Related provisions for BIPRU 9.6.8

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SUP 2.2.3GRP
The FSA would not normally seek to gather information using the methods described in SUP 2.3 or SUP 2.4 in a situation where the FSA could not have obtained it under the powers in Part XI of the Act (Information Gathering and Investigations). In particular, the limitations in the following sections of the Act are relevant to this chapter:(1) section 175(5) (Information and documents: supplementary powers) under which no person may be required under Part XI of the Act (Information
SUP 2.2.4GRP
When the FSA obtains confidential information using the methods of information gathering described in SUP 2.3 or SUP 2.4, it is obliged under Part XXIII of the Act (Public Record, Disclosure of Information and Co-operation) to treat that information as confidential. The FSA will not disclose confidential information without lawful authority, for example if an exception applies under the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations
COLL 6.3.4RRP
(1) An authorised fund must not have fewer than two regular valuation points in any month and if there are only two valuation points in any month, the regular valuation points must be at least two weeks apart.(2) The prospectus of a scheme must contain information about its regular valuation points for the purposes of dealing in units in accordance with COLL 4.2.5R (16) (Table: contents of the prospectus).(3) Where a scheme operates limited redemption arrangements, (1) does not
COLL 6.3.6GRP

Table: This table belongs to COLL 6.3.2 G (2) (a) and COLL 6.3.3 R (Valuation)1.

Valuation and pricing

1

The valuation of scheme property

(1)

Where possible, investments should be valued using a reputable source. The reliability of the source of prices should be kept under regular review.

(2)

For some or all of the investments comprising the scheme property, different prices may quoted according to whether they are being bought (offer prices) or sold (bid prices). The valuation of a single-priced authorised fund should reflect the mid-market value of such investments. In the case of a dual-priced authorised fund, the issue basis of the valuation will be carried out by reference to the offer prices of investments and the cancellation basis by reference to the bid prices of those same investments. The prospectus should explain how investments will be valued for which a single price is quoted for both buying and selling.1

1

3(2A)

Schemes investing in approved money-market instruments5should value such instruments on an amortised cost basis on condition that:5

55

[Note:CESR's UCITS eligible assets guidelines with respect to article 4(2) of the UCITS eligible assets Directive]

(3)

Any part of the scheme property of an authorised fund that is not an investment should be valued at a fair value, but for immovables this is subject to COLL 5.6.20 R (3) (f) (Standing independent valuer and valuation).

(4)

For the purposes of (2) and (3), any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable on acquiring or disposing of the investment or other part of the scheme property should, in the case of a single-priced authorised fund,2 be excluded from the value of an investment or other part of the scheme property. In the case of a dual-priced authorised fund, any such payments should be added to the issue basis of the valuation, or subtracted from the cancellation basis of the valuation, as appropriate. Alternatively, the prospectus of a dual-priced authorised fund may prescribe any other method of calculating unitprices that ensures an equivalent treatment of the effect of these payments.2

(5)

Where the authorised fund manager has reasonable grounds to believe that:

it should value an investment at a price which, in its opinion, reflects a fair and reasonable price for that investment (the fair value price);

(6)

The circumstances which may give rise to a fair value price being used include:

  • no recent trade in the security concerned; or
  • the occurrence of a significant event since the most recent closure of the market where the price of the security is taken.
In (b), a significant event is one that means the most recent price of a security or a basket of securities is materially different to the price that it is reasonably believed would exist at the valuation point had the relevant market been open.

(7)

In determining whether to use such a fair value price , the authorised fund manager should include in his consideration:

4(7A)

Where the authorised fund manager, the depositary or the standing independent valuer have reasonable grounds to believe that the most recent valuation of an immovable does not reflect the current value of that immovable, the authorised fund manager should consult and agree with the standing independent valuer a fair and reasonable value for the immovable.

(8)

The authorised fund manager should document the basis of valuation (including any fair value pricing policy) and, where appropriate, the basis of any methodology and ensure that the procedures are applied consistently and fairly.

(9)

Where a unit price is determined using properly applied fair value prices in accordance with policies in (8), subsequent information that indicates the price should have been different from that calculated will not normally give rise to an instance of incorrect pricing.

2

The pricing controls of the authorised fund manager

(1)

An authorised fund manager needs to be able to demonstrate that it has effective controls over its calculations of unit prices.

(2)

The controls referred to in (1) should ensure that:

  • asset prices are accurate and up to date;
  • investment 1transactions are accurately and promptly reflected in valuations;
  • the components of the valuation (including stock, cash, and units in issue1), are regularly reconciled to their source or prime records and any reconciling items resolved promptly and debtors reviewed for recoverability;
  • the sources of prices not obtained from the main pricing source are recorded and regularly reviewed;
  • compliance with the investment and borrowing powers is regularly reviewed;
  • dividends are accounted for as soon as securities1 are quoted ex-dividend (unless it is prudent to account for them on receipt):
  • fixed interest dividends, interest and expenses are accrued at each valuation point1;
  • tax positions are regularly reviewed and adjusted, if necessary;
  • reasonable tolerances are set for movements in the key elements of a valuation and movements outside these tolerances are investigated;5
  • the fund manager regularly reviews the portfolio valuation for accuracy5; and5
  • the valuation of OTC derivatives is accurate and up to date and in compliance with the methods agreed with the depositary.5

(3)

In exercising its pricing controls, the authorised fund manager may exercise reasonable discretion in determining the appropriate frequency of the operation of the controls and may choose a longer interval, if appropriate, given the level of activity on the authorised fund1or the materiality of any effect on the price.

(4)

Evidence of the exercise of the pricing controls should be retained.

(5)

Evidence of persistent or repetitive errors in relation to these matters, and in particular any evidence of a pattern of errors working in an authorised fund manager's favour, will make demonstrating effective controls more difficult.

(6)

Where the pricing1function is delegated to a third party, COLL 6.6.15 R (1) (Committees and delegation) will apply.

3

The depositary's review of the authorised fund manager's systems and controls

(1)

This section provides details of the types of checks a depositary should carry out to be satisfied that the authorised fund manager adopts systems and controls which are appropriate to ensure that prices of units are calculated in accordance with this section and to ensure that the likelihood of incorrect prices will be minimised. These checks also apply where an authorised fund manager has delegated all or some of its pricing1 functions to one or more third parties5.

5

(2)

A depositary should thoroughly review an authorised fund manager's systems and controls to confirm that they are satisfactory. The depositary's review should include an analysis of the controls in place to determine the extent to which reliance can be placed on them.

(3)

A review should be performed when the depositary is appointed and thereafter as it feels appropriate given its knowledge of the robustness and the stability of the systems and controls and their operation.

(4)

A review should be carried out more frequently where a depositary knows or suspects that an authorised fund manager's systems and controls are weak or are otherwise unsatisfactory.

(5)

Additionally, a depositary should from time to time review other aspects of the valuation of the scheme property of each authorised fund for which it is responsible, verifying, on a sample basis, if necessary, the assets, liabilities, accruals, units in issue1, securities prices (and in particular the prices of OTC derivatives,5unapproved securities and the basis for the valuation of unquoted securities) and any other relevant matters, for example an accumulation factor or a currency conversion factor.

(6)

A depositary should ensure that any issues, which are identified in any such review, are properly followed up and resolved.

4

The recording and reporting of instances of incorrect pricing

(1)

An authorised fund manager should record each instance where the price of a unit is incorrect as soon as the error is discovered, and report the fact to the depositary together with details of the action taken, or to be taken, to avoid repetition as soon as practicable.

(2)

In accordance with COLL 6.6.11 G (Duty to inform the FSA), the depositary should report any breach of the rules in COLL 6.3 immediately to the FSA. However, notification should relate to instances which the depositary considers material only.

(3)

A depositary should also report to the FSA immediately any instance of incorrect pricing1where the error is 0.5% or more of the price of a unit, where a depositary believes that reimbursement or payment is inappropriate and should not be paid by an authorised fund manager.

(4)

In accordance with SUP 16.6.8 R, a depositary should also make a return to the FSA on a quarterly basis which summarises the number of instances of incorrect pricing1 during a particular period.

5

The rectification of pricing breaches

(1)

COLL 6.6.3 R (1) (Functions of the authorised fund manager) places a duty on the authorised fund manager to take action to reimburse affected unitholders, former unitholders, and the scheme itself, for instances of incorrect pricing1, except if it appears to the depositary that the breach is of minimal significance.

(2)

A depositary may consider that the instance of incorrect pricing1is of minimal significance if:

(3)

In determining (2), if the instance of incorrect pricing1 is due to one or more factors or exists over a period of time, each price should be considered separately.

(4)

If a depositary deems it appropriate, it may, in spite of the circumstances outlined in (2), require a payment from the authorised fund manager or from the authorised fund to the unitholders, former unitholders, the authorised fund or the authorised fund manager (where appropriate).

(5)

The depositary should satisfy itself that any payments required following an instance of incorrect pricing1 are accurately and promptly calculated and paid.

(6)

If a depositary considers that reimbursement or payment is inappropriate, it should report the matter to the FSA, together with its recommendation and justification. The depositary should take into account the need to avoid prejudice to the rights of unitholders, or the rights of unitholders in a class of units.

(7)

It may not be practicable, or in some cases legally permissible, for the authorised fund manager to obtain reimbursement from unitholders, where the unitholders have benefited from the incorrect price.

(8)

In all cases where reimbursement or payment is required, amounts due to be reimbursed to unitholders for individual sums which are reasonably considered by the authorised fund manager and depositary to be immaterial, need not normally be paid.

COLL 6.3.12GRP
(1) In determining the appropriate manner of making prices public, the authorised fund manager should ensure that:(a) a unitholder or potential unitholder can obtain the prices at a reasonable cost;(b) prices are available at reasonable times;(c) publication is consistent with the manner and frequency at which the units are dealt in1;(d) the manner of publication is disclosed in the prospectus; and(e) prices are published in a consistent manner.(2) Examples of what might be deemed
COBS 4.9.5RRP
A financial promotion for an overseas long-term insurer, which has no establishment in the United Kingdom, must include:(1) the full name of the overseas long-term insurer, the country where it is registered, and, if different, the country where its head office is situated;(2) a prominent statement that 'holders of policies issued by the company will not be protected by the Financial Services Compensation Scheme if the company becomes unable to meet its liabilities to them'; and(3)
COBS 4.9.6RRP
A financial promotion for an overseas long-term insurer which is authorised to carry on long-term insurance business in any country or territory listed in paragraph (c) of the Glossary definition of overseas long-term insurer must also include:(1) the full name of any trustee of property of any description which is retained by the overseas long-term insurer in respect of the promoted contracts;(2) an indication whether the investment of such property (or any part of it) is managed
SUP 15.3.7GRP
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
SUP 15.3.14GRP
A notification under SUP 15.3.11 R should include:(1) information about any circumstances relevant to the breach or offence;(2) identification of the rule or requirement or offence; and(3) information about any steps which a firm or other person has taken or intends to take to rectify or remedy the breach or prevent any future potential occurrence.
SUP 15.3.19GRP
The notifications under SUP 15.3.17 R are required as the FSA needs to be aware of the types of fraudulent and irregular activity which are being attempted or undertaken, and to act, if necessary, to prevent effects on consumers or other firms. A notification under SUP 15.7.3 G should provide all relevant and significant details of the incident or suspected incident of which the firm is aware.
DTR 6.1.9RRP
An issuer of shares must without delay disclose to the public any change in the rights attaching to its various classes of shares, including changes in the rights attaching to derivativesecurities issued by the issuer giving access to the shares of that issuer. [Note: article 16(1) of the TD]
DTR 6.1.10RRP
An issuer of securities other than shares admitted to trading on a regulated market must disclose to the public without delay any changes in the rights of holders of securities other than shares, including changes in the terms and conditions of such securities which could indirectly affect those rights, resulting in particular from a change in loan terms or in interest rates.[Note article 16(2) of the TD]
APER 4.1.6ERP
Deliberately failing to inform, without reasonable cause:(1) a customer; or(2) his firm (or its auditors or an actuary appointed by his firm under SUP 4 (Actuaries)1); or1(3) the FSA;of the fact that their understanding of a material issue is incorrect, despite being aware of their misunderstanding, falls within APER 4.1.2 E.
APER 4.1.13ERP
Deliberately failing to disclose the existence of a conflict of interest in connection with dealings with a client falls within APER 4.1.2 E.
SUP 5.5.11GRP
Reasonable assistance in SUP 5.5.9 R should include:(1) access at all reasonable business hours for the skilled person to the firm's accounting and other records in whatever form;(2) providing such information and explanations as the skilled person reasonably considers necessary or desirable for the performance of his duties; and (3) permitting a skilled person to obtain such information directly from the firm's auditor as he reasonably considers necessary or desirable for the
MCOB 4.10.4GRP
1The guidance on initial disclosure requirements at MCOB 4.4.2 G to MCOB 4.4.4 G may be relevant.Additional requirements for distance home purchase mediation contracts with retail customersNote: The rules regarding additional disclosure requirements for, and cancellation of, distance home purchase mediation contracts are set out in MCOB 4.5 and MCOB 4.6 respectively.
PRIN 1.2.1GRP
Principles 6 (Customers' interests), 7 (Communications with clients), 8 (Conflicts of interest), 9 (Customers: relationships of trust) and 10 (Clients' assets) impose requirements on firms expressly in relation to their clients or customers. These requirements depend, in part, on the characteristics of the client or customer concerned. This is because what is "due regard" (in Principles 6 and 7), "fairly" (in Principles 6 and 8), "clear, fair and not misleading" (in Principle
PRIN 1.2.6GRP
If the person with or for whom the firm is carrying on an activity is acting through an agent, the ability of the firm to treat the agent as its client under COBS 2.4.3 R3 (Agent as client) will not be available. For example, if a general insurer is effecting a general insurance contract through a general insurance broker who is acting as agent for a disclosed policyholder, the policyholder will be a client of the firm and the firm must comply with the Principles accordingly.
LR 1.4.1RRP
(1) If it appears to the FSA that there is, or there may be, a breach of the listing rules by an issuer with a primary listing, the FSA may in writing require the issuer to appoint a sponsor to advise the issuer on the application of the listing rules.(2) If required to do so under paragraph (1), an issuer must, as soon as practicable, appoint a sponsor to advise it on the application of the listing rules.Note: LR 8.2 sets out the various circumstances in which an issuer must
MCOB 5.6.52RRP
Where all or part of the regulated mortgage contract to which the illustration relates is an interest-only mortgage:(1) the illustration must include the sub-heading 'Cost of repaying the capital' with the following text under it:'You will still owe [insert amount of loan on an interest-only basis] at the end of the mortgage term. You will need to make separate arrangements to repay this. When comparing the payments on this mortgage with a repayment mortgage, remember to add any
MCOB 5.6.53GRP

An example of how the information required by MCOB 5.6.52 R (1), MCOB 5.6.52 R (3) and MCOB 5.6.52 R (5) may be presented is as follows:

Cost of repaying the capitalYou will still owe £Z at the end of the mortgage term. You will need to make separate arrangements to repay this. When comparing the payments on this mortgage with a repayment mortgage, remember to add any money that you may need to pay into a separate savings plan to build up a lump sum to repay this amount.

Savings plan that you do not have to take out through [insert name of mortgage lender or mortgage intermediary]

Monthly payments

XYZ savings plan (see separate product disclosure document)

£C

What you will need to pay each month including the cost of a savings plan to repay the capital

36 payments at a fixed rate currently x% followed by:

£(A+C)

264 payments at a variable rate currently y%.

£(B+C)

MCOB 5.6.82RRP
(1) If any quotations for insurance are included in the illustration in accordance with MCOB 5.6.74 R(3), MCOB 5.6.77 R(1) or MCOB 5.6.80 R, the illustration:(a) must include a brief description only of the type of insurance (full details of the insurance cover may however be provided separately); and(b) (i) must include the total price to be paid by the customer in a column on the right hand side of the illustration under the heading '[insert frequency of payments quoted] payments';
MCOB 13.8.1RRP
If a customer falls into arrears, a firm must provide the customer with adequate information about the arrears in a durable medium:(1) as soon as practicable after becoming aware of that fact;(2) at quarterly intervals; and(3) before commencing action for repossession.
MCOB 12.5.3GRP
When determining whether a charge is excessive, a firm should consider:(1) the amount of its charges for the services or products in question compared with charges for similar products or services on the market; (2) the degree to which the charges are an abuse of the trust that the customer has placed in the firm; and (3) the nature and extent of the disclosure of the charges to the customer.
MCOB 10.2.1GRP
The purpose of this chapter is to establish the requirements for the proper calculation of the APR. As a cost measure which facilitates comparisons between similar mortgages offered on a similar basis, the APR is an integral element of the rules relating to qualifying credit promotions and disclosure.
ICOBS 8.1.2RRP
A rejection of a consumerpolicyholder's claim is unreasonable, except where there is evidence of fraud, if it is for:(1) non-disclosure of a fact material to the risk which the policyholder could not reasonably be expected to have disclosed; or(2) non-negligent misrepresentation of a fact material to the risk; or(3) breach of warranty or condition unless the circumstances of the claim are connected to the breach and unless (for a pure protection contract):(a) under a ‘life of
SYSC 18.1.2GRP
(1) The purposes of this chapter are:(a) to remind firms of the provisions of PIDA; and(b) to encourage firms to consider adopting and communicating to workers appropriate internal procedures for handling workers' concerns as part of an effective risk management system.(2) In this chapter "worker" includes, but is not limited to, an individual who has entered into a contract of employment.
COBS 4.8.3RRP
A firm must notinitiate a non-written financial promotioncommunicated to a particular person outside the firm's premises, unless the personcommunicating it:(1) only does so at an appropriate time of the day;(2) identifies himself and the firm he represents at the outset and makes clear the purpose of the communication;(3) clarifies if the client would like to continue with or terminate the communication, and terminates the communication at any time that the client requests it;