Related provisions for REC 6.5.1
21 - 40 of 245 items.
The purpose of this chapter is to give guidance on the FSA's use of the power in section 166 of the Act (Reports by skilled persons). The purpose is also to make rules requiring a firm to include certain provisions in its contract with a skilled person and to give assistance to a skilled person. These rules are designed to ensure that the FSA receives certain information from a skilled person and that a skilled person receives assistance from a firm.
The first part of the exemption (referred to in PERG 8.12.34G (1)) specifically precludes any form of written communication. However, the FSA understands that the Treasury did not intend to prohibit the use of written words in the form of subtitling. These may be an aid to those with hearing difficulties or to interpret a foreign language, or the use of captions which supplement a spoken communication by highlighting aspects of it without introducing anything new. The FSA cannot
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.
The FSA will usually consider revoking a recognition order if:(1) the recognised body is failing or has failed to satisfy the recognition requirements or other obligations in or under the Act and that failure has or will have serious consequences; or(2) it would not be possible for the recognised body to comply with a direction under section 296 of the Act (FSA's power to give directions); or (3) for some other reason, it would not be appropriate for the FSA to give a direction
The FSA would be likely to consider the conditions in REC 4.7.3 G (2) or REC 4.7.3 G (3) to be satisfiedin the following circumstances:(1) the recognised body appears not to have the resources or management to be able to organise its affairs so as to satisfy the recognition requirements or other obligations in or under the Act(2) the recognised body does not appear to be willing to satisfy the recognition requirements or other obligations in or under the Act; or(3) the recognised
In addition to the factors set out in REC 4.7.4 G, the FSA will usually consider that it would not be able to secure an overseas recognised body's compliance with the recognition requirements or other obligations in or under the Act by means of a direction under section 296 of the Act, if it appears to the FSA that the overseas recognised body is prevented by any change in the legal framework or supervisory arrangements to which it is subject in its home territory from complying
A UK firm cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and, if it derives its EEA right from the Insurance Directives, paragraph 20(4B) of Part III of Schedule 3 to the Act. It is an offence for a UK firm which is not an authorised person to breach this prohibition (paragraph 21 of Part III of Schedule 3 to the Act).The conditions are that:(1) the
If a UK firm has given the FSA a notice of intention in the required form, then:(1) if the UK firm'sEEA right derives from the Investment Services Directive, the Banking Consolidation Directive or the UCITS Directive, paragraph 20(3) of Part III of Schedule 3 to the Act requires the FSA to send a copy of the notice of intention to the Host State Regulator within one month of receipt; or(2) (a) if the UK firm'sEEA right derives from theInsurance Directives, paragraph 20(3A) of
The test in section 236(3)(a) of the Act is whether the reasonable investor would expect that, were he to invest, he would be in a position to realise his investment within a period appearing to him to be reasonable. In the FSA's view, this is an objective test with the appropriate objective judgment to be applied being that of the hypothetical reasonable investor with qualities such as those mentioned in PERG 9.7.2 G (The investment condition: the 'reasonable investor').
In the FSA's view, the 'realisation' of an investment means converting an asset into cash or money. The FSA does not consider that 'in specie' redemptions (in the sense of exchanging shares or securities of BC with other shares or securities) will generally count as realisation. Section 236(3)(a) refers to the realisation of an investment, the investment being represented by the 'value' of shares or securities held in BC. In the FSA's view, there is no realisation of value where
The use of an expectation test ensures that the definition of an open-ended investment company is not limited to a situation where a holder of shares in, or securities of, a body corporate has an entitlement or an option to realise his investment. It is enough if, on the facts of any particular case, the reasonable investor would expect that he would be able to realise the investment. The following are examples of circumstances in which the FSA considers that a reasonable investor
In the FSA's view, the fact that a person may invest in the period shortly before a redemption date would not cause a body corporate, that would not otherwise be regarded as such, to be open-ended. This is because the investment condition must be applied in relation to BC as a whole (see PERG 9.6.3 G (The investment condition (section 236(3) of the Act): general).
A decision to: (1) revoke a recognition order under section 297 of the Act (Revoking recognition); or(2) make a direction under section 296 (FSA's powers to give directions); or(3) refuse to make a recognition order under section 290 (Recognition orders);is a serious one and section 298 of the Act (Directions and revocation: procedure) sets out a procedure (see REC 4.8.9 G) which the FSA will follow unless, in the case of a revocation of a recognition order, the recognised body
In considering whether it would be appropriate to exercise the powers under section 296 or section 297 of the Act, the FSA will have regard to all relevant information and factors including:(1) its guidance to recognised bodies;(2) the results of its routine supervision of the body concerned;(3) the extent to which the failure or likely failure to satisfy the recognition requirements or other obligations in or under the Act may affect the regulatory objectives.
Before exercising its powers under section 296 or section 297 of the Act, the FSA will usually discuss its intention, and the basis for this, with the key individuals or other appropriate representatives of the recognised body. It will usually discuss its intention not to make a recognition order with appropriate representatives of the applicant.
The FSA will send a notice in writing requiring the person in SUP 5.2.1 G to provide a report by a skilled person on any matter if it is reasonably required in connection with the exercise of its functions conferred by or under the Act. The FSA may require the report to be in whatever form it specifies in the notice (SUP 5 Annex 2 summarises the appointment and reporting processes).
But under section 316 of the Act (Direction by the FSA) the general prohibition does not apply to a person who is a member of the Society of Lloyds unless the FSA has made a direction that it should apply. The general prohibition is disapplied in relation to any regulated activity carried on by a member relating to contracts of insurance written at Lloyds. Directions can be made by the FSA in relation to individual members or the members of the Society of Lloyds taken together.
Such a person may carry on regulated activities if the conditions outlined below are met, that is the person:(1) is not affected by an order or direction made by the FSA under section 328 or 329 of the Act (Directions and orders in relation to the general prohibition) which has the effect of re-imposing the general prohibition in any particular case;(2) is, or is controlled by, a member of a profession;(3) does not receive any pecuniary reward or other advantage from the regulated
A person carrying on regulated activities under the regime for members of the professions will be subject to rules made by the professional body designated by the Treasury. Such bodies are obliged to make rules governing the carrying on by their members of those regulated activities that they are able to carry on without authorisation under the Act. Where such a person is carrying on insurance mediation or reinsurance mediation, he must also be included on the register kept by
Each of these aspects of the definition is considered in greater detail in PERG 9.4 (Collective investment scheme (section 235 of the Act)) to PERG 9.9 (The investment condition: the 'satisfaction test' (section 236(3)(b) of the Act)). Although the definition has a number of elements, the FSA considers that it requires an overall view to be taken of the body corporate. This is of particular importance in relation to the investment condition (see PERG 9.6.3 G and PERG 9.6.4 G (The
The FSA understands that the aim of the definition in section 236 of the Act is to include any body corporate which, looked at as a whole, functions as an open-ended investment vehicle. The definition operates against a background that there is a wide range of different circumstances in which any particular body corporate can be established and operated. For example, the definition applies to bodies corporate wherever they are formed. So, in the application of the definition to
For a body corporate formed outside the United Kingdom, there is an additional issue as to how the applicable corporate law and the definition of open-ended investment company in the Act relate to one another. The FSA understands this to operate as follows. The term 'body corporate' is defined in section 417(1) of the Act (Interpretation) as including 'a body corporate constituted under the law of a country or territory outside the United Kingdom'. So, whether or not any particular
A UK firm cannot establish a branch in another EEA State for the first time under an EEA right unless the conditions in paragraphs 19(2), (4) and (5) of Part III of Schedule 3 to the Act are satisfied. It is an offence for a UK firm which is not an authorised person to contravene this prohibition (paragraph 21 of Part III of Schedule 3 to the Act). These conditions are that:(1) the UKfirm has given the FSA, in accordance with the FSArules (see SUP 13.5.1 R), notice of its intention
The Act does not contain any definition of the expressions ‘invitation’ or ‘inducement’, leaving them to their natural meaning. The ordinary dictionary entries for ‘invitation’ and ‘inducement’ offer several possible meanings to the expressions. An ‘invitation’ is capable of meanings ranging from merely asking graciously or making a request to encouraging or soliciting. The expression ‘inducement’ is given meanings ranging from merely bringing about to prevailing upon or persuading.
The FSA recognises that the matter cannot be without doubt. However, it is the FSA's view that the context in which the expressions ‘invitation’ or ‘inducement’ are used clearly suggests that the purpose of section 21 is to regulate communications which have a promotional element. This is because they are used as restrictions on the making of financial promotions which are intended to have a similar effect to restrictions on advertising and unsolicited personal communications
The FSA considers that it is appropriate to apply an objective test to decide whether a communication is an invitation or an inducement. In the FSA's view, the essential elements of an invitation or an inducement under section 21 are that it must both have the purpose or intent of leading a person to engage in investment activity and be promotional in nature. So it must seek, on its face, to persuade or incite the recipient to engage in investment activity. The objective test
Merely asking a person if they wish to enter into an agreement with no element of persuasion or incitement will not, in the FSA's view, be an invitation under section 21. For example, the FSA does not consider an invitation to have been made where:(1) a trustee or nominee receives an offer document of some kind and asks the beneficial owner whether he wishes it to be accepted or declined;(2) a person such as a professional adviser enquires whether or not his client would be willing
Schedule to the Recognition Requirements Regulations, paragraph 3
(1) |
The [UK RIE] must ensure that the systems and controls used in the performance of its [relevant functions] are adequate, and appropriate for the scale and nature of its business. |
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(2) |
Sub-paragraph (1) applies in particular to systems and controls concerning - |
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(a) |
the transmission of information; |
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(b) |
the assessment and management of risks to the performance of the [UK RIE'srelevant functions]; |
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(c) |
the effecting and monitoring of transactions on the [UK RIE]; |
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(d) |
the operation of the arrangements mentioned in paragraph 4(2)(d); and |
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(e) |
(where relevant) the safeguarding and administration of assets belonging to users of the [UK RIE's] facilities.1 |
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The FSA may also have regard to the systems and controls intended to ensure that confidential information is only used for proper purposes. Where relevant, recognised bodies will have to comply with section 348 (Restrictions on disclosure of confidential information by the FSA etc.) and regulations made under section 349 (Exemptions from section 348) of the Act.
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.
Section 80 (1) of the Act (general duty of disclosure in listing
particulars) requires listing particulars submitted
to the FSA to contain all such information as investors
and their professional advisers would reasonably require, and reasonably expect
to find there, for the purpose of making an informed assessment of:(1) the assets and liabilities, financial
position, profits and losses, and prospects of the issuer of
the securities; and(2) the rights attaching to the securi
A request to the FSA to authorise the omission of specific
information in a particular case must:(1) be in writing from the issuer;(2) identify the specific information
concerned and the specific reasons for the omission; and(3) state why in the issuer's opinion
one or more of the grounds in section 82 of the Act applies.
Within the legal constraints that apply, the FSA may pass on to a skilled person any information which it considers relevant to the skilled person's function. A skilled person, being a primary recipient under section 348 of the Act (Restrictions on disclosure of confidential information by Authority etc.), is bound by the confidentiality provisions in Part XXIII of the Act (Public record, disclosure of information and cooperation) as regards confidential information he receives
Sections 87H and 87I of the Act provide:
Prospectus approved in another EEA State |
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87H |
(1) |
A prospectus approved by the competent authority of an EEA State other than the United Kingdom is not an approved prospectus for the purposes of section 85 unless that authority has provided the competent authority with – |
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(a) |
a certificate of approval; |
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(b) |
a copy of the prospectus as approved; and |
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(c) |
if requested by the [FSA], a translation of the summary of the prospectus. |
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(2) |
A document is not a certificate of approval unless it states that the prospectus – |
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(a) |
has been drawn up in accordance with the prospectus directive; and |
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(b) |
has been approved, in accordance with that directive, by the competent authority providing the certificate. |
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(3) |
A document is not a certificate of approval unless it states whether (and, if so, why) the competent authority providing it authorised, in accordance with the prospectus directive, the omission from the prospectus of information which would otherwise have been required to be included. |
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(4) |
“Prospectus” includes a supplementary prospectus. |
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Provision of information to host Member State |
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87I |
(1) |
The [FSA] must, if requested to do so, supply the competent authority of a specified EEA State with – |
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(a) |
a certificate of approval; |
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(b) |
a copy of the specified prospectus (as approved by the [FSA]); and |
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(c) |
a translation of the summary of the specified prospectus (if the request states that one has been requested by the other competent authority). |
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(2) |
Only the following may make a request under this section – |
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(a) |
the issuer of the transferable securities to which the specified prospectus relates; |
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(b) |
a person who wishes to offer the transferable securities to which the specified prospectus relates to the public in an EEA State other than (or as well as) the United Kingdom; |
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(c) |
a person requesting the admission of the transferable securities to which the specified prospectus relates to a regulated market situated or operating in an EEA State other than (or as well as) the United Kingdom. |
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(3) |
A certificate of approval must state that the prospectus – |
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(a) |
has been drawn up in accordance with this Part and the prospectus directive; and |
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(b) |
has been approved, in accordance with those provisions, by the [FSA]. |
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(4) |
A certificate of approval must state whether (and, if so, why) the [FSA] authorised, in accordance with section 87B, the omission from the prospectus of information which would otherwise have been required to be included. |
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(5) |
The [FSA] must comply with a request under this section – |
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(a) |
if the prospectus has been approved before the request is made, within 3 working days beginning with the date of the request; or |
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if the request is submitted with an application for the approval of the prospectus, on the first working day after the date on which it approves the prospectus. |
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(6) |
“Prospectus” includes a supplementary prospectus. |
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(7) |
“Specified” means specified in a request made for the purposes of this section. |
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(1) This rule applies to a request by a person to the FSA to supply information referred to in section 87I of the Act to the competent authority of a relevant Host State.(2) The request must be in writing and must include:(a) the relevant prospectus as approved (if it has already been approved); and(b) a translation of the summary if required by the competent authority of a relevant host State.
If the FSA receives information referred to in section 87H from another competent authority it will as soon as practicable:(1) inform the issuer, offeror or person requesting admission (as the case may be) that it has received the information; and(2) give notice on the FSA's website that it has received the information.