SUP 16.6 Compliance reports

The effect of SUP 16.1.1 R is that this section applies to every firm within a category listed in the left hand column of the table in SUP 16.6.2 G.

13The FCA performs part of its supervision work by reviewing and analysing information about firms' records of compliance with the requirements and standards under the regulatory system. The type of report the FCA requires will vary, depending on the type of business a firm undertakes. This information helps the FCA to determine whether a firm is complying with the requirements applicable to its business, and what procedures it is operating to ensure its compliance.

1. (1)

   10A depositary should report a breach only once under SUP 16.6.8R(1A)(a) and once under SUP 16.6.8R(1A)(c). When both reports are made in the same month, only a single entry in the form is required. Under SUP 16.6.8R(1A)(b) a depositary should report changes to the reported details of existing breaches.

2. (2)

   A separate line should be entered on the form for each rule breached. For example, a breach of the investment limits in COLL 5.2.11R11 that results in incorrect pricing of the scheme contrary to COLL 6.3.3R should be recorded as two entries, with the same reference.

3. (3)

   Under SUP 16.6.8R(1A)(c) a depositary should report all breaches that have been closed during the previous month. A breach can be closed in a number of ways. For example:

   1. (a)

      A breach that does not involve changes to systems and controls may be considered closed when, in the opinion of the depositary, the authorised fund manager has taken all necessary action to rectify the breach.

   2. (b)

      A breach that requires changes to systems and controls that cannot be implemented promptly, may nevertheless be considered closed when, in the opinion of the depositary, the authorised fund manager has implemented an effective temporary control to resolve the issue, taking into account the interests of Unitholders.

4. (4)

   A depositary should not consider a breach closed until any applicable compensation has been paid to the scheme and/or to Unitholders.