermediary exceed £1,000; and

    2. (b)

      must give the identity of the intermediary and the amount of commission which remains outstanding.

  3. (3)

    In (1) an "indemnity commission clawback arrangement" is an arrangement under which:

    1. (a)

      an insurer pays commission to an intermediary before the date on which the premium is due under the relevant investment agreement; and

    2. (b)

      the insurer requires repayment of the commission, if the investment agreement is terminated by reason of a failure to pay a premium.

11Money service business and trust or company service providers11

SUP 15.8.4 G RP
  1. (1)

    467In accordance with article 3111of the Money Laundering Regulations, with effect from 15 December 200711, a firm is required to notify the FSA:

    1111
    1. (a)

      before it begins or within 28 days of it beginning11; and

    2. (b)

      immediately11 after it ceases;

      11

    to operate a money service business or a trust or company service provider.11

    11
  2. (2)

    The notification referred to in (1) should be made in accordance with the requirements in SUP 15.7 (Form and method of notification)

SUP 15.8.5 G RP

4 6 7A firm which is already operating a money service business or a trust or company service provider11 as at 15 December 200711 is required by the Money Laundering Regulations to notify the FSA of that fact and should do so in the manner specified in SUP 15.8.4 G(2) before 15 January 200811.

11 11

Delegation by UCITS management companies

SUP 15.8.6 R RP

A UCITS management company must notify the FSA as soon as reasonably practicable if it delegates any of its functions to a third party.

SUP 15.8.7 G RP

A UCITS management company which delegates any of its functions to a third party must, as well as complying with SUP 15.8.6 R,13 comply with the requirements in COLL 6.6.15 R (2) .13

13 8 13

9CTF providers

SUP 15.8.8 R RP
  1. (1)

    9If a firm begins or ceases to hold itself out as acting as a CTF provider, it must notify the FSA as soon as reasonably practicable that it has done so.

  2. (2)

    A firm that acts as a CTF provider must provide theFSA, as soon as reasonably practicable, with details of:

    1. (a)

      any third party administrator that it engages;

    2. (b)

      details of whether it intends to offer HMRC allocated CTFs12; and

      12
    3. (c)

      whether it intends to provide its own stakeholder CTF account.

SUP 15.8.9 R RP

10A BIPRUfirm must report to the FSA immediately any case in which its counterparty in a repurchase agreement or reverse repurchase agreement or securities or commodities lending or borrowing transaction defaults on its obligations.

SUP 15.9 1Notifications by members of financial conglomerates

SUP 15.9.1 R RP

A firm that is a regulated entity must notify the FSA immediately it becomes aware that any consolidation group of which it is a member:

  1. (1)

    is a financial conglomerate; or

  2. (2)

    has ceased to be a financial conglomerate.

SUP 15.9.2 R RP
  1. (1)

    A firm that is a regulated entity must establish whether or not any consolidation group of which it is a member:

    1. (a)

      is a financial conglomerate; or

    2. (b)

      has ceased to be a financial conglomerate;

    if:

    1. (c)

      the firm believes; or

    2. (d)

      a reasonable firm that is complying with the requirements of the regulatory system would believe;

    that it is likely that (a) or (b) is true.

  2. (2)

    A firm does not need to determine whether (1)(a) is the case if the consolidation group is already being regulated as a financial conglomerate.

  3. (3)

    A firm does not need to determine whether (1)(b) is the case if notification has already been given as contemplated by SUP 15.9.4 R.

SUP 15.9.3 G RP

A firm should consider the requirements in SUP 15.9.2 R on a continuing basis, and in particular, when the group prepares its financial statements and on the occurrence of an event affecting the consolidated group. Such events include, but are not limited to, an acquisition, merger or sale.

SUP 15.9.4 R RP

A firm does not have to give notice to the FSA under SUP 15.9.1 R if it or another member of the consolidation group has already given notice of the relevant fact to:

  1. (1)

    the FSA; or

  2. (2)

    (if another competent authority is co-ordinator of the financial conglomerate ) that competent authority; or

  3. (3)

    (in the case of a financial conglomerate that does not yet have a co-ordinator ) the competent authority who would be co-ordinator under Article 10(2) of the Financial Groups Directive (Competent authority responsible for exercising supplementary supervision (the co-ordinator)).

SUP 15.10 1Reporting suspicious transactions (market abuse)

Application: where

SUP 15.10.1 R

This section applies in relation to activities carried on from an establishment maintained by the firm or its appointed representative in the United Kingdom. [Note: Article 7 2004/72/EC]

Notification of suspicious transactions: general

SUP 15.10.2 R

A firm which arranges or executes a transaction with or for a client in a qualifying investment admitted to trading on a prescribed market and which has reasonable grounds to suspect that the transaction might constitute market abuse must notify the FSA without delay.

[Note: Article 6(9) Market Abuse Directive]

Notification of suspicious transactions: investment firms and credit institutions

SUP 15.10.3 R

A firm, that is an investment firm or a credit institution, must decide on a case-by-case basis whether there are reasonable grounds for suspecting that a transaction involves market abuse, taking into account the elements constituting market abuse. [Note: Articles 1(3) and 7 2004/72/EC]

SUP 15.10.4 G RP
  1. (1)

    Notification of suspicious transactions to the FSA requires sufficient indications (which may not be apparent until after the transaction has taken place) that the transaction might constitute market abuse. In particular a firm will need to be able to explain the basis for its suspicion when notifying the FSA (see SUP 15.10 R). Certain transactions by themselves may seem completely devoid of anything suspicious, but might deliver such indications of possible market abuse, when seen in perspective with other transactions, certain behaviour or other information (though firms are not expected to breach effective information barriers put in place to prevent and avoid conflicts of interest so as actively to seek to detect suspicious transactions). [Note: Recital 9 2004/72/EC]

  2. (2)

    Assistance in identifying the elements constituting market abuse may be derived from the Code of Market Conduct (MAR 1), and some example indications of market abuse are set out in SUP 15 Ann 5 G. A fuller set of example indications is published by the Committee of European Securities Regulators (CESR).

Timeframe for notification: investment firms and credit institutions

SUP 15.10.5 R

If an investment firm or a credit institution becomes aware of a fact or information that gives reasonable ground for suspicion concerning a transaction, it must make its notification under this section without delay. [Note: Article 8 2004/72/EC]

Content of notification: investment firms and credit institutions

SUP 15.10.6 R
  1. (1)

    If an investment firm or a credit institution is obliged to make a notification to the FSA under this section, it must transmit to the FSA the following information:

    1. (a)

      a description of the transaction, including the type of order (such as limit order, market order or other characteristics of the order) and the type of trading market (such as block trade); and

    2. (b)

      the reasons for suspicion that the transaction might constitute market abuse.

  2. (2)

    In addition the following information must be provided to the FSAas soon as it becomes available:

    1. (a)

      the means for identification of the persons on behalf of whom the transaction has been carried out, and of other persons involved in the relevant transaction;

    2. (b)

      the capacity in which the firm operates (such as for own account or on behalf of third parties); and

    3. (c)

      any other information which may have significance in reviewing the suspicious transaction. [Note: Article 9 2004/72/EC]

Means of notification: investment firms and credit institutions

SUP 15.10.7 R RP

An investment firm or a credit institution making a notification to the FSA under this section may do so:

  1. (1)

    by mail to:

    Market Conduct Team

    25 The North Colonnade

    Canary WharfLondon E14 5HS; or

  2. (2)

    by electronic mail to market.abuse@fsa.gov.uk;

  3. (3)

    by facsimile to the Market Conduct Team on 020 7066 1099; or

  4. (4)

    by telephone to the market abuse helpline 020 7066 4900. [Note: Article 10 2004/72/EC]

SUP 15.10.8 G
  1. (1)

    If a notification is made by telephone, the FSA may subsequently request confirmation of the notification in writing. [Note: Article 10 2004/72/EC]

  2. (2)

    When making a notification in writing it may be convenient to use the form for suspicious transaction reports provided on the FSA's website. This form follows the common standard approved by CESR.

Liability and professional secrecy: investment firms and credit institutions

SUP 15.10.9 R
  1. (1)

    An investment firm or a credit institution which notifies the FSA under this section must not inform any other person, in particular the persons on behalf of whom the transaction has been carried out or parties related to those persons, of this notification, except in accordance with an obligation imposed by or under statute.

  2. (2)

    Notwithstanding any other provision of the Handbook a notification in good faith under this section to the FSA does not constitute a breach of any restriction on disclosure of information imposed by the Handbook. [Note: Article 11 2004/72/EC]

Note: Section 131A of the Act sets out additional protections from liability for a person who makes a notification to the FSA under this section (or who passes the relevant information to someone designated by his employer to do so).

SUP 15 Annex 1 Application of SUP 15 to incoming EEA firms and incoming Treaty firms1

R

1 .

SUP 15 applies in full to an incoming EEA firm, or incoming Treaty firm , which has a top-up permission.

2 .

SUP 15 does not apply to an incoming EEA firm which has permission for cross border services only and which does not carry on regulated activities in the United Kingdom. 5

5 2A

SUP 15 does not apply to an EEA pure reinsurer which does not have a top-up permission.

3 .

For any other incoming EEA firm or incoming Treaty firm, SUP 15 applies as set out in the following table.

Applicable sections

Application

SUP 15.1 , SUP 15.2

Application, Purpose

Apply in full

SUP 15.3.1 R to SUP 15.3.6 G

Matters having a serious regulatory impact

SUP 15.3.1 R does not apply, otherwise apply in full

SUP 15.3.7 G to SUP 15.3.10 G

Communication with the FSA in accordance with Principle 11

Apply in so far as responsibility for the matter in question is not reserved by an EU 4 instrument to the firm's Home State regulator

4

SUP 15.3.1 R to SUP 15.3.14 G

Breaches of rules and other requirements in or under the Act

Apply in full

SUP 15.3.1 R to SUP 15.3.16 G

Civil, criminal or disciplinary proceedings against a firm

Apply in so far as responsibility for the matter in question is not reserved by an EU 4 instrument to the firm's Home State regulator

4

SUP 15.3.1 R to SUP 15.3.20 G

Fraud, errors and other irregularities

Apply in so far as responsibility for the matter in question is not reserved by an EU 4 instrument to the firm's Home State regulator

4

SUP 15.3.2 G

Insolvency, bankruptcy and winding up

Apply in so far as responsibility for the matter in question is not reserved by an EU 4 instrument to the firm's Home State regulator

4

SUP 15

Notified persons

Does not apply

SUP 15.5.1 R to SUP 15.5.3 G

Change in name

Apply in full

SUP 15.5.4 R

Change in address: principal place of business in the UK

Applies in full

SUP 15.5.4 R (2)

Change in address: registered office

Applies to an incoming Treaty firm . Does not apply to an incoming EEA firm, but see SUP 14 (Incoming EEA firms: changing authorisation and cancelling qualification for authorisation).

SUP 15.5.5 R to SUP 15.5.6 G

Change in legal status

Do not apply

SUP 15.5.7 R and SUP 15.5.8 G

Other regulators

Apply in so far as responsibility for the matter in question is not reserved by an EU 4 instrument to the firm's Home State regulator

4

SUP 15.6

Inaccurate, false or misleading information

Applies in full

SUP 15.7

Form and method of notification

Applies in full

SUP 15.8

Notifications in respect of particular products and services

Applies in full 2

SUP 15.10 3

Reporting suspicious transactions (market abuse) 3

Applies in relation to activities carried on from an establishment maintained by the firm or its appointed representative in the United Kingdom. [Note:Article 7 2004/72/EC]3

SUP 15 Ann 2 Form F: Changes in notified persons3

R

This annex consists only of one or more forms. Forms can be completed online now by visiting: http://www.fsa.gov.uk/Pages/doing/index.shtml

The forms are also to be found through the following address:

Supervision forms - SUP 15 Annex 2

SUP 15 Ann 4 Notification form1

R

This annex consists only of one or more forms. Forms are to be found through the following address:

Notifications Form - SUP 15 Annex 4

SUP 15 Ann 5 Indications of Possible Suspicious Transactions

1

1.

The following examples of indications are intended to be a starting point for consideration of whether a transaction is suspicious. They are neither conclusive nor comprehensive.

Possible Signals of Insider Dealing

2.

A client opens an account and immediately gives an order to conduct a significant transaction or, in the case of a wholesale client, an unexpectedly large or unusual order, in a particular security - especially if the client is insistent that the order is carried out very urgently or must be conducted before a particular time specified by the client.

3.

A transaction is significantly out of line with the client's previous investment behaviour (e.g. type of security; amount invested; size of order; time security held).

4.

A client specifically requests immediate execution of an order regardless of the price at which the order would be executed (assuming more than a mere placing of 'at market' order by the client).

5.

There is unusual trading in the shares of a company before the announcement of price sensitive information relating to the company.

6.

An employee's own account transaction is timed just before clients' transactions and related orders in the same financial instrument.

Possible signals of Market Manipulation

7.

An order will, because of its size in relation to the market in that security, clearly have a significant impact on the supply of or demand for or the price or value of the security, especially an order of this kind to be executed near to a reference point during the trading day - e.g. near the close.

8.

A transaction appears to be seeking to modify the valuation of a position while not decreasing/increasing the size of that position.

9.

A transaction appears to be seeking to bypass the trading safeguards of the market (e.g. as regards volume limits; bid/offer spread parameters; etc).