Related provisions for SUP 15A.1.4
1 - 20 of 103 items.
A firm continuing to hold capital in accordance with its individual capital guidance and its ability to carry on doing so is a fundamental part of the FCA's supervision of that firm. Therefore, if a firm'sown funds have fallen, or are expected to fall, below the level advised in individual capital guidance, then, consistent with Principle 11 (Relations with regulators), a firm should inform the FCA of this fact as soon as practicable, explaining why this has happened or is expected
Monitoring the use of a firm'scapital planning buffer is also a fundamental part of the FCA's supervision of that firm. A firm should only use its capital planning buffer to absorb losses or meet increased own funds requirements if certain adverse circumstances materialise. These should be circumstances beyond the firm's normal and direct control, whether relating to a deteriorating external environment or periods of stress, such as macroeconomic downturns or financial/market
Following discussions with the firm on the items listed in IFPRU 2.3.27 G, the FCA may put in place additional reporting arrangements to monitor the firm's use of its capital planning buffer in accordance with the plan referred to in IFPRU 2.3.27 G (3). The FCA may also identify specific trigger points as the capital planning buffer is being used up by the firm, which could lead to additional supervisory actions.
Where a firm'scapital planning buffer is being drawn down due to circumstances other than those in IFPRU 2.3.26 G, such as poor planning or mismanagement, the FCA may ask the firm for more detailed plans for it to restore its capital planning buffer. In the light of the relevant circumstances, the FCA may consider taking other remedial actions, which may include using its powers under section 55L of the Act on its own initiative, to impose a requirement on a firm.11
This section contains:(1) rules that exercise the discretion afforded to the FCA as competent authority under article 18 of the EU CRR (Methods of prudential consolidation); and(2) guidance on the criteria that the FCA will take into account when considering whether to grant a permission to a firm on a case-by-case basis for the individual consolidation method under article 9 of the EUCRR (Individual consolidation method).
The FCA will assess an application for individual consolidation against articles 9 and 396(2) (Compliance with large exposure requirements) of the EU CRR on a case-by-case basis. The FCA will assess whether it is still appropriate to permit the treatment if doing so risks conflict with its statutory objectives. The FCA will apply a high level of scrutiny to applications under article 9 of the EU CRR, consistent with the previous solo consolidation regime.
The FCA will assess core UK group applications against article 113(6) on a case-by-case basis. The FCA expects to approve this treatment for core UK groupundertakings if the conditions stipulated in article 113(6) are met. A firm should note that the FCA will still make a wider judgement whether it is appropriate to grant this treatment even where the conditions in article 113(6) are met. It is the FCA's intention to continue to apply a high level of scrutiny to applications under
The decisions referred to in DEPP 2.5.12 G are:(1) the decision to give a supervisory notice pursuant to section 259(3), (8) or 9(b) (directions on authorised unit trust schemes); section 268(3), 7(a) or 9(a) (directions in respect of recognised overseas schemes); or section 282(3), (6) or (7)(b) (directions in respect of relevant recognised schemes) of the Act;(1A) the decision to give a supervisory notice pursuant to section 261Z1(3), (8) or (9)(b) (Procedure on giving directions
Some of the distinguishing features of notices given under enactments other than the Act are as follows: (1) [deleted]66(2) [deleted]66(3) Friendly Societies Act 1992, section 58A1: The warning notice and decision notice must set out the terms of the direction which the FCA6 proposes or has decided to give and any specification of when the friendly society is to comply with it. A decision notice given under section 58A(3) must give an indication of the society's right, given by
In complying with Principle 11, the appropriate regulator considers that a firm should, in relation to the discharge by the appropriate regulator of its functions under the Act:(1) make itself readily available for meetings with representatives or appointees of the appropriate regulator as reasonably requested;(2) give representatives or appointees of the appropriate regulator reasonable access to any records, files, tapes or computer systems, which are within the firm's possession
The cooperation that a firm is expected to procure from such suppliers is similar to that expected of the firm, in the light of the guidance in SUP 2.3.3 G to SUP 2.3.4 G, but does not extend to matters outside the scope of the appropriate regulator's functions in relation to the firm. SUP 2.3.5 R (2) also requires a firm to take reasonable steps regarding access to the premises of such suppliers.
When a firm appoints or renews the appointment of a supplier under a material outsourcing arrangement, it should satisfy itself that the terms of its contract with the supplier require the supplier to give the appropriate regulator7 access to its premises as described in SUP 2.3.5 R (2), and to cooperate with the appropriate regulator7 as described in SUP 2.3.7 R. The appropriate regulator7 does not consider that the 'reasonable steps' in SUP 2.3.7 R would require a firm to
The Companies Act 1989 also gives the FCA1 powers to supervise the taking of action under default rules. Under section 166 of the Companies Act 1989 (Powers of the appropriate regulator1 to give directions) (see REC 4.5.4 G), the FCA1 may direct a UK RIE1to take, or not to take, action under its default rules. Before exercising these powers the FCA1 must consult the UK RIE.1 The FCA1 may also exercise these powers if a relevant office-holder applies to it under section 167 of
The Companies Act 1989: section 166
The FCA1 may issue a "positive" direction (to take action) under section 166(2)(a) of the Companies Act 1989: 1 |
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Where in any case a [UK RIE] has not taken action under its default rules- if it appears to [the FCA] that it could take action, [the FCA may direct it to do so,1 1 |
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but under section 166(3)(a) of the Companies Act 1989: |
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Before giving such a direction the [FCA] shall consult the [UK RIE] in question; and [the FCA] shall not give a direction unless [the FCA] is satisfied, in the light of that consultation that failure to take action would involve undue risk to investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the United Kingdom, or that the direction is necessary to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 or in connection with a particular exercise of a power under that Part.1 1 |
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The FCA1 may issue a "negative" direction (not to take action) under section 166(2)(b) of the Companies Act 1989: 1 |
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Where in any case a [UK RIE] has not taken action under its default rules - if it appears to the [FCA] that it is proposing to take or may take action, [the FCA] may direct it not to do so.1 1 |
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but under section 166(3)(b) of the Companies Act 1989: |
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Before giving such a direction the [FCA] shall consult the [UK RIE] in question; and the [FCA] shall not give a direction unless [the FCA] is satisfied, in the light of that consultation that the taking of action would be premature or otherwise undesirable in the interests of investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the United Kingdom, or that the direction is necessary to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 or in connection with a particular exercise of a power under that Part.1 1 |
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Under section 166(7) of the Companies Act 1989, where a UK RIE has taken action either of its own accord or in response to a direction, the FCA may direct it to do or not to do specific things subject to these being within the powers of the UK RIE under its default rules. However,11(1) 1where the UK RIE is acting in accordance with a direction given by the FCA to take action under section 166(2)(a) of the Act on the basis that failure to take action would involve undue risk to
10Although PRIN does not apply to a firm in relation to its carrying on of auction regulation bidding, the FCA35expects to be given notice of events that are material to the FCA's35supervision of that business and so firms carrying on that business should have regard to the guidance in SUP 15.3.8 G to SUP 15.3.10 G.3535
Compliance with Principle 11 includes, but is not limited to, giving the appropriate regulator35 notice of:35(1) any proposed restructuring, reorganisation or business expansion which could have a significant impact on the firm's risk profile or resources, including, but not limited to:(a) setting up a new undertaking within a firm'sgroup, or a new branch (whether in the United Kingdom or overseas); or (b) commencing the provision of cross border services into a new territory;
Article 20(6) of the EU CRR states that, where the IRB approach is used on a unified basis by those entities which fall within the scope of article 20(6) (EEA group), the FCA is required to permit certain IRB requirements to be met on a collective basis by members of that group. In particular, the FCA considers that, where a firm is reliant upon a rating system or data provided by another member of its group, it will not meet the condition that it is using the IRB approach on
The following points set out the level at which the FCA expects the 15% test to applied for a firm that is a member of a group:(1) if a firm is part of a group subject to consolidated supervision in the EEA and for which the FCA is the consolidating supervisor, the calculations in (1) are carried out with respect to the wider group;(2) if a firm is part of a group subject to consolidated supervision in the EEA and for which the FCA is not the consolidating supervisor the calculation
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
The FCA will
adopt a pre-emptive approach which will be based on making forward-looking
judgments about firms' business
models, product strategy and how they run their businesses, to enable the FCA to identify and intervene earlier to
prevent problems crystallising. The FCA's approach
to supervising firms will contribute
to its delivery against its objective to protect and enhance the integrity
of the UK financial system (as
set out in the Act). Where the FCA has responsibilities
(1) The FCA intends
to communicate the outcomes of its pillars of supervision to each firm within an appropriate time frame. In
the case of firms in which risks
have been identified which could have a material bearing on the FCA meeting its statutory
objectives, the FCA will
also outline a remedial programme intended to address these.(2) The FCA considers
that it would generally be inappropriate for a firm to
disclose its FCA risk assessment
to third parties, except to those who
While respecting each regulator's
different statutory objectives and
mandates, in undertaking its supervisory activity the FCA will
co-ordinate and co-operate with the PRA as
required and necessary in the interests of the effective and efficient supervision
of regulated firms and individuals.
Both regulators will coordinate with each other as required under the Act, including on the exchange of information
relevant to each regulator's individual objectives. However, the FCA and
The FCA3 will usually consider revoking a recognition order if:3(1) the recognised body is failing or has failed to satisfy 2one or more of the recognised body requirements1and that failure has or will have serious consequences; or2(2) it would not be possible for the recognised body to comply with a direction under section 296 of the Act (FCA's3 power to give directions) or (for RAPs) regulation 3 of the RAP regulations;2 or 3(3) for some other reason, it would not be appropriate
The FCA3 would be likely to consider the conditions in REC 4.7.3 G (2) or REC 4.7.3 G (3) to be triggered1in the following circumstances:31(1) the recognised body appears not to have the resources or management to be able to organise its affairs so as to satisfy one or more of the recognised body requirements; or212(2) the recognised body does not appear to be willing to satisfy one or more of the recognised body requirements; or212(3) the recognised body is failing or has failed
In addition to the relevant 1factors set out in REC 4.7.4 G, the FCA3 will usually consider that it would not be able to secure an ROIE's3 compliance with the recognition requirements or other obligations in or under the Act by means of a direction under section 296 of the Act, if it appears to the FCA3 that the ROIE3 is prevented by any change in the legal framework or supervisory arrangements to which it is subject in its home territory from complying with the recognition requirements
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 (FCA's4powers to give directions) or (for RAPs) regulation 3 of the RAP regulations; or34(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
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 FCA4 will have regard to all relevant information and factors including:4(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 statutory
4For RAPs, key steps in the regulation 5 procedure
The FCA will: |
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(1) |
give written notice to the RAP (or applicant); |
The notice will state why the FCA intends to take the action it proposes to take, and include an invitation to make representations, and the date by which representations should be made. |
(2) |
take such steps as it considers reasonably practicable to bring the notice to the attention of the members of the RAP or of the applicant, as the case may be; |
The FCA will also notify persons individually (as far as it considers it reasonably practicable to do so) if it considers that the action it proposes to take would affect them adversely in a way which would be different from its effect on other persons of the same class. |
(3) |
publish the notice so as to bring it to the attention of other persons likely to be affected; |
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(4) |
receive representations from the RAP or applicant concerned, any member of the RAP or applicant, and any other person who is likely to be affected by the action the FCA proposes to take; |
The FCA will not usually consider oral representations without first receiving written representations from the person concerned. It will normally only hear oral representations from the RAP (or applicant) itself or of a person whom it has notified individually, on request. |
(5) |
write promptly to any person who requests the opportunity to make oral representations if it decides not to hear that person's representations; |
The FCA will indicate why it will not hear oral representations and the FCA will allow the person concerned further time to respond. |
(6) |
have regard to representations made; |
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(7) |
(when it has reached its decision) notify the RAP (or applicant) concerned in writing; |
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(8) |
(if it has decided to give a direction, or revoke or refuse to make a recognition order) take such steps as it considers reasonably practicable to bring its decision to the attention of members of the RAP or applicant and to other persons likely to be affected. |
The FCA will usually give notice of its decision to the same persons and in the same manner as it gave notice of its intention to act. |
This chapter sets out the FCA's3 approach to the supervision of recognised bodies and contains guidance on: 3(1) the arrangements for investigating complaints about recognised bodies made under section 299 of the Act (Complaints about recognised bodies) (REC 4.4); (2) the FCA's3approach to the exercise of its powers under:3(a) (for RIEs)2section 296 of the Act (Appropriate regulator's3 power to give directions) or (for RAPs) regulation 3 of the RAP regulations2 to give directions
The FCA's3 general approach to supervision is intended to ensure that:3(1) the FCA3 has sufficient assurance that recognised bodies continue at all times to satisfy the recognised body requirements; and2132(2) the FCA's3 supervisory resources are allocated, and supervisory effort is applied, in ways which reflect the actual risks to the regulatory objectives. 3
The FCA4 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 FCA4 will
As part of the decision making process the appropriate regulator2 will normally contact the person in SUP 5.2.1 G or in SUP 5.2.2 G2 to discuss its needs before finalising its decision to require a report or the updating or collection of information by a skilled person. This will provide an opportunity for discussion about the appointment, whether an alternative means of obtaining the information would be better, what the scope of a report should be, who should be appointed,
The appropriate regulator2 may enter into a dialogue with the skilled person, and is ready to discuss matters relevant to the report or the collection or updating of the relevant information2 with him, during the preparation of the report or the collection or updating of the relevant information.2 Such discussions may2 involve or be through the person in SUP 5.2.1 G or SUP 5.2.2 G.222
If the firm or its group is subject to lead supervision arrangements by the appropriate regulator,7 the firm or group may give or address a notice under SUP 15.7.4 R(1) to the supervisory contact at the appropriate regulator,7 designated as lead supervisor, if the firm has chosen to make use of the lead supervisor as a central point of contact (see SUP 1.5).77
The appropriate regulator7 has made arrangements with the Society of Lloyd's with respect to the monitoring of underwriting agents. Underwriting agents should check whether these arrangements provide for any notifications required under this chapter to be sent to the Society instead of to the appropriate regulator.7 [For further details see the appropriate regulator's7 website.]777
4As well as potentially breaching the requirements in this section, misleading statements by a firm may involve a breach of Principle 7 (Communications with clients) or section Part 7 (Offences relating to financial services) of the Financial Services Act 2012, as well as giving rise to private law actions for misrepresentation.
Under section 296 of the Act (FCA's4 power to give directions) and (for RAPs) under regulation 3 of the RAP regulations3, the FCA4 has the power to give directions to a recognised body to take specified steps 1in order to secure its compliance with the recognised body requirements. In the case of a UK RIE (including one which operates an RAP) 3those steps may include granting the FCA4 access to the UK RIE's premises for the purposes of inspecting those premises or any documents
The FCA4 is likely to exercise its power under section 296 of the Act or regulation 3 of the RAP regulations3 if it considers that:4(1) there has been, or was likely to be, a failure to satisfy one or more of the recognised body requirements31which has serious consequences; (2) compliance with the direction would ensure that 1one or more of the recognised body requirements is3 satisfied; and(3) the recognised body is capable of complying with the direction.
Under section 298(7) of the Act (Directions and revocation: procedure), and (for RAPs) regulation 5(7) of the RAP regulations,3 the FCA4 need not follow the consultation procedure set out in the rest of section 298 (see REC 4.8) or may cut short that procedure, if it considers it reasonably necessary to do so. For RAPs, the FCA need not follow the procedure set out in regulation 5 of the RAP regulations or may cut short the procedure, if it considers it essential to do so.44