Related provisions for PRIN 3.1.5

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FEES 6.1.4GRP
Section 213(3)(b) of the Act requires the FSA to make rules to enable the FSCS to impose levies on authorised persons in order to meet its expenses. These expenses include in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks.
FEES 6.1.4AGRP
Section 224F of the Act enables the FSA to make rules to enable the FSCS to impose levies on authorised persons (or any class of authorised persons) in order to meet its management expenses incurred if, under Part 15A of the Act, it is required by HM Treasury to act in relation to relevant schemes. But those rules must provide that the FSCS can impose a levy only if the FSCS has tried its best to obtain reimbursement of those expenses from the manager of the relevant scheme.
FEES 6.1.8GRP
Within each class2 there are one or moresub-classes.2 These relate to different types of activity carried on by participant firms within each class.2 Within a class,2 individual participant firms are allocated for funding purposes to one or more sub-classes,2 depending on their business activities. This, together with the provisions on the allocation of levies to sub-classes up to their levy limits,2 meetsa requirement of section 213(5) of the Act that the FSA, in making rules
FEES 6.1.9GRP
Section 223 of the Act (Management expenses) prevents the FSCS from recovering, through a levy, any management expenses attributable to a particular period in excess of the limit set in COMP as applicable to that period. 'Management expenses' are defined in section 223(3) to mean expenses incurred or expected to be incurred by the FSCS in connection with its functions under the Act, except:(1) expenses incurred in paying compensation;5(2) expenses incurred as a result of the FSCS
FEES 7.1.3GRP
Section 6A(1) of the Act (Enhancing public understanding of financial matters etc) requires the FSA to establish the CFEB in order to enhance:(1) the understanding and knowledge of members of the public of financial matters (including the UK financial system); and(2) the ability of members of the public to manage their own financial affairs.
FEES 7.1.4GRP
Paragraph 12(1) of Part 2 of Schedule 1A to the Act enables the FSA to make rules requiring certain2authorised persons or payment service providers or electronic money issuers2 to pay to the FSA specified amounts or amounts calculated in a specified way in order to meet a proportion of:22(1) the expenses incurred by the FSA in establishing the CFEB, whenever these were incurred; and(2) the expenses incurred, or expected to be incurred, by the CFEB in connection with the discharge
FEES 7.1.9GRP
Paragraph 7(1) of Part 1 of Schedule 1A to the Act requires the CFEB to adopt an annual budget which has been approved by the FSA.
SUP 13.3.1GRP
Guidance on what constitutes a branch is given in SUP App 36. Note that if a UK MiFID investment firm is seeking to use a tied agent established in another EEA State, the rules in SUP 13 will apply as if that firm were seeking to establish a branch in that EEA State unless the firm has already established a branch in that EEA State (paragraph 20A of Schedule 3 to the Act).846
SUP 13.3.2GRP
A UK firm other than a UK pure reinsurer9cannot 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
SUP 13.3.7GRP
(1) If the FSA proposes to refuse to give a consent notice, then paragraph 19(8) of Part III of Schedule 3 to the Act requires the FSA to give the UK firm a warning notice.(2) If the FSA decides to refuse to give a consent notice, then paragraph 19(12) of Part III of Schedule 3 to the Act requires the FSA to give the UK firm a decision notice within three months8 of the date on which it received the UK firm'snotice of intention8(two months8 in the case of a UK firm which is a
PR 2.1.1UKRP

1Sections 87A(2), (2A), 2(3) and (4) of the Act provide for the general contents of a prospectus:

(2)

The necessary information is the information necessary to enable investors to make an informed assessment of –

(a)

the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the transferable securities and of any guarantor; and

(b)

the rights attaching to the transferable securities.2

2(2A)

If, in the case of transferable securities to which section 87 applies, the prospectus states that the guarantor is a specified EEA State, the prospectus is not required to include other information about the guarantor.

(3)

The necessary information must be presented in a form which is comprehensible and easy to analyse.

(4)

The necessary information must be prepared having regard to the particular nature of the transferable securities and their issuer and any delegated acts adopted by the Commission under article 7(1) of the prospectus directive2.

PR 2.1.2UKRP

Sections 87A(5) and (6) of the Act set out the requirement for a summary to be included in a prospectus:

(5)

The prospectus must include a summary (unless the transferable securities in question are ones in relation to which prospectus rules provide that a summary is not required).

(6)

The summary must convey concisely, in non-technical language and in an appropriate structure, the key information relevant to the securities which are the subject of the prospectus and, when read with the rest of the prospectus, must be an aid to investors considering whether to invest in the securities2.

2
PR 2.1.3RRP
In accordance with section 87A(5) of the Act, a summary is not required for a prospectus relating to non-equity transferable securities that have a denomination of at least 100,000 euros 2(or an equivalent amount) if the prospectus relates to an admission to trading. [Note: article 5.2 PD]2
PR 2.1.7RRP
The summary must also contain a warning to the effect that:(1) it should be read as an introduction to the prospectus;(2) any decision to invest in the transferable securities should be based on consideration of the prospectus as a whole by the investor; (3) where a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might, under the national legislation of the EEA States, have to bear the costs of translating the prospectus
REC 6.6.1GRP
An overseas recognised body is required to notify the FSA of certain events and give information to it on a regular basis and when certain specified events occur. Section 295 of the Act (Notification: overseas investment exchanges and overseas clearing houses) requires each overseas recognised body to provide the FSA, the Treasury and the Director General of Fair Trading with a report (at least once a year) which contains:(1) a statement as to whether any events have occurred
REC 6.6.3GRP
The period covered by a report submitted under section 295(1) of the Act starts on the day after the period covered by its last report or, if there is no such report, after the making of the recognition order recognising the overseas recognised body as such, and ends on the date specified in the report or, if no date is specified, on the date of the report.
REC 6.6.5GRP
The period covered by a report submitted under section 295(1) of the Act would most conveniently be one year.
REC 4.8.1GRP
A decision to: (1) revoke a recognition order under section 297 of the Act (Revoking recognition) or (for RAPs) regulation 4 of the RAP regulations; or3(2) make a direction under section 296 (FSA's powers to give directions) or (for RAPs) regulation 3 of the RAP regulations; or3(3) refuse to make a recognition order under section 290 (Recognition orders) or 290A (Refusal of recognition on ground of excessive regulatory provision) or (for RAPs) regulation 2 of the RAP regulations32;is
REC 4.8.3GRP
In considering whether it would be appropriate to exercise the powers under section 296 or section 297 of the Act or (for RAPs) regulation 3 or 4 of the RAP regulations,3 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 one or more of the recognised body requirements31may affect the regulatory
REC 4.8.5GRP
The procedures laid down in section 298 of the Act and (for RAPs) regulation 5 of the RAP regulations3are summarised, with the FSA's guidance about the actions it proposes to take in following these procedures, in the table at REC 4.8.9 G.
REC 4.8.6GRP
Before exercising its powers under section 296 or section 297 of the Act or (for RAPs) regulation 3 or 4 of the RAP regulations3, 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.
SUP 2.2.1GRP
Breaching Principle 11, or the rules in this chapter, makes a firm liable to regulatory sanctions, including discipline under Part XIV of the Act (Disciplinary Measures), and may be relevant to the use of the FSA's other powers, including the statutory information gathering and investigation powers (see further PRIN 1.1.7 G to PRIN 1.1.9 G). But, unlike a breach of a requirement imposed under the statutory powers listed in SUP 2.1.5 G, a breach of Principle 11 or a rule:(1) is
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
PR 5.6.1RRP
Where, in relation to an offer in the United Kingdom, no prospectus is required under the Act, the issuer and offeror must ensure that material information they provide to qualified investors or special categories of investors, including information disclosed in the context of meetings relating to offers, is disclosed to all qualified investors or special categories of investors to whom the offer is exclusively addressed. [Note: article 15.5 PD]
PR 5.6.2GRP
Where a prospectus is required to be made available to the public under the Act, information referred to in PR 5.6.1 R should be included in the prospectus or in a supplementary prospectus.
PR 5.6.3GRP
Under sections 87K and 87L of the Act, the FSA has various powers including powers to prohibit or suspend an offer and to prohibit or suspend an advertisement. The FSA will use these powers if it is necessary to protect investors or the smooth operation of the market is, or may be, jeopardised.
DEPP 6A.1.1GRP
1DEPP 6A sets out the FSA's statement of policy with respect to the imposition of suspensions or restrictions, and the period for which those suspensions or restrictions are to have effect, under the Act, as required by sections 69(1) and 210(1) of the Act.
DEPP 6A.1.2GRP
For the purposes of DEPP 6A, "suspension" refers both to the suspension of any permission which an authorised person has to carry on a regulated activity (under section 206A of the Act), and the suspension of any approval of the performance by an approved person of any function to which the approval relates (under section 66 of the Act); and "restriction" refers both to limitations or other restrictions in relation to the carrying on of a regulated activity by an authorised person
DEPP 6A.1.4GRP
As the power to impose a suspension or a restriction is a disciplinary measure, where the FSA considers it necessary to take action, for example, to protect consumers from an authorised person, the FSA will seek to cancel or vary the authorised person'spermissions. If the FSA has concerns with a person's fitness to be approved, and considers it necessary to take action, the FSA will seek to prohibit the approved person or withdraw its approval.
PERG 9.1.1GRP
This guidance applies to persons who need to know whether a body corporate is an open-ended investment company as defined in section 236 of the Act (Open-ended investment companies). This would mean that it is a collective investment scheme.
PERG 9.1.3GRP
This guidance is issued under section 157of the Act (Guidance). It is designed to throw light on particular aspects of regulatory requirements, not to be an exhaustive description of a person's obligations. If a person acts in line with the guidance in the circumstances it contemplates, the FSA will proceed on the footing that the person has complied with aspects of the requirement to which the guidance relates. Rights conferred on third parties cannot be affected by guidance
PERG 9.1.5GRP
Open-ended investment companies constituted in other EEA States which are seeking to exercise rights conferred by the UCITS Directive should refer to COLL 9 (Recognised schemes) for guidance on the requirements of section 264 of the Act (Schemes constituted in other EEA States).2
COND 1.2.2GRP
(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
COND 1.2.3GRP
(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), and EG 8 (Variation and cancellation of permission on the FSA's own initiative and intervention against incoming firms)1.1(2) If, when exercising its
PERG 8.17.2GRP
Rights under an agreement for qualifying credit are a controlled investment.Qualifying credit is defined in paragraph 10 of Schedule 1 to the Financial Promotion Order (Controlled activities) as credit provided pursuant to an agreement under which:(1) the lender is a person who carries on the regulated activity of entering into a regulated mortgage contract (whether or not he is an authorised or exempt person under the Act); and(2) the obligation of the borrower to repay is secured
PERG 8.17.6GRP
Arranging qualifying credit is a controlled activity under paragraph 10A of Schedule 1 to the Financial Promotion Order; that is, making arrangements:(1) for another person to enter as borrower into an agreement for qualifying credit; or(2) for a borrower under a regulated mortgage contract entered into on or after 31 October 2004 to vary the terms of that contract in such a way as to vary his obligations under that contract.This means that invitations and inducements relating
PERG 8.17.7GRP
Advising on qualifying credit will be a controlled activity under paragraph 10B of Schedule 1 to the Financial Promotion Order; that is, advising a person if the advice is:(1) given to the person in his capacity as a borrower or potential borrower; and(2) advice on the merits of his doing any of the following:(a) entering into an agreement for qualifying credit; or(b) varying the terms of a regulated mortgage contract entered into by him on or after 31 October 2004 in such a way
PERG 8.17.12GRP
Article 28B (Real time communications: introductions) exempts a real time financial promotion that relates to one or more of the controlled activities about regulated mortgage contracts, as well as home reversion plans, home purchase plans and regulated sale and rent back agreements3. The exemption is subject to the following conditions being satisfied:22(1) the financial promotion must be made for the purpose of, or with a view to, introducing the recipient to a person ('N')
SUP 13.4.2GRP
A UK firm, other than a UK pure reinsurer,9 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
SUP 13.4.2DGRP
8A MiFID investment firm that wishes to obtain a passport for the activity of operating an MTF should follow the procedures described in this chapter. A UK market operator that operates a recognised investment exchange, a recognised auction platform (pursuant to the RAP regulations, the definition of regulated market in the Act is read for these purposes as including a recognised auction platform)11 or an MTF and wishes to provide cross border services into another EEA State should
SUP 13.4.4GRP
8(1) If8 the UK firm'sEEA right derives from MiFID8, 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 intention8 to the Host State Regulator within one month8 of receipt.8A UK firm passporting under the Banking Consolidation Directive10 may start providing cross border services as soon as it satisfies the relevant conditions (see SUP 13.4.2 G).88888810(2) (a) If8 the
SUP 13.4.5GRP
When the FSA sends a copy of a notice of intention8, or if it gives a consent notice to the Host State regulator, it must inform the UK firm in writing that it has done so (paragraphs 20 (3B)(b) and (4) of Schedule 3 to the Act).48
REC 6A.2.1GRP
1Under section 312B of the Act, the FSA may prohibit an EEA market operator from making or, as the case may be, continuing arrangements in the United Kingdom, to facilitate access to, or use of, a regulated market, or multilateral trading facility, operated by the operator if:(1) the FSA has clear and demonstrable grounds for believing that the operator has contravened a relevant requirement, and(2) the FSA has first complied with sections 312B(3) to (9) of the Act.
REC 6A.2.3GRP
The procedure the FSA will follow if it is to exercise this prohibition power is set out in sections 313B(3) to (9) of the Act.
REC 6A.2.7GRP
3In accordance with the RAP regulations, references in section 312B of the Act to regulated market are to be read as including reference to an auction platform and references to MiFID are to be read as including reference to the auction regulation.
PERG 2.2.1GRP
Under section 23 of the Act (Contravention of the general prohibition), a person commits a criminal offence if he carries on activities in breach of the general prohibition in section 19 of the Act (The general prohibition) .. Although a person who commits the criminal offence is subject to a maximum of two years imprisonment and an unlimited fine, it is a defence for a person to show that he took all reasonable precautions and exercised all due diligence to avoid committing the
PERG 2.2.2GRP
Another consequence of a breach of the general prohibition is that certain agreements could be unenforceable (see sections 26 to 29 of the Act). This applies to agreements entered into by persons who are in breach of the general prohibition. It also applies to any agreement entered into by an authorised person if the agreement is made as a result of the activities of a person who is in breach of the general prohibition.
PERG 2.2.3GRP
Any person who is concerned that his proposed activities may require authorisation will need to consider the following questions (these questions are a summary of the issues to be considered and have been reproduced, in slightly fuller form in the decision tree in PERG 2 Annex 1 G):(1) Will I be carrying on my activities by way of business (see PERG 2.3)?(2) Will I be managing the assets of an occupational pension scheme (see PERG 2.3.2G (3))?(3) If the answer is 'Yes' to (1)
SUP 4.3.8GRP
The FSA is concerned to ensure that every actuary appointed by a firm under this section1 has the necessary skill and experience to provide the firm with appropriate actuarial advice. SUP 4.3.9 R to SUP 4.3.10 G set out the FSA's rules and guidance aimed at achieving this.1
SUP 4.3.9RRP
Before a firm applies for approval of the person it proposes to appoint as an actuary under SUP 4.3.1 R1, it must take reasonable steps to ensure that the actuary:1(1) has the required skill and experience to perform his functions under the regulatory system; and(2) is a Fellow of the Institute of Actuaries or of the Faculty of Actuaries.
SUP 4.3.11RRP
A firm must not appoint under SUP 4.3.1 R1 or an actuary who is disqualified by the FSA under section 345 of the Act (Disqualification) from acting as an actuary either for that firm or for a relevant class of firm. 1
SUP 4.3.12GRP
If it appears to the FSA that an actuary1 has failed to comply with a duty imposed on him under the Act, it may disqualify him under section 345 of the Act. For more detail about what happens when the disqualification of an actuary is being considered or put into effect, see EG 155 (Disqualification of auditors and actuaries)1. A list of actuaries who are disqualified by the FSA may be found on the FSA website (www.fsa.gov.uk).15
SUP 4.3.12ARRP
1A firm must take reasonable steps to ensure that an actuary who is to be, or has been, appointed under SUP 4.3.1 R:(1) does not perform the function of chairman or chief executive of the firm, or does not, if he is to perform the with-profits actuary function, become a member of the firm's governing body; and(2) does not perform any other function on behalf of the firm which could give rise to a significant conflict of interest.
PERG 2.6.11BGRP
The arrangements which grant rights under alternative debentures are similar to the tax definition of arrangements relating to alternative finance investment bonds at section 48A of the Finance Act 2005 (see www.opsi.gov.uk/acts/acts2007/ukpga_20070011_en_5#pt3-pb9-l1g53). However the purposes of the two provisions are not the same. One of the objectives of the FSA under the Act is consumer protection. Accordingly, secondary legislation made under the Act, like article 77A
PERG 2.6.11EGRP
As these arrangements might amount to a collective investment scheme (see PERG 9.4.2 GG for a broad description) a consequential amendment to the Financial Services and Markets Act 2000 (Collective Investment Scheme) Order 2001 (SI 2001/1062) has been made so that, like conventional bonds, alternative debentures are excluded from the definition of collective investment scheme.
PERG 2.6.17GRP
The specified investment category of units in a collective investment scheme includes units in a unit trust scheme, shares in open-ended investment companies and rights in respect of most limited partnerships. Shares in or securities of an open-ended investment company are treated differently from shares in other companies. They are excluded from the specified investment category of shares. This does not mean that they are not investments but simply that they are uniformly treated
PERG 2.6.18GRP
There are no exclusions in the Regulated Activities Order for this specified investment category. This is because 'collective investment scheme' is defined in section 235 of the Act (Collective investment schemes) for the purposes of the Act generally. But there is a separate power to provide for exemptions from that definition and the Treasury have exercised it (see the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001 (SI 2001/1062). The result
PERG 2.6.23AGRP
4All contracts in this category are cash-settled instruments (as opposed to being settled by way of delivering something other than cash). Many would be unenforceable as gaming contracts were it not for section 412 of the Act (Gaming contracts). Examples of instruments that count as specified investments under this category are spread bets and interest rate swaps.
PERG 8.14.16GRP
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
PERG 8.14.21GRP
This exemption disapplies the restriction in section 21 of the Act from non-real time financial promotions or solicited real time financial promotions which are made to a person who the communicator believes on reasonable grounds to be a certified high net worth individual and which relate to certain investments. These investments must be either:7(1) shares in or debentures or alternative debentures7 of an unlisted company; or(2) warrants,certificates representing certain securities,
PERG 8.14.28AGRP
The second exemption in article 50A disapplies the restriction in section 21 of the Act from any financial promotions4 which are made to a person who the communicator believes on reasonable grounds to be a self-certified sophisticated investor and which relate to one or more of the specified investments in PERG 8.14.21G (1) to (3) (Certified high net worth individuals (article 484)).44
PERG 8.14.40AFGRP
6The exemptions described in PERG 8.14.40A G to PERG 8.14.40AE G should enable employers (and their contracted service providers) to promote employee benefits packages that include any pension schemes, work-related insurance schemes and staff mortgages to employees without undue concern that they may be breaching the restriction in section 21 of the Act. PERG 8.14.34 G (Communications by employers and contracted service providers to employees) has further guidance about the application
PR 4.2.1RRP
If a prospectus relating to an issuer that has its registered office in a country that is not an EEA State is drawn up in accordance with the legislation of that country, the FSA may, if the United Kingdom is the Home State in relation to the issuer, approve the prospectus if it is satisfied that:(1) the prospectus has been drawn up in accordance with international standards set by international securities commission organisations, including the IOSCO disclosure standards; and(2)
PR 4.2.2GRP
An applicant for the approval of a prospectus referred to in PR 4.2.1 R will need to comply with relevant requirements of the Act, the PD regulation and these rules including (to the extent applicable) PR 3.1 relating to applying for approval of a prospectus.
SUP 14.5.1GRP
Where an incoming EEA firm has been granted top-up permission by the FSA and wishes to vary that permission, the Act requires it to apply to the FSA for a variation of the top-up permission. 1
SUP 14.5.2GRP
Guidance on the procedures for applying for a variation of a permission granted under Part IV of the Act, including a top-up permission, is given in SUP 6 (Applications to vary and cancel Part IVPermission).1