SUP 7.4 Annulment of FCA decision to exercise its additional own-initiative variation power

1If the FCA decides to exercise its additional own-initiative variation power, the relevant FCA-authorised person can apply, under paragraph 4 of Schedule 6A to the Act, within 12 months of the decision taking effect, to the FCA for that decision to be retrospectively annulled. The FCA must notify that person of its right to apply when notifying that person, under paragraph 3 of Schedule 6A, of the decision to exercise the power and can direct what information should be included in the application and what form it should take.

1The FCA can annul the decision unconditionally or subject to such conditions as it considers appropriate or refuse to annul. The FCA is permitted by Schedule 6A to the Act to annul, whether unconditionally or subject to conditions, only if satisfied that, in all the circumstances, it is just and reasonable to do so.

1Schedule 6A to the Act specifies that the conditions that the FCA can impose when annulling include, without restriction:

1. (1)

   the removal or modification of the description of one or more of the regulated activities that the relevant firm was permitted to carry on immediately before the decision annulled was taken; and

2. (2)

   the withdrawal or variation of one or more approvals previously given by the FCA under section 59 of the Act in respect of one or more roles at the firm, which condition, if imposed, the FCA considers can apply only to approvals that will otherwise be restored as a result of the annulment.

Schedule 6A specifies that such variations of permission and withdrawals or variations of approval take effect, if imposed as conditions, on the date on which the relevant annulment takes effect.

1In determining whether and subject to what conditions it is just and reasonable to annul, the FCA will consider all the relevant circumstances, including, without restriction:

1. (1)

   the applicant firm’s reasons for failing to respond as directed to the relevant notices served on it under paragraph 2 of Schedule 6A to the Act;

2. (2)

   what explanation the firm has for the facts that led the FCA to form the view that it was no longer carrying on any regulated activity to which its permission related; and

3. (3)

   if applicable, what remedial steps the firm proposes to take in relation to those.

1Other factors the FCA may consider, in so determining, may include, without restriction:

1. (1)

   the applicant firm’s ability to comply, after annulment, with the threshold conditions and whether any concerns arising in this regard can be addressed via the imposition of conditions;

2. (2)

   whether the firm applied promptly after the cancellation or variation of its permission has taken effect and, if it did not, its reasons for such delay;

3. (3)

   whether and, if so, in what manner, to what extent and why the firm has breached section 19 or 20 of the Act since the cancellation or variation took effect;

4. (4)

   where the relevant decision is that the applicant firm’s permission be cancelled, the extent to which the firm:

   1. (a)

      has followed, since the cancellation, the requirements of the regulatory system that would have applied to it but for the cancellation, including, without restriction, those in DISP and COMP; and

   2. (b)

      is willing, to the extent it was unable to follow those requirements during the period of cancellation, to address, after annulment, the consequences of not following those requirements, in particular the effects on other persons; and

5. (5)

   whether any awards or directions by the Ombudsman against the firm have not yet been complied with.

1The effect of annulment is specified by Schedule 6A to the Act:

1. (1)

   the relevant variation or cancellation is treated as never having taken place; but

2. (2)

   where, by virtue of that fact, any person becomes subject to a statutory obligation in relation to which the FCA has functions, the FCA is permitted, in exercising those functions, to treat that person as not having become subject to that obligation;

3. (3)

   in which case the FCA must notify that person appropriately.

1. (1)

   1If the FCA decides to annul, it will give the relevant firm a notice in writing, specifying the date on which the annulment takes effect and the conditions, if any, attached to the annulment.

2. (2)

   Where the FCA proposes to refuse to annul, it will give the relevant firm a warning notice and, where the FCA decides to refuse to annul, it will give the relevant firm a decision notice. Detail of the procedure under which those two notices will be provided is given in DEPP 2 and 3.

3. (3)

   Whatever the FCA’s decision, either or both of the firm and the FCA can refer the matter to the Tribunal.

4. (4)

   In determining such a reference, the Tribunal may give such directions, and may make such provision, as it considers reasonable for placing the firm and other persons in the same position (as nearly as may be) as if the firm’s permission had not been varied or cancelled.

1The following other chapters of the Handbook contain rules making provision for and guidance as to the effect of annulment:

1. (1)

   FEES 4, FEES 4A, FEES 5, FEES 6, FEES 7A to FEES 7D and FEES 13;

2. (2)

   DISP 1 and DISP 2; and

3. (3)

   COMP 6.