Related provisions for BIPRU 12.9.22

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DEPP 6.2.1GRP
The FSA will consider the full circumstances of each case when determining whether or not to take action for a financial penalty or public censure. Set out below is a list of factors that may be relevant for this purpose. The list is not exhaustive: not all of these factors may be applicable in a particular case, and there may be other factors, not listed, that are relevant.(1) The nature, seriousness and impact of the suspected breach, including:(a) whether the breach was deliberate
DEPP 6.2.2GRP
When deciding whether to take action for market abuse or requiring or encouraging, the FSA may consider the following additional factors:(1) The degree of sophistication of the users of the market in question, the size and liquidity of the market, and the susceptibility of the market to market abuse.(2) The impact, having regard to the nature of the behaviour, that any financial penalty or public censure may have on the financial markets or on the interests of consumers:(a) a
DEPP 6.2.3GRP
The FSA's rules on systems and controls against money laundering are set out in SYSC 3.2 and SYSC 6.3. The FSA, when considering whether to take action for a financial penalty or censure in respect of a breach of those rules, will have regard to whether a firm has followed relevant provisions in the Guidance for the UK financial sector issued by the Joint Money Laundering Steering Group.
DEPP 6.2.4GRP
The primary responsibility for ensuring compliance with a firm's regulatory obligations rests with the firm itself. However, the FSA may take disciplinary action against an approved person where there is evidence of personal culpability on the part of that approved person. Personal culpability arises where the behaviour was deliberate or where the approved person's standard of behaviour was below that which would be reasonable in all the circumstances at the time of the conduct
DEPP 6.2.5GRP
In some cases it may not be appropriate to take disciplinary measures against a firm for the actions of an approved person (an example might be where the firm can show that it took all reasonable steps to prevent the breach). In other cases, it may be appropriate for the FSA to take action against both the firm and the approved person. For example, a firm may have breached the rule requiring it to take reasonable care to establish and maintain such systems and controls as are
DEPP 6.2.6GRP
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
DEPP 6.2.7GRP
The FSA will not discipline approved persons on the basis of vicarious liability (that is, holding them responsible for the acts of others), provided appropriate delegation and supervision has taken place (see APER 4.6.13 G and APER 4.6.14 G). In particular, disciplinary action will not be taken against an approved person performing a significant influence function simply because a regulatory failure has occurred in an area of business for which he is responsible. The FSA will
DEPP 6.2.9GRP
Where disciplinary action is taken against an approved person the onus will be on the FSA to show that the approved person has been guilty of misconduct.
DEPP 6.2.9AGRP
3In addition to the general factors outlined in DEPP 6.2.1 G, there are some additional considerations that the FSA will have regard to when deciding whether to take action against a person that performs a controlled function without approval contrary to section 63A of the Act.(1) The conduct of the person. The FSA will take into consideration whether, while performing controlled functions without approval, the person committed misconduct in respect of which, if he had been approved,
DEPP 6.2.10GRP
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
DEPP 6.2.11GRP
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
DEPP 6.2.13GRP
In deciding whether to take action, the FSA will consider the full circumstances of each case. Factors that may be relevant for this purpose include, but are not limited to, the factors at DEPP 6.2.1 G.
DEPP 6.2.14GRP
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.
DEPP 6.2.16GRP
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.
DEPP 6.2.18GRP
In certain cases, it may be appropriate to discipline a listed company on the basis of the Listing Principles alone. Examples include the following:(1) where there is no detailed listing rule which prohibits the behaviour in question, but the behaviour clearly contravenes a Listing Principle Principle;(2) where a listed company has committed a number of breaches of detailed rules which individually may not merit disciplinary action, but the cumulative effect of which indicates
DEPP 6.2.19GRP
Some types of breach may potentially result not only in action by the FSA, but also action by other domestic or overseas regulatory authorities or enforcement agencies.
DEPP 6.2.20GRP
When deciding how to proceed in such cases, the FSA will examine the circumstances of the case, and consider, in the light of the relevant investigation, disciplinary and enforcement powers, whether it is appropriate for the FSA or another authority to take action to address the breach. The FSA will have regard to all the circumstances of the case including whether the other authority has adequate powers to address the breach in question.
DEPP 6.2.21GRP
In some cases, it may be appropriate for both the FSAand another authority to be involved, and for both to take action in a particular case arising from the same facts. For example, a breach of RIE rules may be so serious as to justify the FSA varying or cancelling the firm's Part IV permission, or withdrawing approval from approved persons, as well as action taken by the RIE. In such cases, the FSA will work with the relevant authority to ensure that cases are dealt with efficiently
DEPP 6.2.23GRP
The FSA will not take action against a person over behaviour which (a) conforms with the Takeover Code or rules of an RIE and (b) falls within the terms of any provision of the Code of Market Conduct which states that behaviour so conforming does not amount to market abuse. The FSA will seek the Takeover Panel's or relevant RIE's views on whether behaviour complies with the Takeover Code or RIE rules and will attach considerable weight to its views.
DEPP 6.2.24GRP
If any of the circumstances in DEPP 6.2.26 G apply, and the FSA considers that the use of its disciplinary powers under section 123 or section 129, or of its injunctive powers under section 381 or of its powers relating to restitution under section 383 or 384 is appropriate, it will not take action during an offer to which the Takeover Code applies except in the circumstances set out in DEPP 6.2.27 G.
DEPP 5.1.1GRP
(1) 1A person subject to enforcement action may agree to a financial penalty or other outcome rather than contest formal action by the FSA.(2) The fact that he does so will not usually obviate the need for a statutory notice recording the FSA's decision to take that action. Where, however, the person subject to enforcement action agrees not to contest the content of a proposed statutory notice, the decision to give that statutory notice will be taken by senior FSA staff.(3) The
DEPP 5.1.2GRP
A person who is or may be subject to enforcement action may wish to discuss the proposed action with FSA staff through settlement discussions.
DEPP 5.1.3GRP
Settlement discussions may take place at any time during the enforcement process if both parties agree. This might be before the giving of a warning notice, before a decision notice, or even after referral of the matter to the Tribunal. But the FSA would not normally agree to detailed settlement discussions until it has a sufficient understanding of the nature and gravity of the suspected misconduct or issue to make a reasonable assessment of the appropriate outcome. Settlement
DEPP 5.1.6GRP
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
DEPP 6.6.2GRP
In addition to the factors considered in Step 2 for cases against firms (DEPP 6.5A) and cases against individuals (DEPP 6.5B),1 the following considerations are relevant.1(1) In general, the FSA's approach to disciplinary action arising from the late submission of a report will depend upon the length of time after the due date that the report in question is submitted.(2) If the person concerned is an individual, it is open to him to make representations to the FSA as to why he
DEPP 6.6.3GRP
In addition, in appropriate cases, the FSA may bring disciplinary action against the approved persons within the firm's management who are ultimately responsible for ensuring that the firm's reports are completed and returned to the FSA.
DEPP 6.6.5GRP
In most late reporting cases, it will not be necessary for the FSA to appoint an investigator since the fact of the breach will be clear. It follows that the FSA will not usually send the firm concerned a preliminary findings letter for late-reporting disciplinary action.
DEPP 6.5D.1GRP
(1) 1The FSA's approach to determining penalties described in DEPP 6.5 to DEPP 6.5C is intended to ensure that financial penalties are proportionate to the breach. The FSA recognises that penalties may affect persons differently, and that the FSA should consider whether a reduction in the proposed penalty is appropriate if the penalty would cause the subject of enforcement action serious financial hardship.(2) Where an individual or firm claims that payment of the penalty proposed
DEPP 6.5D.2GRP
(1) In assessing whether a penalty would cause an individual serious financial hardship, the FSA will consider the individual’s ability to pay the penalty over a reasonable period (normally no greater than three years). The FSA’s starting point is that an individual will suffer serious financial hardship only if during that period his net annual income will fall below £14,000 and his capital will fall below £16,000 as a result of payment of the penalty. Unless the FSA believes
DEPP 6.5D.4GRP
(1) The FSA will consider reducing the amount of a penalty if a firm will suffer serious financial hardship as a result of having to pay the entire penalty. In deciding whether it is appropriate to reduce the penalty, the FSA will take into consideration the firm’s financial circumstances, including whether the penalty would render the firm insolvent or threaten the firm’s solvency. The FSA will also take into account its regulatory objectives, for example in situations where
DEPP 6.7.1GRP
Persons subject to enforcement action may be prepared to agree the amount of any financial penalty, or the length of any period of suspension or restriction,2 and other conditions which the FSA seeks to impose by way of such action. Such conditions might include, for example, the amount or mechanism for the payment of compensation to consumers. The FSA recognises the benefits of such agreements, in that they offer the potential for securing earlier redress or protection for consumers
DEPP 6.7.4GRP
(1) Any settlement agreement between the FSA and the person concerned will therefore need to include a statement as to the appropriate penalty discount in accordance with this procedure.(2) In certain circumstances the person concerned may consider that it would have been possible to reach a settlement at an earlier stage in the action, and argue that it should be entitled to a greater percentage reduction in penalty than is suggested by the table at DEPP 6.7.3G (3). It may be,
DEPP 6A.1.3GRP
The power to impose a suspension or a restriction is a disciplinary measure which the FSA may use in addition to, or instead of, imposing a financial penalty or issuing a public censure. The principal purpose of imposing a suspension or a restriction is to promote high standards of regulatory and/or market conduct by deterring persons who have committed breaches from committing further breaches, helping to deter other persons from committing similar breaches, and demonstrating
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.
REC 6.7.4RRP
An overseas recognised body must include in its report submitted in compliance with section 295(1) of the Act:(1) particulars of any changes to: (a) its memorandum and articles of association or any similar or analogous documents; (b) its regulatory provisions; (c) its chairman or president, or chief executive (or equivalent);(2) particulars of any disciplinary action (or any similar or analogous action) taken against it by any supervisory authority in its home territory, whether
REC 6.7.5RRP
An overseas recognised body must include in the first report submitted under section 295(1) of the Act after the recognition order in relation to that overseas recognised body is made: (1) particulars of any events of the kind described in section 295(2) of the Act which occurred; (2) particulars of any change specified in REC 6.7.4 R (1) or disciplinary action specified in REC 6.7.4 R (2) which occurred; and(3) any annual report and accounts which covered a period ending; after
SUP 8.4.1GRP
If the FSA gives a firm a waiver, then the relevant rule no longer applies to the firm. But:(1) if a waiver directs that a rule is to apply to a firm with modifications, then contravention of the modified rule could lead to FSA enforcement action and (if applicable) a right of action under section 150 of the Act (Actions for damages); and(2) if a waiver is given subject to a condition, it will not apply to activities conducted in breach of the condition, and those activities,
SUP 6.4.22GRP
In deciding whether to cancel a firm'sPart IV permission, the FSA will take into account all relevant factors in relation to business carried on under that permission, including whether:(1) there are unresolved, unsatisfied or undischarged complaints against the firm from any of its customers;(2) the firm has complied with CASS 4.3.99 R,5CASS 5.5.80 R and CASS 7.2.15 R5 (Client money: discharge of fiduciary duty) and CASS 4.3.104 R and CASS 7.2.19 R5(Client money: allocated but
SUP 6.4.25GRP
Consequently, the FSA considers that it will have good reason not to grant a firm's application for cancellation of permission where:(1) it proposes to exercise any of the powers described in SUP 6.4.24 G; or(2) it has already begun disciplinary and restitution proceedings against the firm by exercising either or both of these powers against the firm.
DEPP 2.5.18GRP
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
LR 8.7.8RRP
A sponsor must notify the FSA in writing as soon as possible if:(1) the sponsor ceases to satisfy the criteria for approval as a sponsor set out in LR 8.6.5 R; or(2) the sponsor, or any of its employees who provide sponsor services,5 are:5(a) convicted of any offence involving fraud, theft or other dishonesty; or(b) the subject of a bankruptcy proceeding, a receiving order or an administration order; or(3) any of its employees who providesponsor services5are disqualified by a
PERG 8.2.2GRP
Another consequence of a breach of section 21 of the Act is that certain agreements could be unenforceable (see section 30 of the Act (Enforceability of agreements resulting from unlawful communications)). This applies to agreements entered into by a person as a customer as a consequence of a communication made in breach of section 21.
SYSC 10.2.3GRP
SYSC 10.2.2 R is made under section 147 of the Act (Control of information rules). It has the following effect:(1) acting in conformity with SYSC 10.2.2 R (1) provides a defence against proceedings brought under section 397(2) or (3) of the Act (Misleading statements and practices) - see sections 397(4) and (5)(c);(2) behaviour in conformity with SYSC 10.2.2 R (1) does not amount to market abuse (see SYSC 10.2.2 R (4)); and(3) acting in conformity with SYSC 10.2.2 R (1) provides
MAR 2.5.2RRP
A person who is treated under MAR 2.5.1R (1) as acting or engaging in conduct in conformity with the price stabilising rules is also to be treated to an equivalent extent as so acting or engaging for the purposes of:(1) MAR 2.2.1R (2) and MAR 2.2.2 G, provided that the investments concerned are not admitted to trading on a regulated market and there has been no request for admission to trading on a regulated market;(2) Part XIV (Disciplinary measures); and (3) Part XXV (Injunctions
CREDS 10.1.3GRP

Module

Relevance to Credit Unions

The Principles for Businesses (PRIN)

The Principles for Businesses (PRIN) set out, in a small number of high-level requirements, the basic obligations of all regulated firms. They provide a general statement of regulatory requirements, and the FSA considers that the Principles are appropriate expressions of the standards of conduct to be expected of all financial firms including credit unions. In applying the Principles to credit unions, the FSA will be mindful of proportionality. In practice, the implications are likely to vary according to the size of the credit union.

Senior Management Arrangements, Systems and Controls (SYSC)

SYSC 1 and SYSC 4 to 10 apply to all credit unions in respect of the carrying on of their regulated activities and unregulated activities in a prudential context. SYSC 18 applies to all credit unions without restriction.

Threshold Conditions (COND)

In order to become authorised under the Act all firms must meet the threshold conditions. The threshold conditions must be met on a continuing basis by credit unions. Failure to meet one of the conditions is sufficient grounds for the exercise by the FSA of its powers (see EG).

Statements of Principle and Code of Practice for Approved Persons (APER)

The purpose of the Statements of Principle contained in APER 2 is to provide guidance to approved persons in relation to the conduct expected of them in the performance of a controlled function. The Code of Practice for Approved Persons sets out descriptions of conduct which, in the opinion of the FSA, do not comply with a Statement of Principle and, in the case of Statement of Principle 3, conduct which tends to show compliance within that statement.

The Fit and Proper test for Approved Persons (FIT)

The purpose of FIT is to set out and describe the criteria that the FSA will consider when assessing the fitness and propriety of a person in respect of whom an application is being made for approval to undertake a controlled function under the approved persons regime. The criteria are also relevant in assessing the continuing fitness and propriety of persons who have already been approved.

General Provisions (GEN)

GEN contains rules and guidance on general matters, including interpreting the Handbook, statutory status disclosure, the FSA logo and insurance against financial penalties.

Fees manual (FEES)

This manual sets out the fees applying to credit unions.

Conduct of Business sourcebook (COBS)

A credit union which acts as a CTF provider or provides a cash-deposit ISA will need to be aware of the relevant requirements in COBS. COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R (Direct offer financial promotions), COBS 4.10 (Systems and controls and approving and communicating financial promotions), COBS 13 (Preparing product information) and COBS 14 (Providing product information to clients) apply with respect to accepting deposits as set out in those provisions, COBS 4.1 and BCOBS.

Banking: Conduct of Business sourcebook (BCOBS)

BCOBS sets out rules and guidance for credit unions on how they should conduct their business with their customers. In particular there are rules and guidance relating to communications with banking customers and financial promotions (BCOBS 2), distance communications (BCOBS 3), information to be communicated to banking customers (BCOBS 4), post sale requirements (BCOBS 5), and cancellation (BCOBS 6). BCOBS 5.1.13 R (Value dating) does not apply to credit unions. The rules in BCOBS 3.1 that relate to distance contracts for accepting deposits are likely to have limited application to a credit union. This is because the Distance Marketing Directive only applies where there is "an organised distance sales or service-provision scheme run by the supplier" (Article 2(a)). If, therefore, the credit union normally operates face to face and has not set up facilities to enable customers to deal with it at a distance, such as facilities for a customer to deal with it purely by post, telephone, fax or the Internet, the provisions will not be relevant.

Supervision manual (SUP)

The following provisions of SUP are relevant to credit unions: SUP 1 (The FSA approach to supervision), SUP 2 (Information gathering by the FSA on its own initiative), SUP 3.1 to SUP 3.8 (Auditors), SUP 5 (Skilled persons), SUP 6 (Applications to vary or cancel Part IVpermission), SUP 7 (Individual requirements), SUP 8 (Waiver and modification of rules), SUP 9 (Individual guidance), SUP 10 (Approved persons), SUP 11 (Controllers and Close links), SUP 15 (Notifications to the FSA) and SUP 16 (Reporting Requirements).

Credit unions are reminded that they are subject to the requirements of the Act and SUP 11 on

controllers and close links, and are bound to notify the FSA of changes. It may be unlikely, in practice, that credit unions will develop such relationships. It is possible, however, that a person may acquire control of a credit union within the meaning of the Act by reason of holding the prescribed proportion of deferred shares in the credit union.

In relation to SUP 16, credit unions are exempted from the requirement to submit annual reports of

controllers and close links.

Decision, Procedure and Penalties manual (DEPP)

DEPP is relevant to credit unions because it sets out:

(1) the FSA's decision-making procedure for giving statutory notices. These are warning notices, decision notices and supervisory notices (DEPP 1.2 to DEPP 5); and

(2) the FSA's policy with respect to the imposition and amount of penalties under the Act (see DEPP 6).

Dispute Resolution: Complaints (DISP)

DISP sets out rules and guidance in relation to treating complainants fairly and the Financial Ombudsman Service.

Compensation (COMP)

COMP sets out rules relating to the scheme for compensating consumers when authorised firms are unable, or likely to be unable, to satisfy claims against them.

Complaints against the FSA (COAF)

This relates to complaints against the FSA.

The Enforcement Guide (EG)

The Enforcement Guide (EG) describes the FSA's approach to exercising the main enforcement powers given to it by the Act and by regulation 12 of the Unfair Terms Regulations.

Financial crime: a guide for firms (FC)

FC provides guidance on steps that a firm can take to reduce the risk that it might be used to further financial crime.
RCB 4.2.3GRP
(1) When deciding whether to take enforcement action under Part 7 of the RCB Regulations, and what form that enforcement action should take, the FSA will consider all relevant factors, including:(a) the relevant factors on decisions to take action set out in DEPP 6.2.1 G;(b) whether any contractual or other arrangements agreed between the parties can be used effectively to address any perceived failure under the RCB Regulations; and(c) the interests of investors in the relevant
DEPP 6.4.2GRP
The criteria for determining whether it is appropriate to issue a public censure rather than impose a financial penalty include those factors that the FSA will consider in1 determining the amount of penalty set out in DEPP 6.5 A to DEPP 6.5 D.1 Some particular considerations that may be relevant when the FSA determines whether to issue a public censure rather than impose a financial penalty are:1(1) whether or not deterrence may be effectively achieved by issuing a public censure;(2)
SUP 7.3.1GRP
The FSA expects to maintain a close working relationship with certain types of firm and expects that routine supervisory matters arising can be resolved during the normal course of this relationship by, for example, issuing individual guidance where appropriate (see SUP 9.3). However, the FSA may seek to vary a firm's Part IV permission:(1) in circumstances where it considers it appropriate for the firm to be subject to a formal requirement, breach of which could attract enforcement