Related provisions for SUP 6.3.30
1 - 20 of 85 items.
Before applying to vary its permission, a firm should determine whether there are any statutory restrictions that do not allow combinations of certain types of regulated activity, particularly for insurance business or UCITS managers. For example, the FSA will not grant a variation of Part IV permission to allow a friendly society to carry on reinsurance business (see AUTH 3.12.5 G). A firm should refer to AUTH 3 for details of any restrictions or discuss its plans with its usual
If a firm wishes to cease carrying on an activity for which it has Part IV permission, it will usually apply to vary its Part IV permission to remove that activity. If a firm wishes to cease carrying on an activity in relation to any specified investment, it will usually apply to vary its Part IV permission to remove that specified investment from the relevant activity.
The application for variation of Part IV permission will need to provide information about the classes of contract of insurance for which variation of Part IV permission is requested and also those classes qualifying to be carried on, on an ancillary or supplementary basis. For example, an insurer applying to vary its permission to include class 10 (motor vehicle liability, other than carrier's liability) must satisfy the FSA that it will meet, and continue to meet, threshold
(1) If a firm wishes to apply for a variation of Part IV permission, it must complete and submit to the FSA the form in SUP 6 Annex 5 (Variation of permission application form).7(2) A firm's application for variation of Part IV permission must be given or addressed, and delivered in the way set out in SUP 15.7.4 R to SUP 15.7.6 G (Form and method of notification).(3) Until the application has been determined, a firm which submits an application for variation of Part IV permission
(1) Section 51(2) of the Act (Applications under this Part) requires that the application for variation of Part IV permission must contain a statement:(a) of the desired variation; and(b) of the regulated activity or regulated activities which the firm proposes to carry on if its permission is varied.(2) The full form and content of the application for variation of Part IV permission is a matter for direction by the FSA, who will determine the additional information and documentation
In certain cases, FSA may consider that granting an application for variation of Part IV permission which includes adding further regulated activities or changing a requirement or limitation would cause a significant change in the firm's business or risk profile. In these circumstances, the FSA may require the firm to complete appropriate parts of the full application pack (see AUTH 3), as directed by the FSA. Applications for variation involving significant changes may be processed
(1) The FSA may ask for any information it reasonably requires before determining the application. The information required will be determined on a case by case basis, taking into account the FSA's existing knowledge of the firm and the variation requested. The FSA will advise the firm of the information required at an early stage in the application process.(2) The nature of the information and documents requested will be related to the risks posed to the FSA's regulatory objectives
Information which may be required. See SUP 6.3.24 G
Type of business |
Information which may be required |
All |
1. Details of how the firm plans to comply with the FSA's regulatory requirements relating to any additional regulated activities it is seeking to carry on. |
2. Descriptions of the firm's key controls, senior management arrangements and audit and proposed compliance arrangements in respect of any new regulated activity (see SYSC). |
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3. Organisation charts and details of individuals transferring or being recruited to perform new controlled functions (see SUP 10 for details of the application or transfer procedures under the approved persons regime). |
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1. A scheme of operations in accordance with SUP App 2. |
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2. (If the application seeks to vary a permission to include motor vehicle liability insurance business) details of the claims representatives required by threshold condition 2A (Appointment of claims representatives), if applicable. |
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1. A business plan which includes the impact of the variation on the firm's existing or continuing business financial projections for the firm, including the impact of the requested variation of Part IV permission on the firm's financial resources and capital adequacy requirements.2 |
(1) The FSA is required by section 41(2) of the Act to ensure that a firm applying to vary its Part IV permission satisfies and will continue to satisfy the threshold conditions in relation to all the regulated activities for which the firm has or will have Part IV permission after the variation. However, the FSA's duty under the Act does not prevent it, having regard to that duty, from taking such steps as it considers necessary in relation to a particular firm, to secure its
A decision to grant an application for variation of Part IV permission, as applied for, will be taken by appropriately experienced FSA staff. However, if the FSA staff dealing with the application recommend that a firm's application for variation of Part IV permission be either refused or granted subject to limitations or requirements or a narrower description of regulated activities than applied for, the decision will be taken by either the RDC or executive procedures.
If the variation of Part IV permission is given, the FSA will expect a firm to commence a new regulated activity in accordance with its business plan (revised as necessary to take account of changes during the application process) or scheme of operations for an insurer. Firms should take this into consideration when determining when to make an application to the FSA.
(1) Firms should be aware that the FSA may exercise its own-initiative power to vary or cancel their Part IV permission if they do not:(a) commence a regulated activity for which they have Part IV permission within a period of at least 12 months from the date of being given; or(b) carry on a regulated activity for which they have Part IV permission for a period of at least 12 months (irrespective of the date of grant). (2) If the FSA considers that such a variation or cancellation
(1) Threshold condition 4 (Adequate resources), requires the FSA to ensure that a firm has adequate resources in relation to the specific regulated activity or regulated activities which it seeks to carry on, or carries on.(2) In this context, the FSA will interpret the term 'adequate' as meaning sufficient in terms of quantity, quality and availability, and 'resources' as including all financial resources, non-financial resources and means of managing its resources; for example,
(1) When assessing this threshold condition, the FSA may have regard to any person appearing to it to be, or likely to be, in a relevant relationship with the firm, in accordance with section 49 of the Act (Persons connected with an applicant); for example, a firm's controllers, its directors or partners, other persons with close links to the firm (see COND 2.3), and other persons that exert influence on the firm which might pose a risk to the firm's satisfaction of the threshold
(1) When assessing whether a firm will satisfy and continue to satisfy threshold condition 4, the FSA will have regard to all relevant matters, whether arising in the United Kingdom or elsewhere.(2) Relevant matters may include but are not limited to:(a) whether there are any indications that the firm may have difficulties if the application is granted (see COND 2.4.6 G), at the time of the grant or in the future, in complying with any of the FSA'sprudential rules (see the relevant
A firm authorised under Part IV of the Act (Permission to carry on regulated activity) has a single Part IV permission granted by the FSA. A firm's Part IV permission specifies all or some of the following elements (as detailed in AUTH 3.3.3 G (When is Part IV permission required and what does it contain?)):(1) a description of the activities the firm may carry on, including any limitations;(2) the specified investments involved; and(3) if appropriate, requirements.
Variation and cancellation of Part IV permission. See ofSUP 6.2.3 G
Question |
Variation of Part IV permission |
Cancellation of Part IV permission |
What does the application apply to? |
Individual elements of a firm's Part IV permission. Variations may involve adding or removing categories of regulated activity or specified investments or varying or removing any limitations or requirements in the firm's Part IV permission. |
A firm's entire Part IV permission and not individual elements within it. |
In what circumstances is it usually appropriate to make an application? |
If a firm: 1. wishes to change the regulated activities it carries on in the United Kingdom under a Part IV permission (SUP 6.3); or 2. has the ultimate intention of ceasing carrying on regulated activities but due to the nature of those regulated activities (for example, accepting deposits, or insurance business) it will require a long term (normally over six months) to wind down (run off) its business (see SUP 6.2.8 G to SUP 6.2.11 G and SUP 6 Annex 4). |
If a firm: 1. has ceased to carry on all of the regulated activities for which it has Part IV permission (SUP 6.4); or 2. wishes or expects to cease carrying on all of the regulated activities for which it has Part IV permission in the short term (normally not more than six months). In this case, the firm may apply to cancel its Part IV permission prior to ceasing the regulated activities (see SUP 6.4.3 G). |
Where do I find a summary of the application procedures? |
See SUP 6 Annex 2 . |
See SUP 6 Annex 3. |
Discussions with the FSA are particularly relevant where the firm has to discharge obligations to its customers or policyholders before it can cease carrying on a regulated activity. This may be the case, for example, where the firm is an insurer, a bank or, as is often the case, holding client money or customer assets.
If an insureror a bank wishes to cease carrying on all regulated activities for which it has Part IV permission, it will usually be necessary to wind down the business over a long term period which is normally more than six months. This may also be the case for a firm holding client money or customer assets. In these circumstances, it will usually be appropriate for the firm to apply for variation of its Part IV permission before commencing the wind-down. A firm should only make
(1) Specific guidance on the additional procedures for a firm winding down (running off) its business in the circumstances discussed in SUP 6.2.8 G is in SUP 6 Annex 4.(2) The guidance in SUP 6 Annex 4 applies to any firm that is applying for variation of Part IV permission before it applies for cancellation of Part IV permission to enable it to wind down (run off) its business over a long term period of six months of more. It will apply to most insurers and banks and, in some
(1) A firm may apply to the FSA to cancel its Part IV permission before it has ceased carrying on all regulated activities. However, where a firm makes a formal application for cancellation of its permission when it has not yet ceased carrying on regulated activities, the FSA will expect the firm:(a) to cease those regulated activities within the short term (normally no more than six months from the date of application for cancellation); and(b) to have formal plans to cease its
Additional guidance for a firm carrying on insurance business, accepting deposits or which holds client money or customer's assets is given in SUP 6 Annex 4. As noted in SUP 6.2.9 G, it will usually be appropriate for a firm to apply for variation of its Part IV permission while winding down (running off) its regulated activities and before applying to cancel its Part IV permission.
A firm will be expected to demonstrate to the FSA that it has ceased carrying on regulated activities. The FSA may require, as part of the application, a report from the firm that includes, but is not limited to, the confirmations referred to in SUP 6.4.12 G (as appropriate to the firm's business). The FSA may also require additional information to be submitted with the report including, in some cases, confirmation or verification from a professional adviser on certain matters
The FSA will usually require the report in SUP 6.4.9 G to be signed by a director or other officer with authority to bind the firm. It may include confirmations from the firm that, in relation to business carried on under its Part IV permission, it has:(1) ceased carrying on all regulated activities;(2) properly disbursed funds in its client bank accounts and closed those accounts;(3) discharged all insurance or deposit liabilities; and(4) properly transferred all investments,
If a firm is transferring its business, the FSA may require a professional opinion in respect of certain aspects of the transfer. For example, the FSA may require a legal opinion on the validity of arrangements to transfer regulated activities, client money, client deposits, custody assets or any other property belonging to clients, to another authorised person. Alternatively, an auditor or reporting accountant may be requested to verify that a transfer has been properly accounted
The FSA will usually not cancel a firm's Part IV permission until the firm can demonstrate that, in relation to business carried on under that permission, it has, as appropriate:(1) ceased carrying on regulated activities or fully run off or transferred all insurance liabilities;(2) repaid all client money and client deposits;(3) discharged custody assets and any other property belonging to clients; and(4) discharged, satisfied or resolved complaints against the firm.
If it is not possible for a firm to demonstrate a relevant matter referred to in SUP 6.4.19 G, for example, depositors are uncontactable, the firm will be expected to have satisfied the FSA that it has made adequate provisions for discharging any liabilities to clients which do not involve the firm carrying on regulated activities.
Before the FSA cancels a firm'sPart IV permission, the firm will be expected to be able to demonstrate that it has ceased or transferred all regulated activities under that permission. For example, the firm may be asked to provide evidence that a transfer of business (including, where relevant, any client money, customer assets or deposits or insurance liabilities) is complete. As noted in SUP 6.4.9 G, the FSA may require the firm to confirm this by providing a report, in a form
In deciding whether to cancel a firm'sPart IV permission, the FSA will take into account all relevant factors in relation to business carried on under that permission, including whether:(1) there are unresolved, unsatisfied or undischarged complaints against the firm from any of its customers;(2) the firm has complied with CASS 4.3.99 R and CASS 5.5.80 R (Client money: discharge of fiduciary duty) and CASS 4.3.104 R (Client money: allocated but unclaimed client money) if it has
The following Tables 1 and 2 provide an outline of the regulated activities and specified investments that may be of relevance to firms considering undertaking passported activities under the Banking Consolidation Directive or the Investment Services Directive. The tables may be of assistance to UK firms that are thinking of offering financial services in another EEA State and to EEA firms that may offer those services in the United Kingdom.
(1) Threshold condition 5 (Suitability), requires the firm to satisfy the FSA that it is 'fit and proper' to have Part IV permission having regard to all the circumstances, including its connections with other persons, the range and nature of its proposed (or current) regulated activities and the overall need to be satisfied that its affairs are and will be conducted soundly and prudently (see also PRIN and SYSC).(2) The FSA will also take into consideration anything that could
In determining whether a firm will satisfy, and continue to satisfy, threshold condition 5 in respect of conducting its business with integrity and in compliance with proper standards, the relevant matters, as referred to in COND 2.5.4 G (2), may include but are not limited to whether:(1) the firm has been open and co-operative in all its dealings with the FSA and any other regulatory body (see Principle 11 (Relations with regulators)) and is ready, willing and organised to comply
(1) Under section 19 of the Act (The general prohibition), no person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is an authorised person, or he is an exempt person in relation to that activity.(2) A person will be an exempt person if he satisfies the conditions in section 39(1) of the Act, guidance on which is given in SUP 12.2.2 G. A person who is exempt as a result of satisfying these conditions is referred to in the Act as an appointed
(1) A person must satisfy the conditions in section 39(1) of the Act to become an appointed representative. These are that:(a) the person must not be an authorised person, that is, he must not have permission under the Act to carry on any regulated activity in his own right (section 39(1) of the Act); (b) the person must have entered into a contract with an authorised person, referred to in the Act as the 'principal', which:(i) permits or requires him to carry on business of
As long as the conditions in section 39 of the Act are satisfied, any person, other than an authorised person, may become an appointed representative, including a body corporate, a partnership or an individual in business on his own account. However, an appointed representative cannot be an authorised person under the Act; that is, it cannot be exempt for some regulated activities and authorised for others.
(1) The Appointed Representatives Regulations are made by the Treasury under section 39(1) of the Act. These regulations describe, among other things, the business for which an appointed representative may be exempt, which is business which comprises any of:(a) arranging (bringing about) deals in investments (article 25(1) of the Regulated Activities Order) (that is in summary, deals in a designated investment, funeral plan contract or right to or interest in a funeral plan);
(1) An introducer is an individual appointed by a firm or by an appointed representative of such a firm to carry out, in the course of designated investment business, either or both of the following activities:4(a) effecting introductions; (b) distributing non-real time financial promotions.(2) An introducer is not an exempt person under section 39 of the Act (unless he is also an introducer appointed representative) and hence cannot benefit from the exemption to carry on regulated
This is a guide only and should not be used as a substitute for legal advice
in individual cases.
Table 3: Insurance Directive activities |
Part II RAO Activities |
Part III RAO Investments |
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1. Non-life insurance activities |
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1. |
Taking up and carrying on direct non-life insurance business |
Article 10 |
Article 75 |
2. |
Classes 1 to 18 of direct non-life insurance business in Point A of the Annex to the First Directive |
Corresponding paragraphs 1 to 18 of Schedule 1, Part I |
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2. Consolidated Life Directive activities |
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1. |
Taking up and carrying on direct life insurance business |
Article 10 |
Article 75 |
2. |
Classes I to IX of direct life insurance business in the Annex 1 to the Consolidated Life Directive |
Corresponding paragraphs I to IX of Schedule 1, Part II |
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Most of the exclusions under the Directives, however, are not excluded from being regulated activities. For example, article 3 of the Consolidated Life Directive and article 3 of the Non-Life Directive exclude certain mutual associations whose annual contribution income falls below a defined threshold. In the United Kingdom, these include certain smaller friendly societies commonly referred to as "non-directive friendly societies". The activities of such societies are regulated
So, the effect of App 3.12.1 is that an insurer may be carrying on insurance business in the United Kingdom which is to be treated as a regulated activity under article 10 to the Regulated Activities Order (Effecting and carrying out contracts of insurance) in circumstances where the risks covered are treated as located in another EEA State. In that event, the insurer is required by Schedule 3 to the Act to passport into the State concerned and may be subject to conduct of business
An insurer authorised in another EEA State who is insuring UK risks and so passports on a services basis under the Insurance Directives into the United Kingdom (see ), may not be carrying on a regulated activity in the United Kingdom. But, if it passports into the United Kingdom, it will qualify for authorisation under paragraph 12 of Schedule 3 to the Act (Firms qualifying for authorisation). Where this is the case, the insurer will be subject to conduct of business requirements
Although the Insurance Directives are concerned with the regulated activities of effecting and carrying out contracts of insurance, an incoming EEA firm passported under the Consolidated Life Directive will be entitled to carry on certain other regulated activities without the need for top-up permission. This is where the regulated activities are carried on for the purposes of or in connection with the incoming EEA Firm'sinsurance business. These regulated activities may include:(1)
In assessing this threshold condition, factors which the FSA will take into consideration include, among other things, whether: (1) it is likely that the FSA will receive adequate information from the firm, and those persons with whom the firm has close links, to enable it to determine whether the firm is complying with the requirements and standards under the regulatory system and to identify and assess the impact on the regulatory objectives in section 2 of the Act (The FSA's
The application of most of MCOB is expressed by reference to four types of firm: mortgage lenders, mortgage administrators, mortgage arrangers and mortgage advisers. This includes those firms that provide business loans to customers under a regulated mortgage contracts (see MCOB 1.2.3 R to MCOB 1.2.9 G). A single firm may fall into more than one of these types. Guidance on these firm types, the regulated mortgage activities which they carry on, a description of what those activities
MCOB does not apply to an authorised professional firm with respect to its non-mainstream regulated activities except for:(1) MCOB 2.2 (Communications);(2) MCOB 3 (Financial promotion); and(3) MCOB 4.4 (Initial disclosure requirements) but only as regards providing the information contained in section 7 (What to do if you have a complaint) and section 8 (Are we covered by the Financial Services Compensation Scheme?) of MCOB 4 Annex 1 or MCOB 4 Annex 2, and MCOB 8 Annex 1 or MCOB
Authorised professional firms should be aware of the following:(1) PROF 5 (Non-mainstream regulated activities); and(2) MCOB 3.1.9 R (Authorised professional firms) and the exception in article 55 of the Financial Promotion Order (Communications by members of the professions) which applies in relation to qualifying credit promotions of authorised professional firms under MCOB 3.2.5 R(3) (Exemptions).
The effect of article 28A of the Regulated Activities Order would normally mean that arrangements made by a party to a regulated mortgage contract would not fall within the regulated mortgage activity of arranging. So in a direct sale, a mortgage lender would not be carrying on the regulated activity of arranging but, where the transaction proceeds to completion, would instead be involved in the regulated activity of entering into a regulated mortgage contract. However, the provisions
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
Compliance with Principle 11 includes, but is not limited to, giving the FSA notice of:(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:(a) setting up a new undertaking within a firm'sgroup, or a new branch (whether in the United Kingdom or overseas); or (b) commencing the provision of cross border services into a new territory; or(c) commencing the
A firm must notify the FSA immediately if one of the following events arises and the event is significant:(1) it becomes aware that an employee may have committed a fraud against one of its customers; or(2) it becomes aware that a person, whether or not employed by it, may have committed a fraud against it; or(3) it considers that any person, whether or not employed by it, is acting with intent to commit a fraud against it; or(4) it identifies irregularities in its accounting
The guidance in COND 2 explains each threshold condition in Part I of Schedule 6 (threshold conditions) to the Act and how the FSA will interpret it in practice. An overview of the threshold conditions is given in COND 1 Annex 1 G. This guidance is not, however, exhaustive and is written in very general terms. A firm will need to have regard to the obligation placed upon the FSA under section 41 (the threshold conditions) of the Act; that is, the FSA must ensure that the firm
Although the FSA may consider that a matter is relevant to its assessment of a firm, the fact that a matter is disclosed to the FSA, for example in an application, does not necessarily mean that the firm will fail to satisfy the threshold conditions. The FSA will consider each matter in relation to the regulated activities for which the firm has, or will have, permission, having regard to the regulatory objectives set out in section 2 of the Act (The FSA's general duties). A firm
(1) For ease of reference, the threshold conditions in or under Schedule 6 to the Act have been quoted in full in COND 2. (2) As these provisions impose obligations, they are printed in bold type. The use of bold type is not intended to indicate that these quotations are rules made by the FSA.(3) Where words have been substituted for the text of these provisions the substitutions are enclosed in square brackets ([ ]). However, none of the changes made by the FSA in these quotations
Principles 3, 4 and (in so far as it relates to disclosing to the FSA) 11 (and this chapter) also:(1) apply with respect to the carrying on of unregulated activities (for Principle 3 this is only in a prudential context); and(2) take into account any activity of other members of a group of which the firm is a member.
Failing
to take reasonable steps to implement (either personally or through a compliance
department or other departments) adequate and appropriate systems of control
to comply with the relevant requirements and standards of the regulatory system in respect of its regulated
activities falls within APER 4.7.2 E.
In the case of an approved person who
is responsible, under SYSC
2.1.3 R (2), with overseeing
the firm's obligation under SYSC
3.1.1 R, failing to take reasonable care
to
Failing
to take reasonable steps adequately to inform himself about the reason why
significant breaches (whether suspected or actual) of the relevant requirements
and standards of the regulatory system in
respect of its regulated activities may have arisen (taking account
of the systems and procedures in place) falls within APER 4.7.2 E.
Failing
to take reasonable steps to ensure that procedures and systems of control
are reviewed and, if appropriate, improved, following the identification of
significant breaches (whether suspected or actual) of the relevant requirements
and standards of the regulatory system relating
to its regulated activities, falls within APER 4.7.2 E (see APER 4.7.13 G).
A firm's notice under SUP 12.7.1 R should give details of the appointed representative and the regulated activities which the firm is, or intends to, carry on through the appointed representative, including:(1) the name of the firm's new appointed representative (if the appointed representative is a body corporate, this is its registered name);(2) any trading name under which the firm's new appointed representative carries on a regulated activity in that capacity;(3) a description
(1) Under section 41(2) of the Act (The threshold conditions), in giving or varying a Part IV permission or imposing or varying any requirement, the FSA must ensure that the firm concerned will satisfy, and continue to satisfy, the threshold conditions in relation to all of the regulated activities for which it has or will have permission.(2) If, however, the applicant for permission is an incoming firm seeking top-up permission, or variation of top-up permission, under Part IV
(1) If, among other things, a firm is failing to satisfy any of the threshold conditions, or is likely to fail to do so, section 45 of the Act (Variation etc. on the FSA's own initiative) states that the FSA may exercise its own-initiative power. Use of the FSA'sown-initiative power is explained in SUP 7 (Individual requirements), ENF 3 (Variation of Part IV permission on the FSA's own initiative) and ENF 5 (Cancellation of Part IV permission on the FSA's own initiative and withdrawal
(1) The Ombudsman cannot consider a complaint (except as described in (2)) if the complainant refers it to the Financial Ombudsman Service:(a) less than eight weeks after receipt of the complaint by the firm or VJ participant, unless the firm or VJ participant has already sent the complainant its final response; or(b) more than six months after the date on which the firm or VJ participant sends the complainant its final response advising him that he may refer his complaint to
Under
DISP 5.6.1 R
a firm or VJ participant is liable to pay a case fee in respect of chargeable cases. However, in some circumstances, the Ombudsman may conclude that a firm or VJ participant should have more time to resolve a complaint before a case fee is incurred (for example, where there has been delay in obtaining information from third parties or where the Ombudsman considers that the complainant has not fully cooperated with the firm or VJ participant in the investigation