Related provisions for PRIN 3.1.5
81 - 100 of 456 items.
The guidance in COND 2 explains each FCA1threshold condition in Schedule 6 (threshold conditions) to the Act and indicates1 how the FCA1 will interpret it in practice. This guidance is not, however, exhaustive and is written in very general terms. A firm will need to have regard to the obligation placed upon the FCA1 under section 55B (The threshold conditions) of the Act; that is, the FCA1 must ensure that the firm will satisfy, and continue to satisfy, the FCA1threshold conditions
1When assessing the FCAthreshold conditions, the FCA may have regard to any person appearing to be, or likely to be, in a relevant relationship with the firm, in accordance with section 55R of the Act (Persons connected with an applicant). For example, a firm'scontrollers, its directors or partners, other persons with close links to the firm (see COND 2.3), and other persons that exert influence on the firm which might pose a risk to the firm's satisfaction of the FCAthreshold
(1) For ease of reference, the FCA1threshold conditions in or under Schedule 6 to the Act have been quoted in full in COND 2. (1A) 1Paragraphs 2A and 3A of Schedule 6 of the Act have not been quoted. These set out the application of the FCAthreshold conditions to firms which do not carry on, or are not seeking to carry on, a PRAregulated activity and firms which carry on, or are seeking to carry on, a PRAregulated activity respectively. This application is summarised in COND
1Paragraph 1A of Schedule 6 to the Act(1) "assets" includes contingent assets;"consolidated supervision" has the same meaning as in section 3M(a);"consumer" has the meaning given by section 425A(b);"financial crime" is to be read with section 1H(3)(c);"functions", in relation to either the FCA or the PRA, means the functions conferred on that regulator by or under this Act;"liabilities" includes contingent liabilities; "relevant directives" has the same meaning as in section 3M;
Section 213(3)(b) of the Act requires the appropriate regulator 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.
Section 224F of the Act enables the appropriate regulator 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
The9 provisions on the allocation of levies to classes9 up to their levy limits2 meet9 a requirement of section 213(5) of the Act that the appropriate regulator , in making rules to enable the FSCS to impose levies, must take account of the desirability of ensuring that the amount of the levies imposed on a particular class of authorised person reflects, so far as practicable, the amount of claims made, or likely to be made, in respect of that class of person.22229999
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
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]
An ROIE1 is required to notify the FCA1 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 ROIE1 to provide the FCA1 with a report (at least once a year) which contains:111(1) a statement as to whether any events have occurred which are likely to affect the FCA's assessment of whether it is satisfied that the ROIE
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 theROIE1 as such, and ends on the date specified in the report or, if no date is specified, on the date of the report. 1
A firm authorised under Part 4A8 of the Act (Permission to carry on regulated activity) has a single Part 4A permission8 granted by the FCA or the PRA. A firm'sPart 4A permission8 specifies all or some of the following elements (see PERG 2 Annex 2 (Regulated activities and the permission regime) and the information online at the FCA and PRA websites):8888338(1) a description of the activities the firm may carry on, including any limitations;(2) the specified investments involved;
8If an FCA-authorised person wishes to change its Part 4A permission to:(1) add a regulated activity, other than a PRA-regulated activity; or(2) remove a regulated activity from those to which the permission relates; or(3) vary the description of a regulated activity to which the permission relates; or(4) cancel the permission;it can apply to the FCA under section 55H of the Act (Variation by FCA at request of authorised person).
8If an FCA-authorised person wishes to change its Part 4A permission, by adding to the regulated activities to which the permission relates one or more regulated activities, which include a PRA-regulated activity, it can apply to the PRA under section 55I of the Act (Variation by PRA at request of authorised person). The PRA can determine such an application only with the consent of the FCA.
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 appropriate regulator'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
The FCA1 would not normally seek to gather information using the methods described in SUP 2.3 or SUP 2.4 in a situation where the FCA1 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:11(1) section 175(5) (Information and documents: supplementary powers) under which no person may be required under Part XI of the Act (Information
When the FCA1 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 FCA1 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
This guidance is issued under section 139A of 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 FCA 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
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
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 appropriate UK regulator,20 in accordance with
20Where the PRA is the appropriate UK regulator, it will consult the FCA before deciding whether to give a consent notice, except where paragraph 19(7A) of Part III of Schedule 3 to the Act applies. Where the FCA is the appropriate UK regulator, it will consult the PRA before deciding whether to give a consent notice in relation to a UK firm whose immediate group includes a PRA-authorised person.
(1) If the appropriate UK regulator20 proposes to refuse to give a consent notice, then paragraph 19(8) of Part III of Schedule 3 to the Act requires the appropriate UK regulator20 to give the UK firm a warning notice.2020(2) If the appropriate UK regulator20 decides to refuse to give a consent notice, then paragraph 19(12) of Part III of Schedule 3 to the Act requires the appropriate UK regulator20 to give the UK firm a decision notice within three months8 of the date on which
1Section 87A(2A) of the Act provides that information about certain guarantors may be omitted from a prospectus:
87A |
(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. |
Section 87B(1) of the Act sets out when the FCA may authorise the omission of information from a prospectus:
(1) |
The [FCA] may authorise the omission from a prospectus of any information, the inclusion of which would otherwise be required, on the ground – |
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(a) |
that its disclosure would be contrary to the public interest; |
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(b) |
that its disclosure would be seriously detrimental to the issuer, provided that the omission would be unlikely to mislead the public with regard to any facts or circumstances which are essential for an informed assessment of the kind mentioned in section 87A(2); or |
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(c) |
that the information is only of minor importance for a specific offer to the public or admission to trading on a regulated market and unlikely to influence an informed assessment of the kind mentioned in section 87A(2). |
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A request to the FCA to authorise the omission of specific information must:(1) be in writing from the applicant;(2) identify the specific information concerned and the specific reasons for its omission; and(3) state why in the applicant's opinion one or more of the grounds in section 87B(1) of the Act applies.
This guidance is issued under section 139A of 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 and the circumstances contemplated by it, then the FCA 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 given by the FCA. This guidance represents the FCA's view, and does not bind the courts, for example, in relation to the enforceability of a contract where there has been a breach of the general prohibition on carrying on a regulated activity in the United Kingdom without authorisation (see sections 26 to 29 of the Act (Enforceability of Agreements)).
A firm should satisfy itself that the terms of the contract with its appointed representative (including an introducer appointed representative):(1) are designed to enable the firm to comply properly with any limitations or requirements on its own permission;(2) require the appointed representative to cooperate with the FCA as described in SUP 2.3.4 G (Information gathering by the FCA on its own initiative: cooperation by firms) and give access to its premises, as described in
A firm must ensure that its written contract with each of its appointed representatives:4(1) complies with the requirements prescribed in regulation 3 of the Appointed Representatives Regulations (see SUP 12.5.2 G);4(2) requires the appointed representative to comply, and to ensure that any persons who provide services to the appointed representative under a contract of services or a contract for service comply, with the relevant requirements in or under the Act (including the
The Act (section
1L) requires the FCA to "maintain
arrangements for supervising authorised persons". Section 1K of the Act also requires the FCA to
provide general guidance about
how it intends to advance its operational objectives in discharging its general
functions in relation to different categories of authorised
person or regulated activity.
One purpose of this guidance is
to discharge the duties of the FCA set
out in sections 1L and 1K of the Act.
The FCA's approach to
The design of these arrangements
is shaped by the FCA'sstatutory objectives in relation to the
conduct supervision of financial services firms as
well as the prudential supervision of firms not
supervised by the PRA. These
objectives are set out in Chapter 1 of the Act.
The FCA has one strategic objective: ensuring that the relevant
markets function well. In discharging its general functions, the FCA must, so far as is reasonably possible,
act in a way which is compatible with
(1) In designing its approach to supervision,
the FCA has regard to the regulatory
principles set out in section 3B of the Act.
In particular, the FCA's regulatory
approach aims to focus and reinforce the responsibility of the senior management
of each firm (section 3B(1)(d)
of the Act) to ensure that it
takes reasonable care to organise and control the affairs of the firm responsibly and effectively, and develops
and maintains adequate risk management systems. It is the responsibility
Section 87G of the Act provides that:
(1) |
Subsection (2) applies if, during the relevant period, there arises or is noted a significant new factor, material mistake or inaccuracy relating to the information included in a prospectus approved by the [FCA]. |
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(2) |
The person on whose application the prospectus was approved must, in accordance with prospectus rules, submit a supplementary prospectus containing details of the new factor, mistake or inaccuracy to the [FCA] for its approval. |
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(3) |
The relevant period begins when the prospectus is approved by the [FCA] and ends – |
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(a) |
with the closure of the offer of the transferable securities to which the prospectus relates; or |
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(b) |
when trading in those securities on a regulated market begins. |
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4(3A) |
But where the prospectus relates both to an offer of transferable securities to the public and the admission of those securities to trading on a regulated market, subsection (3) does not apply and the relevant period beings when the prospectus is approved and ends with the later of - |
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(a) |
the closure of the offer to the public to which the prospectus relates; or |
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(b) |
the time when trading in those securities on a regulated market begins. |
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(4) |
"Significant" means significant for the purposes of making an informed assessment of the kind mentioned in section 87A(2). |
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(5) |
Any person responsible for the prospectus who is aware of any new factor, mistake or inaccuracy which may require the submission of a supplementary prospectus in accordance with subsection (2) must give notice of it to – |
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(a) |
the issuer of the transferable securities to which the prospectus relates, and |
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(b) |
the person on whose application the prospectus was approved. |
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(6) |
A supplementary prospectus must provide sufficient information to correct any mistake or inaccuracy which gave rise to the need for it. |
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(7) |
Subsection (1) applies also to information contained in any supplementary prospectus published under this section. |
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A supplementary prospectus must also if necessary include an amendment or supplement to the summary, and any translations of the summary, to take into account the new information. [ Note: article 16.1 PD ]Note:Sections 87Q(4) and (5) of the Act set4 out the rights of investors to withdraw their acceptances after a supplementary prospectus is published.4
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
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
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 appropriate UK regulator20 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).8882088810(2)
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
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.
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)
(1) If the operator of a scheme gives notice to the FCA under section 270 of the Act (Schemes authorised in designated countries or territories) or makes an application under section 272 of the Act (Individually recognised overseas schemes), the notice or application must include the information in paragraph (4). (2) The documents must be in English or accompanied by a translation in English. (3) The documents must be certified by the operator to be true copies of the originals.
An operator of a scheme recognised under section 272 of the Act must ensure the prospectus:(1) contains a statement that "Complaints about the operation of the scheme may be made to the FCA."; and(2) states whether or not investors in the scheme would be covered by the compensation scheme, and if so, it must state how they are covered and who they would need to contact for further information.
(1) An operator of a scheme which is a recognised scheme by virtue of section 270 or 272 of the Act must comply, subject to paragraph (2) below, with the requirements set out in COLL 4.2 (Pre-sale notifications). (2) Where a scheme recognised under section 270of the Act is managed and authorised in Guernsey, Jersey, or the Isle of Man, the prospectus need not comply with the requirements of COLL 4.2.5 R (Table: contents of prospectus), providing it contains corresponding matter
1Under
section 312B of the Act, the FCA5 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:5(1) the FCA5 has clear and demonstrable grounds for believing that the operator
has contravened a relevant requirement, and5(2) the FCA5 has first complied with sections 312B(3) to (9) of the Act.5
(1) 1PR 2, PR 3, PR 4.2, PR 5.1, PR 5.3.1 UK to PR 5.3.3 G and PR 5.5 only apply (subject to paragraph (2)) in relation to:(a) an offer, or a request for admission to trading of transferable securities, in respect of which section 85 of the Act applies (other than an exempt offer under section 86 of the Act) and in relation to which the United Kingdom is the Home State;(b) an offer, or a request for admission to trading of transferable securities, where under section 87 of the
Under section 33(2) of the Act (Withdrawal of authorisation), if the appropriate regulator cancels a firm'sPart 4A permission,1 and as a result there is no regulated activity for which the firm has permission, the regulator authorising that firm1 is required to give a direction withdrawing the firm's status as an authorised person.111
1If the FCA concludes that it should grant an FCA-authorised person's application for cancellation of permission and end its authorisation, the FCA will:(1) cancel the firm'sPart 4A permission under section 55H(3) of the Act;(2) withdraw the firm'sauthorised status under section 33(2) of the Act by giving the firm a direction in writing; and(3) update the firm's entry in the Financial Services Register to show it has ceased to be authorised.
A firm is required to provide the appropriate regulator9 with a wide range of information to enable the appropriate regulator9 to meet its responsibilities for monitoring the firm's compliance with requirements imposed by or under the Act. Some of this information is provided through regular reports, including those set out in SUP 16 (Reporting requirements) and SUP 17 (Transaction reporting). In addition, other chapters in the Handbook set out specific notification and reporting
This chapter sets out:(1) guidance on the type of event or change in condition which a firm should consider notifying in accordance with Principle 11; the purpose of this guidance is to set out examples and not to give comprehensive advice to firms on what they should notify in order to be in compliance with Principle 11;(2) rules on events and changes in condition that a firm must notify; these are the types of event that the appropriate regulator9 must be informed about, usually