SUP 7.2 The FSA's powers to set individual requirements on its own initiative

The FSA has the power under section 45of the Act (Variation on the Authority's own initiative) to vary a firm's Part IV permission. This includes imposing a statutory requirement or limitation on that Part IV permission.

The circumstances in which the FSA may vary a firm's Part IV permission on its own initiative under section 45 of the Act include where it appears to the FSA that:

1. (1)

   one or more of the threshold conditions is or is likely to be no longer satisfied; or

2. (2)

   it is desirable to vary a firm's permission in order to meet any of the FSA's regulatory objectives.3

   3

The FSA may also use its powers under section 45 for enforcement purposes. EG 82 sets out in detail the FSA's powers under section 45 and the circumstances under which the FSA may vary a firm's permission in this way, whether for enforcement purposes or as part of its day to day supervision of firms. This chapter provides additional guidance on when the FSA will use these powers for supervision purposes.

The FSA may use its powers under section 45 of the Act only in respect of a Part IV permission ; that is, a permission granted to a firm under section 42 of the Act (Giving permission) or having effect as if so given. In respect of an incoming EEA firm, an incoming Treaty firm, or a UCITS qualifier, this power applies only in relation to any top-up permission that it has. There are similar but more limited powers under Part XIII of the Act in relation to the permission of an incoming EEA firm or incoming Treaty firm under Schedules 3 or 4 to the Act (see EG 8.26 to EG 8.27 ).2

If the FSA exercises its powers under section 45 of the Act, it will do so by issuing a supervisory notice. The procedure that will be followed is set out in DEPP 22.

A firm has a right of referral to the Tribunal4 in respect of the exercise by the FSA of its powers to vary, on its own initiative, the firm's Part IV permission.