Related provisions for REC 6A.2.3
1 - 20 of 307 items.
In addition to the general factors outlined in DEPP 6.2.1 G, there are some additional considerations that may be relevant when deciding whether to take action against an approved person pursuant to section 66 of the Act. This list of those considerations is non-exhaustive. Not all considerations below may be relevant in every case, and there may be other considerations, not listed, that are relevant.(1) The approved person's position and responsibilities. The FSA may take into
The primary responsibility for ensuring compliance with Part VI of the Act, the Part 6 rules, the prospectus rules or a provision otherwise made in accordance with the Prospectus Directive or a requirement imposed under such provision rests with the persons identified in section 91(1) and section 91(1A) (Penalties for breach of Part 6 rules) of the Act respectively. Normally therefore, any disciplinary action taken by the FSA for contraventions of these obligations will in the
However, in the case of a contravention by a person referred to in section 91(1)(a) or section 91(1)(b)(i) or section 91(1A) of the Act ("P"), where the FSA considers that another person who was at the material time a director of P was knowingly concerned in the contravention, the FSA may take disciplinary action against that person. In circumstances where the FSA does not consider it appropriate to seek a disciplinary sanction against P (notwithstanding a breach of relevant requirements
The Principles are set out in PRIN 2.1.1 R. The Principles are a general statement of the fundamental obligations of firms under the regulatory system. The Principles derive their authority from the FSA's rule-making powers set out in section 138(General rule-making power) of the Act. A breach of a Principle will make a firm liable to disciplinary action. Where the FSA considers this is appropriate, it will discipline a firm on the basis of the Principles alone.
The Listing Principles are set out in LR 7. The Listing Principles are a general statement of the fundamental obligations of listed companies. The Listing Principles derive their authority from the FSA's rule making powers set out in section 73A(1) (Part 6 Rules) of the Act. A breach of a Listing Principle will make a listed company liable to disciplinary action by the FSA.
In any case where the FSA considers that the use of its powers under any of sections 123, 129, 381, 383 or 384 of the Act may be appropriate, if that use may affect the timetable or outcome of a takeover bid or where it is appropriate in the context of any exercise by the Takeover Panel of its powers and authority, the FSA will consult the Takeover Panel before using any of those powers.
FSA staff under executive procedures will take the decision to give a warning notice if the FSA proposes to:(1) refuse an application for a Part IV permission or to refuse an application to cancel a Part IV permission;(2) impose a limitation or a requirement which was not applied for, or specify a narrower description of regulated activity than that applied for, on the grant of a Part IV permission;(3) refuse an application to vary a Part IV permission, or to restrict a Part IV
FSA staff under executive procedures will take the following statutory notice decisions:(1) the refusal of an application for listing of securities;(2) the suspension of listing on the FSA's own initiative or at the request of the issuer;(3) the suspension of trading in a financial instrument;(4) the discontinuance of listing of securities at the issuer's request;(5) the exercise of any of the powers in sections 87K or 87L of the Act in respect of a breach of any applicable provision;(6)
The decisions referred to in DEPP 2.5.12 G are:(1) the decision to give a supervisory notice pursuant to section 259(3), (8) or 9(b) (directions on authorised unit trust schemes); section 268(3), 7(a) or 9(a) (directions in respect of recognised overseas schemes); or section 282(3), (6) or (7)(b) (directions in respect of relevant recognised schemes) of the Act;(2) the decision to give a warning notice or decision notice pursuant to section 280(1) or (2)(a) (revocation of recognised
A notice under section 264(2) of the Act (notification of non-compliance with UK law) relating to a collective investment scheme constituted in another EEA State is not a warning notice, but the FSA will operate a procedure for a section 264(2) notice which will be similar to the procedure for a warning notice.
The FSA expects to adopt a procedure in respect of notices under enactments other than the Act which is similar to that for statutory notices under the Act, but which recognises any differences in the legislative framework and requirements. DEPP 2 Annex 1 and DEPP 2 Annex 2 therefore identify notices to be given pursuant to other enactments and the relevant FSA decision maker.
Some of the distinguishing features of notices given under enactments other than the Act are as follows: (1) Building Societies Act 1986, section 36A: There is no right to refer a decision to issue a prohibition order under section 36A to the Tribunal. Accordingly, a decision notice under section 36A(5A) is not required to give an indication of whether any such right exists. A decision notice under section 36A(5A) may only relate to the issue of a prohibition order under section
The terms of any proposed settlement:(1) will be put in writing and be agreed
by FSA staff
and the person concerned;(2) may refer to a draft of the proposed statutory notices setting out the facts
of the matter and the FSA's conclusions; (3) may, depending upon the stage in
the enforcement process at which agreement is reached, include an agreement
by the person concerned to: (a) waive and not exercise any rights
under sections 387 (Warning notices) and 394 (Access to Authority
(1) DEPP 2.4 sets out the FSA's approach
to giving third parties copies of statutory
notices pursuant to section 393 (Third party rights) of the Act.(2) The decision to give a warning notice or a decision
notice to a third party is a statutory
notice associated decision.(3) In cases therefore where the decision
to give a warning notice or decision notice is taken by settlement decision makers, those decision
makers will decide whether a copy of the notice should be given to a
If the RDC considers it relevant to its consideration, it may ask FSA staff to explain or provide any or all of the following:(1) additional information about the matter (which FSA staff may seek by further investigation); or(2) further explanation of any aspect of the FSA staff recommendation or accompanying papers; or(3) information about FSA priorities and policies (including as to the FSA's view on the law or on the correct legal interpretation of provisions of the Act).
If the RDC decides that the FSA should give a warning noticeor a first supervisory notice:(1) the RDC will settle the wording of the warning notice or first supervisory notice, and will ensure that the notice complies with the relevant provisions of the Act;(2) the RDC will make any relevant statutory notice associated decisions;(3) the RDC staff will make appropriate arrangements for the notice to be given; and(4) the RDC staff will make appropriate arrangements for the disclosure
(1) A warning notice or a first supervisory notice will (as required by the Act) specify the time allowed for making representations. This will not be less than 28 days.(2) The FSA will also, when giving a warning notice or a first supervisory notice, specify a time within which the recipient is required to indicate whether he wishes to make oral representations.
If the RDC decides that the FSA should give a decision notice or a second supervisory notice:(1) the RDC will settle the wording of the notice which will include a brief summary of the key representations made and how they have been dealt with, and will ensure that the notice complies with the relevant provisions of the Act;(2) the RDC will make any relevant statutory notice associated decisions, including whether the FSA is required to give a copy of the notice to a third party;
(1) A firm must notify the FSA of:(a) a significant breach of a rule (which includes a Principle, or a Statement of Principle ; or(b) a breach of any requirement imposed by the Act or by regulations or an order made under the Act by the Treasury (except if the breach is an offence, in which case (c) applies);6(c) the bringing of a prosecution for, or a conviction of, any offence under the Act;(d) a breach of a directly applicable provision in the MiFID Regulation; or6(e) a breach
A firm must notify the FSA immediately if:(1) civil proceedings are brought against the firm and the amount of the claim is significant in relation to the firm's financial resources or its reputation; or(2) any action is brought against the firm under section 71 of the Act (Actions for damages) or section 150 (Actions for damages); or(3) disciplinary measures or sanctions have been imposed on the firm by any statutory or regulatory authority, professional organisation or trade
3SUP 15.3.23 D to SUP 15.3.25 D are given in relation to the exercise of the powers of the Society and of the Council generally, with a view to achieving the objective of enabling the FSAto:(1) comply with its general duty under section 314 of the Act (Authority's general duty);(2) determine whether underwriting agents, or approved persons acting for them or on their behalf, are complying with the requirements imposed on them by or under the Act;(3) enforce the provisions of the
3The Society must inform the FSA if it commences investigations or disciplinary proceedings relating to apparent breaches:(1) of the Act or requirements made under the Act, including the threshold conditions or the Principles or other rules, by an underwriting agent; or(2) of the Statements of Principle by an individual or other person who carries out controlled functions for or on behalf of an underwriting agent.
Section 395 of the Act (The FSA's procedures)
requires the FSA to
publish a statement of its procedure for the giving of statutory
notices. The procedure must be designed to secure, among other
things, that the decision which gives rise to the obligation to give a statutory notice is taken by a person not
directly involved in establishing the evidence on which that decision is based. The
types of statutory notices and
related notices, and the principal references to them in the
Table: Summary of statutory and related notices
Notice |
Description |
Act reference |
Further information |
Gives the recipient details about action that the FSA proposes to take and about the right to make representations. |
Section 387 |
||
Gives the recipient details about action that the FSA has decided to take. The FSA may also give a further decision notice if the recipient of the original decision notice consents. |
Section 388 |
||
Identifies proceedings set out in a warning notice or decision notice and which are not being taken or are being discontinued. |
Section 389 |
||
Sets out the terms of the action that the FSA is taking. |
Section 390 |
||
Gives the recipient details about action that the FSA has taken or proposes to take, for example to vary a Part IV permission. |
Section 395(13) |
Decisions on whether to give a statutory notice will be taken by a 'decision
maker'. The FSA's assessment
of who is the appropriate decision maker is subject to the requirements of
section 395 of the Act and will
depend upon the nature of the decision, including its complexity, importance
and urgency. References to the 'decision maker' in DEPP are
to:(1) the Regulatory
Decisions Committee (RDC);
or(2) FSA staff
under executive procedures;
or(3) FSA staff
under the settlement decision
The decision maker will also take
decisions associated with a statutory notice (a
'statutory notice associated decision'). Statutory notice associated decisions include
decisions:(1) to set or extend the period for
making representations;(2) on whether the FSA is required to give a copy of
the statutory notice to any
third party and, if so, the period for the third party to make representations;
and(3) on whether to refuse access to FSA material,
relevant to the relevant statutory
The appointment of a skilled person to produce a report under section 166 of the Act (Reports by skilled persons) is one of the FSA's regulatory tools. The tool may be used:(1) for diagnostic purposes, to identify, assess and measure risks; (2) for monitoring purposes, to track the development of identified risks, wherever these arise;(3) in the context of preventative action, to limit or reduce identified risks and so prevent them from crystallising or increasing; and (4) for
The decision to require a report by a skilled person will normally be prompted by a specific requirement for information, analysis of information, assessment of a situation,4 expert advice or recommendations or by a decision to seek assurance in relation to a regulatory return4. It may4 be part of the risk mitigation programme applicable to a firm, or the result of an event or development relating or relevant to a firm, prompted by a need for verification of information provided
When making the decision to require a report by a skilled person, the FSA will have regard, on a case-by-case basis, to all relevant factors. Those are likely to include:(1) circumstances relating to the firm;(2) alternative tools available, including other statutory powers;(3) legal and procedural considerations;(4) the objectives of the FSA's enquiries;(5) cost considerations; and(6) considerations relating to FSA resources.SUP 5.3.4 G to SUP 5.3.10 G give further guidance
The FSA will have regard to alternative tools that may be available, including for example:(1) obtaining what is required without using specific statutory powers (for example, by a visit by FSA staff or a request for information on an informal basis); (2) requiring information from firms and others, including authorising an agent to require information, under section 165 of the Act (Authority's power to require information);(3) appointing investigators to carry out general investigations
The FSA will have regard to legal and procedural considerations including:(1) statutory powers: whether one of the other available statutory powers is more appropriate for the purpose than the power in section 166 of the Act (Reports by skilled persons);(2) subsequent proceedings: whether it is desirable to obtain an authoritative and independent report for use in any subsequent proceedings; and(3) application of the Handbookrules: whether it is important that the relevant rules
The FSA will have regard to the objectives of its enquiries, and the relative effectiveness of its available powers to achieve those objectives. For example:(1) historic information or evidence: if the objectives are limited to gathering historic information, or evidence for determining whether enforcement action may be appropriate, the FSA's information gathering and investigation powers under sections 165 (Authority's power to require information), 167 (Appointment of persons
In accordance with its general policy the FSA will have regard to the question of cost, which is particularly pertinent in relation to skilled persons because:(1) if the FSA uses the section 166 power (Reports by skilled persons) the firm will appoint, and will have to pay for the services of, the skilled person;(2) if the FSA uses its other information gathering and investigation powers, it will either authorise or appoint its own staff to undertake the information gathering
In having regard to the cost implications of using the section 166 power (Reports by skilled persons) alternative options (such as visits) or other powers, the FSA will take into account relevant factors, including:(1) whether the firm may derive some benefit from the work carried out and recommendations made by the skilled person, for instance a better understanding of its business and its risk profile, or the operation of its information systems, or improvements to its systems
Under section 148(4) of the Act, the FSA may not give a waiver unless it is satisfied that:(1) compliance by the firm with the rules, or with the rules as unmodified, would be unduly burdensome, or would not achieve the purpose for which the rules were made; and(2) the waiver would not result in undue risk to persons whose interests the rules are intended to protect.
Under section 148(2) of the Act the FSA may give a waiver with the consent of a firm. This power may be used by the FSA in exceptional circumstances where the FSA considers that a waiver should apply to a number of firms (for example, where a rule unmodified may not meet the particular circumstances of a particular category of firm). In such cases the FSA will inform the firms concerned that the waiver is available, either by contacting firms individually or by publishing details
(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 (see EG 8 (Variation and cancellation of permission on the FSA's own initiative and intervention against incoming firms))9:(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
Under section 294 of the Act (Modification or waiver of rules), the FSA may, on the application or with the consent of a recognised body (including an overseas recognised body), direct that any notification rule is not to apply to the body or is to apply with such modifications as may be specified in the waiver.
Under section 294(4) of the Act, before the FSA may give a waiver of notification rules, it must be satisfied that:(1) compliance by the recognised body with those notification rules, or with those rules as unmodified, would be unduly burdensome or would not achieve the purpose for which those rules were made; and(2) the waiver would not result in undue risk to persons whose interests those rules are designed to protect.
There is no application form, but applicants should make their application formally and in writing and in accordance with any direction the FSA may make under section 294(2) of the Act. Each application should set out at least:(1) full particulars of the waiver which is requested; (2) the reason why the recognised body believes that the criteria set out in section 294(4) (and described in REC 3.3.3 G) would be met, if this waiver were granted; and (3) where the recognised body
Any waiver given by the FSA under section 294 of the Act will be made in writing, stating: (1) the name of the recognised body in respect of which the waiver is made;(2) the notification rules which are to be waived or modified in respect of that body;(3) where relevant, the manner in which any rule is to be modified;(4) any condition or time limit to which the waiver is subject; and(5) the date from which the waiver is to take effect.
The FSA will periodically review any waiver it has given. The FSA has the right to revoke a waiver under section 294(6) of the Act. This right is likely to be exercised in the event of a material change in the circumstances of the recognised body or in any fact on the basis of which the waiver was given.
Under section 169(1)(b) of the Act,
the FSA may
appoint an investigator to investigate any matter at the request of an overseas regulator. The powers of the investigator appointed by the FSA (referred to here as the 'FSA's investigator') include the power to require persons to
attend at a specified time and place and answer questions (the compulsory
interview power).
Where the FSA appoints an investigator in response to a request from an overseas regulator it may, under section 169(7) of the Act,
direct him to permit a representative of that regulator to attend and take
part in any interviews conducted for the purposes of the investigation. The FSA may
only give a direction under section 169(7) if it is satisfied that any information
obtained by an overseas regulator as a result of the interview will
be subject to the safeguards equivalent
Before making a direction under
section 169(7) the FSA will discuss and determine with the overseas
regulator how this statement of policy will
apply to the conduct of the interview, taking into account all the circumstances
of the case. Amongst other matters, the FSA will at this stage determine the extent to which the representative
of the overseas regulator will be able to participate in
the interview. The overseas regulator will be notified of this determination
on the issuing
In order to make an unsolicited real time financial promotion, an overseas communicator must rely on either article 32 or article 33. Article 32 provides an exemption for unsolicited real time financial promotions made by an overseas communicator to persons who were previously overseas and were a customer of his then. This is subject to certain conditions, including that, in broad terms, the customer would reasonably expect to be contacted about the subject matter of the financial
(1) 1Under section 313A of the Act, the FSA may for the purpose of protecting:(a) the interests of investors; or (b) the orderly functioning of the financial markets; require a UK RIE to suspend or remove a financial instrument from trading.(2) If the FSA exercises this power, the UK RIE concerned may refer the matter to the Tribunal.
The procedure the FSA will follow if it exercises its power to require a UK RIE to suspend or remove a financial instrument from trading is set out in section 313B of the Act. The FSA's internal arrangements provide for decisions to exercise this power to be taken at an appropriately senior level. If the FSA exercises this power, the UK RIE concerned and the issuer (if any) of the relevant financial instrument may refer the matter to the Tribunal(see EG 2.39)2.2
Section 19 of the Act (The general prohibition) provides that the requirement to be authorised under the Act only applies in relation to regulated activities which are carried on 'in the United Kingdom'. In many cases, it will be quite straightforward to identify where an activity is carried on. But when there is a cross-border element, for example because a borrower is outside the United Kingdom or because some other element of the activity happens outside the United Kingdom,
The FSA's view of the effect of the Act and Regulated Activities Order in various territorial scenarios is set out in the remainder of this section. In those scenarios:(1) the term "service provider" is used to describe a person carrying on any of the regulated mortgage activities;(2) the term "borrower" refers to a borrower who is an individual and not a trustee; the position of a borrower acting as a trustee is not considered; and(3) it is assumed that the activity is not an
When considering whether it is satisfied under section 148(6), the FSA is required by section 148(7) of the Act:(1) to take into account whether the waiver relates to a rule contravention of which is actionable under section 150 of the Act (Actions for damages); Schedule 5 identifies such rules;(2) to consider whether its publication would prejudice, to an unreasonable degree, the commercial interests of the firm concerned, or any other member of its immediate group; and(3) to
Waivers can affect the legal rights of third parties, including consumers. In the FSA's view it is important that the fact and effect of such waivers should be transparent. So the fact that a waiver relates to a rule that is actionable under section 150 of the Act (see SUP 8.6.2 G (1)) will tend to argue in favour of publication.
In considering whether commercial interests would be prejudiced to an unreasonable degree (see SUP 8.6.2 G (2)), the FSA will weigh the prejudice to firms' commercial interests against the interests of consumers, markets and other third parties in disclosure. In doing so the FSA will consider factors such as the extent to which publication of the waiver would involve the premature release of proprietary information to commercial rivals, for example relating to a product innovation,
Achieving the regulatory objectives involves the FSA informing itself of developments in firms and in markets. The Act requires the FSA to monitor a firm's compliance with requirements imposed by or under the Act (paragraph 6 (1) of Schedule 1). The Act also requires the FSA to take certain steps to cooperate with other regulators (section 354). For these purposes, the FSA needs to have access to a broad range of information about a firm's business.
The FSA receives the information in SUP 2.1.3 G through a variety of means, including notifications by firms (see SUP 15) and regular reporting by firms (see SUP 16). This chapter is concerned with the methods of information gathering that the FSA may use on its own initiative in the discharge of its functions under the Act. This chapter does not deal with the information gathering powers that the FSA has under the Unfair Terms Regulations. These are dealt with in UNFCOG2.12
Part XI of the Act (Information Gathering and Investigations) gives the FSA statutory powers, including: (1) to require the provision of information (see section 165 and EG 32);2(2) to require reports from skilled persons (see section 166 and SUP 5);(3) to appoint investigators (see sections 167, 168 and 169 of the Act and EG 32); and2(4) to apply for a warrant to enter premises (see section 176 of the Act and EG 42).2
The purpose of SUP 2.3 is to amplify Principle 11 in the context of information gathering by the FSA on its own initiative in the discharge of its functions under the Act. SUP 2.3 therefore sets out, in guidance on Principle 11 and in rules, how the FSA expects firms to deal with the FSA in that context, including the steps that a firm should take with a view to ensuring that certain connected persons should also cooperate with the FSA.
1Under section 300B(2) of the Act, the FSA may, by rules under section 293 (Notification requirements):(1) 1specify descriptions of regulatory provision in relation to which, or circumstances in which, the duty in section 300B(1) does not apply, or(2) 1provide that the duty applies only to specified descriptions of regulatory provision or in specified circumstances.
1Under section 300B(3) of the Act, the FSA may also by rules under section 293: (1) 1make provision as to the form and contents of the notice required, and(2) 1require the UK recognised body to provide such information relating to the proposal as may be specified in the rules or as the FSA may reasonably require.
1A notice under section 300B(1) of the Act of a proposal to make a regulatory provision must be in writing and state expressly that it is a notice for the purpose of that section. To be effective, a notice must: (1) 1contain full particulars of the proposal to make a regulatory provision which is the subject of that notice; and(2) 1either be accompanied by sufficient supporting information to enable the FSA to assess the purpose and effect of the proposed regulatory provision
When a firm appoints a skilled person to provide a report under section 166 of the Act (Reports by skilled persons), the firm must, in a contract with the skilled person:(1) require and permit the skilled person during and after the course of his appointment:(a) to cooperate with the FSA in the discharge of its functions under the Act in relation to the firm; and(b) to communicate to the FSA information on, or his opinion on, matters of which he has, or had, become aware in
In complying with the contractual duty in SUP 5.5.1 R (1) the FSA expects that a skilled person appointed under section 166 of the Act (Reports by skilled persons) will cooperate with the FSA by, amongst other things, providing information or documentation about the planning and progress of the report and its findings and conclusions, if requested to do so. A firm should therefore ensure that the contract it makes with the skilled person requires and permits the skilled person
In addition, under section 290A
of the Act (Refusal of recognition
on ground of excessive regulatory provision), the FSA must refuse to make a recognition
order in relation to a body applying for recognition as a UK RIE or UK RCH if it appears to the FSA that an existing or proposed regulatory
provision of the applicant in connection with the applicant's
business as an investment exchange or the provision by the applicant of clearing services imposes, or will impose, an excessive
An application should:(1) be
made in accordance with any directions the FSA may make under section 287 (Application by an investment exchange) or section 288 (Application by a clearing
house) of the Act;(2) be accompanied by the applicant's regulatory
provisions and
in the case of an application under section 287 of the Act information
required pursuant to sub-sections 287(3)(c), (d) and (e) of the Act (see REC
5.2.3A G) 1(the material specifically prescribed in section 287 or
Under section 289 of the Act (Applications: supplementary), the FSA may
require the applicant to provide additional information, and may require the
applicant to verify any information in any manner. In view of their likely
importance for any application, the FSA will normally wish to arrange for its own inspection of an applicant's
information technology systems.
Where the FSA considers that it is unlikely to make a recognition
order, or to seek the
Treasury's approval, it will discuss its concerns with
the applicant as early as possible with a view to enabling the applicant to
make changes to its rules or guidance, or other parts of the application (see REC 5.2.7 G).
If the FSA decides
that it will not make a recognition order,
it will follow the procedure set out in section 298 of the Act (Directions
and revocation: procedure) and described
The FSA uses various methods of information gathering on its own initiative which require the cooperation of firms:(1) Visits may be made by representatives or appointees of the FSA. These visits may be made on a regular basis, on a sample basis, for special purposes such as theme visits (looking at a particular issue across a range of firms), or when the FSA has a particular reason for visiting a firm. Appointees of the FSA may include persons who are not FSA staff, but who have
In complying with Principle 11, the FSA considers that a firm should, in relation to the discharge by the FSA of its functions under the Act:(1) make itself readily available for meetings with representatives or appointees of the FSA as reasonably requested;(2) give representatives or appointees of the FSA reasonable access to any records, files, tapes or computer systems, which are within the firm's possession or control, and provide any facilities which the representatives
(1) A firm must permit representatives of the FSA, or persons appointed for the purpose by the FSA, to have access, with or without notice, during reasonable business hours to any of its business premises in relation to the discharge of the FSA's functions under the Act.(2) A firm must take reasonable steps to ensure that its agents, suppliers under material outsourcing arrangements and appointed representatives permit such access to their business premises. (See also, in respect