Related provisions for LR 11.1.5A
81 - 100 of 761 items.
An auditor of a firm must submit a client assets 5report addressed to the FCA which: 5(1) 5(a) states the matters set out in SUP 3.10.5 R; and55(b) specifies the matters to which SUP 3.10.9 R and SUP 3.10.9A R refer; or (2) if the firm claims not to hold client money or custody assets, states whether anything has come to the auditor's attention that causes him to believe that the firm held client money or custody assets during the period covered by the report.
SUP 3.10.4 R provides that an auditor must ensure that a client assets report is prepared in accordance with the terms of, as the case may be, a reasonable assurance engagement or a limited assurance engagement. However, the FCA also expects an auditor to have regard, where relevant, to material published by the Auditing Practices Board that deals specifically with the client assets report which the auditor is required to submit to the FCA. In the FCA's view, a client assets report
335(1) 5If an auditor expects that it will fail to comply with SUP 3.10.7 R, it must no later than the end of the four month period in question:(a) notify the FCA that it expects that it will be unable to deliver a client assets report by the end of that period; and(b) ensure that the notification in (a) is accompanied by a full account of the reasons for its expected failure to comply with SUP 3.10.7 R.(2) If an auditor fails to comply with SUP 3.10.7 R, it must promptly:(a)
1The rights and duties of auditors are set out in SUP 3.8 (Rights and duties of all auditors) and SUP 3.10 (Duties of auditors: notification and report on client assets). SUP 3.8.10 G also refers to the auditor's statutory duty to report certain matters to the FCA imposed by regulations made by the Treasury under sections 342(5) and 343(5) of the Act (information given by auditor or actuary to a regulator). An auditor should bear these rights and duties in mind when carrying out
1It is the responsibility of an insurance intermediary's senior management to determine, on a continuing basis, whether the firm is an exempt insurance intermediary for the purposes of this requirement and to appoint an auditor if management determines the firm is no longer exempt. SUP 3.7 (amplified by SUP 15) sets out what a firm should consider when deciding whether it should notify the FCA of matters raised by its auditor.
5An auditor must:(1) deliver to a firm a draft of its client assets report such that the firm has an adequate period of time to consider the auditor’s findings and to provide the auditor with comments of the kind to which SUP 3.11.1 G refers; and(2) unless it is the auditor of a firm falling within category (10) of SUP 3.1.2 R, deliver to the firm a copy of the final report at the same time as it delivers that report to the FCA in accordance with SUP 3.10.7 R.
(1) 5The FCA expects that the list of breaches will include every breach of a rule in CASS insofar as that rule is within the scope of the client assets report and is identified in the course of the auditor’s review of the period covered by the report, whether identified by the auditor or disclosed to it by the firm, or by any third party.(2) 5For the purpose of determining whether to qualify its opinion or express an adverse opinion, the FCA would expect an auditor to exercise
SYSC 12.1.13 R (2)(dA) requires the firm to ensure that the risk management processes and internal control mechanisms at the level of any UK consolidation group or non-EEA sub-group of which a firm is a member comply with the obligations set out in this section on a consolidated (or sub-consolidated) basis. In the appropriate regulator's view, the requirement to apply this section at group, parent undertaking and subsidiary undertaking levels (as provided for in SYSC 19A.3.1
(1) This section applies in relation to Remuneration Code staff, except as set out in (3).(2) When establishing and applying the total remuneration policies for Remuneration Code staff, a firm must comply with this section in a way and to the extent that is appropriate to its size, internal organisation and the nature, the scope and the complexity of its activities (the remuneration principles proportionality rule).(3) Paragraphs (1) and (2) do not apply to the requirement for
Remuneration Code staff comprises categories of staff including senior management, risk takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the firm's risk profile.[Note: article 92(2) of CRD3article 92(2) of CRD]3
The appropriate regulator would normally expect it to be appropriate for the ban on paying variable remuneration to 3members of the management body of a firm that benefits from exceptional government intervention to apply only in relation to 3members of the management body who were in office at the time that the intervention was required.33
(1) This Remuneration Principle stresses the importance of risk adjustment in measuring performance, and the importance within that process of applying judgment and common sense. A firm should ask the risk management function to validate and assess risk-adjustment techniques, and to attend a meeting of the governing body or remuneration committee for this purpose.(2) A number of risk-adjustment techniques and measures are available, and a firm should choose those most appropriate
In the appropriate regulator's view, circumstances in which a person will be using a personal hedging strategy include entering into an arrangement with a third party under which the third party will make payments, directly or indirectly, to that person that are linked to or commensurate with the amounts by which the person'sremuneration is subject to reductions.
(1) Taking account of the remuneration principles proportionality rule, the appropriate regulator8 does not generally consider it necessary for a firm to apply the rules referred to in (2) where, in relation to an individual ("X"), both the following conditions are satisfied:8(a) Condition 1 is that Xs variable remuneration is no more than 33% of total remuneration; and(b) Condition 2 is that Xs total remuneration is no more than 500,000.(2) The rules referred to in (1) are those
In the appropriate regulator's view, variable remuneration can be awarded to Remuneration Code staff in the form of retention awards where it is compatible with the Remuneration Code general requirement to do so. The appropriate regulator considers this is likely to be the case only where a firm is undergoing a major restructuring and a good case can be made for retention of particular key staff members on prudential grounds. Proposals to give retention awards should form part
3A firm must ensure that any approval by the shareholders or owners or members of the firm of a ratio that exceeds 1:1 is carried out in accordance with the following procedure:(1) the firm must give reasonable notice to all shareholders or owners or members of the firm that the firm intends to seek approval of a ratio that exceeds 1:1; (2) the firm must make a detailed recommendation to all shareholders or owners or members of the firm giving the reasons for, and the scope of,
(1) Deferred remuneration paid in shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares. Deferred remuneration paid in cash should also be subject to performance criteria.(2) The appropriate regulator would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred
(1) Variable remuneration may be justified, for example, to incentivise employees involved in new business ventures which could be loss-making in their early stages.(2) The governing body (or, where appropriate, the remuneration committee) should approve performance adjustment policies, including the triggers under which adjustment would take place. The appropriate regulator may ask firms to provide a copy of their policies and expects firms to make adequate records of material
(1) Sections 137H and 137I of the Act enables the appropriate regulator to make rules that render void any provision of an agreement that contravenes specified prohibitions in the Remuneration Code, and that provide for the recovery of any payment made, or other property transferred, in pursuance of such a provision. SYSC 19A.3.53A R and1SYSC 19A.3.54 R (together with SYSC 19A Annex 1) are such rules1 and render1 void provisions of an agreement that contravene the specified
There is no definition in the Financial Promotion Order of what ‘proper systems and procedures’ are, and the matter will ultimately be for the courts to determine. This is unsurprising as systems and procedures may take many different forms depending upon the precise circumstances in which financial promotions are made. But it is clear that persons seeking conclusive proof that the exemption applies must consciously make arrangements to prevent their dealing with certain recipients
In any case, some but not all of the conditions referred to in PERG 8.12.5G (1) to PERG 8.12.5G (2) and PERG 8.12.7G (1) to PERG 8.12.7G (2) (or the additional condition that the communication is included in a website, newspaper or periodical publication which is principally accessed in or intended for a non-UK market or in a radio or television broadcast or teletext service transmitted principally for reception overseas) may be met. In these cases, those conditions being satisfied
This exemption applies to any financial promotion that is made with a view to or for the purposes of introducing the recipient to certain kinds of person. These are authorised persons who carry on the controlled activity to which the financial promotion relates, or exempt persons where the financial promotion relates to a controlled activity that is also a regulated activity in relation to which he is an exempt person. This is subject to the requirement that:11(1) the person making
The conditions in article 18(2) include a requirement that the person making the financial promotion does not select, modify or otherwise exercise control over its content before it is transmitted or received. Article 18(3) provides that a person is not selecting, modifying or exercising control merely as a result of having power to remove material which is illegal, defamatory or in breach of copyright or at the request of a regulatory body or where the law requires him to do
The conditions in article 18 also require that the person acting as the mere conduit must communicate in the course of an activity1 carried on by him the principal purpose of which is transmitting or receiving material provided to him by others. In the FCA's view, what matters is that the person is carrying on an activity1 which has the required principal purpose. Such an activity1 might represent but a part of a person’s overall business1 activities (however small), so long as
Article 19(4) sets out conditions which, if all are satisfied, offer conclusive proof that a financial promotion is directed only at investment professionals. These conditions relate to indications accompanying the financial promotion and the existence of proper systems and procedures. The guidance about proper systems and procedures in PERG 8.12.6 G applies equally to article 19. Article 19(6) specifically states that a financial promotion may be treated as made only to or directed
With this objective in mind, the exemption in article 20 applies to any non-real time financial promotion the contents of which are devised by a person acting as a journalist where the financial promotion is in:1(1) a newspaper, journal, magazine or other periodical publication;(2) a regularly updated news or information service (such as a website or teletext service); or(3) a television or radio broadcast or transmission.In addition, the publication, service or broadcast must
Provided the conditions in PERG 8.12.25 G are met, the exemption in article 20 applies to any non-real time financial promotion. However, there is an additional condition where the subject matter of the financial promotion is shares or options, futures or contracts for differences relating to shares and the financial promotion identifies directly a person who issues or provides such an investment. In such cases, the exemption is subject to a disclosure requirement which is itself
The effect of PERG 8.12.27G (1) is that a journalist will not breach section 21 by not disclosing a financial interest, providing that the publication, service or broadcast concerned operates proper systems and procedures. As with the exemption in article 12 of the Financial Promotion Order (see PERG 8.12.6 G), what proper systems and procedures are will be a matter ultimately for the courts to determine and may vary according to the medium used. It will depend upon all the circumstances
Persons such as experts or analysts may be approached to contribute at very short notice and may be overseas. In such cases, the systems and procedures referred to in PERG 8.12.29 G may not be practical. It is the FCA's opinion that, where occasional contributors are concerned, proper systems and procedures may include arrangements for ensuring that the need for disclosure (or the avoidance of financial interests) is drawn to the contributor’s attention before the communication
It appears to the FCA, however, that there will be situations when it may not be practical for the persons who are responsible for a publication, service or broadcast to apply proper systems and procedures to every person who may, whilst acting in the capacity of a journalist, communicate a financial promotion. For example where persons are asked to stand in at the last moment. In such cases, it is the FCA's opinion that the benefit of the exclusion will not be lost as respects
The exemption applies where the financial promotion:(1) comprises words which are spoken by the director or employee and not broadcast, transmitted or displayed in writing; or(2) is displayed in writing only because it is part of an interactive dialogue to which the director or employee is a party and in the course of which he is expected to respond immediately to questions put by a recipient of the communication.This is provided that the financial promotion is not part of an
The first part of the exemption (referred to in PERG 8.12.34G (1)) specifically precludes any form of written communication. However, the FCA understands that the Treasury did not intend to prohibit the use of written words in the form of subtitling. These may be an aid to those with hearing difficulties or to interpret a foreign language, or the use of captions which supplement a spoken communication by highlighting aspects of it without introducing anything new. The FCA cannot
1The issuer must send to the FCA loan-by-loan level data relating to the asset pool in the form set out in RCB 3 Annex 7A D within one month of the end of each quarter following any issuance of regulated covered bonds after 1 January 2013. Guidance on how to complete this form is set out in RCB 3 Annex 7B G.
1If the issuer or the owner (as the case may be) proposes to add or remove assets to or from the asset pool which change the level of over collateralisation by 5% or more, it must notify the FCA using the form set out in RCB 3 Annex 2 D (asset notification form) at least 5 business days prior to the proposed transfer, giving expected details of the size and composition of the transfer.
1Where a person intends to rely on article 4(2), 10(2) or 89(2) of EMIR for an exemption from the clearing obligation set out in article 4(1) or 10(1) of EMIR, the person should make their application or notification to the FCA in such manner, and by providing such information, as the FCA directs or requires.
Where a person intends to rely on article 11(6), (7), (8), 9) or (10) for an exemption from the obligation to implement risk management procedures set out in article 11(3) of EMIR, the person should make their application or notification to the FCA in accordance with EMIR requirements, including (where relevant) those set out in the EMIR technical standards on OTC derivatives2.
At any time after receiving an application or notification for exemption from, or a notification in respect of, EMIR requirements, the FCA may require the person concerned to provide it with such further information as it reasonably considers necessary to enable it to determine the application or consider the notification.
(1) 15A must be a fit and proper person having regard to all the circumstances, including-(a) A’s connection with any person;(b) the nature (including the complexity) of any regulated activity that A carries on or seeks to carry on;(c) the need to ensure that A’s affairs are conducted in an appropriate manner, having regard in particular to the interests of consumers and the integrity of the UK financial system;(d) whether A has complied and is complying with requirements imposed
(1) 15B must be a fit and proper person, having regard to the operational objectives of the FCA.(2) The matters which are relevant in determining whether B satisfies the condition in sub-paragraph (1) include-(a) B’s connection with any person;(b) the nature (including the complexity) of any regulated activity that B carries on or seeks to carry on;(c) the need to ensure that B’s affairs are conducted in an appropriate manner, having regard in particular to the interests of consumers
15The guidance in COND 2.5 should be read as applying to both paragraph 2E of Schedule 6 to the Act and, as far as relevant to the discharge by the FCA of its functions under the Act in respect of firms carrying on, or seeking to carry on, a PRA-regulated activity, paragraph 3D of Schedule 6 of the Act.
(1) [deleted]1515(2) The FCA15 will also take into consideration anything that could influence a firm's continuing ability to satisfy the threshold conditions set out in paragraphs 2E and 3D of Schedule 6 to the Act15. Examples include the firm's position within a UK or international group, information provided by overseas regulators about the firm, and the firm's plans to seek to vary its Part 4A permission15 to carry on additional regulated activities once it has been granted
(1) The emphasis of the threshold conditions set out in paragraphs 2E and 3D of Schedule 6 of the Act15 is on the suitability of the firm itself. The suitability of each person who performs a controlled function will be assessed by the FCA and/or the PRA, as appropriate,15 under the approved persons regime (see SUP 10 (Approved persons) and FIT). In certain circumstances, however, the FCA15 may consider that the firm is not suitable because of doubts over the individual or collective
(1) [deleted]1515(2) Examples of the kind of general considerations to which the FCA may have regard when assessing whether a firm will satisfy, and continue to satisfy, the threshold conditions set out in paragraphs 2E and 3D of Schedule 6 to the Act include, but are not limited to, whether the firm:1515(a) conducts, or will conduct, its business with integrity and in compliance with proper standards;(b) has, or will have, a competent and prudent management; and(c) can demonstrate
Examples of the kind of particular considerations to which the FCA may have regard when assessing whether a firm will satisfy, and continue to satisfy, this threshold condition include, but are not limited to, whether:1515(1) the firm has been open and co-operative in all its dealings with the FCA15and any other regulatory body (see Principle 11 (Relations with regulators)) and is ready, willing and organised to comply with the requirements and standards under the regulatory system
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
The overall approach in the FCA supervision model is based on the following
principles:(1) forward looking and more interventionist;(2) focused on judgment, not process;(3) consumer-centric;(4) focused on the big issues and causes
of problems;(5) interfaces with executive management/Boards;(6) robust when things go wrong;(7) focused on business model and culture
as well as product supervision;(8) viewing poor behaviour in all markets
through the lens of the impact on consumers;(9)
The FCA supervision
model risk assessment process applies to all firms,
although the detail required may vary from firm to firm. For example, some firms may
experience a highly intensive level of contact although others may only be
contacted once every four years. Firms judged
as high impact are likely to require a more detailed assessment. A peer review
process within the FCA assists
consistency and will be focused on firms and
sectors of the industry that could cause, or are
(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
As many firms will
not have dedicated, fixed portfolio resource, the first point of contact for
many issues for such firms will
be handled by the FCA's Contact
Centre, with the aim being that fewer issues and queries will need to be referred
to the supervisors. To support all firms the FCA will also provide regional workshops
and road shows to clarify its expectations on these risks and issues that
are particularly important to the FCA.
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 word ‘communicate’ is extended under section 21(13) of the Act and includes causing a communication to be made. This means that a person who causes the communication of a financial promotion by another person is also subject to the restriction in section 21. Article 6(d) of the Financial Promotion Order also states that the word ‘communicate’ has the same meaning when used in exemptions in the Order. Article 6(a) also states that the word ‘communication’ has the same meaning
Apart from the originators of a financial promotion, the FCA considers the following persons to be communicating it or causing it to be communicated:(1) publishers and broadcasters who carry advertisements (including websites carrying banner advertisements); and(2) intermediaries who redistribute another person’s communication probably with their own communications.
In the FCA's view, the following persons will not be causing or communicating:(1) advertising agencies and others when they are designing advertising material for originators;(2) persons who print or produce material for others to use as advertisements;(3) professional advisers when they are preparing material for clients or advising them on the need to communicate or the merits or consequences of their communicating a financial promotion; and(4) persons who are responsible for
The FCA considers that, to communicate, a person must take some active step to make the communication. This will be a question of fact in each case. But a person who knowingly leaves copies of a document where it is reasonable to presume that persons will pick up copies and may seek to act on them will be communicating them.
A general point arises about causing and communicating on whether a particular exemption that applies to a communication made by a specified person also applies to a person who is causing that communication to be made. For example, article 551 of the Financial Promotion Order (Communications by members of professions)1 applies only to a communication by an exempt professional firm.1 This exemption may apply where a person ('P') requests an exempt professional firm ('E') to1communicate
Another general point arises about the scope of exemptions that apply only to financial promotions by a particular person. This is whether the exemption applies to the communication of a financial promotion by an unauthorised person on behalf of the person to whom the exemption applies. In the FCA's view, this will not be the case unless the exemption specifically states that it applies to a communication made on behalf of the person identified in the exemption. For example, article
In the FCA's opinion, the matters in PERG 8.6.9 G have the following effects.(1) Any one particular communication will either be real time or non-real time but not both. This is because:(a) a real time communication is one made in the course of an interactive dialogue (see PERG 8.10.2 G for guidance on the meaning of real time);(b) those exemptions which concern real time communications apply only to communications which are made to persons and not those which are directed at
If either the firm or the appointed representative notifies the other that it proposes to terminate the contract of appointment or to amend it so that it no longer meets the requirements contained or referred to in SUP 12.5 (Contracts: required terms), the firm must:2(1) complete and submit to the FCA the form in SUP 12 Annex 5 R (Appointed representative termination form) in accordance with the instructions on the form and no more than ten business days after the date of the
(1) 4A firm other than a credit union must submit any notification under SUP 12.8.1 R (1) in the form set out in SUP 12 Annex 5 R, online at www.fsa.gov.uk using the FCA's ONAsystem.(2) A credit union must submit any notification under SUP 12.8.1 R (1) in the form set out in SUP 12 Annex 5 R and in the way set out in SUP 15.7.4 R to SUP 15.7.9 G (Form and method of notification).(3) Where a firm is obliged to submit a notification online under (1), if the FCA's information technology
4If the FCA's information technology systems fail and online submission is unavailable for 24 hours or more, the FCA will endeavour to publish a notice on its website confirming that online submission is unavailable and that the alternative methods of submission set out in SUP 12.8.1AR(3) and SUP 15.7.4 R to SUP 15.7.9 G (Form and method of notification) should be used.
In assessing whether to terminate a relationship with an appointed representative, a firm should be aware that the notification rules in SUP 15 require notification to be made immediately to the FCA if certain events occur. Examples include a matter having a serious regulatory impact or involving an offence or a breach of any requirement imposed by the Act or by regulations or orders made under the Act by the Treasury.
In the FCA's view, the circumstances in which a person is giving advice on the borrower varying the terms of a regulated mortgage contract so as to vary his obligations under the contract include (but are not limited to) where the advice is about:(1) the borrower obtaining a further advance secured on the same land as the original loan; or(2) a rate switch or a product switch (that is, where the borrower does not change lender but changes the terms for repayment from, say, a variable
In the FCA's view, guiding a person through scripted questions or a decision tree should not, of itself, involve advice within the meaning of article 53A (it should be generic advice). But the combination of advice, which in isolation may properly be considered generic, with the identification of a particular or several particular regulated mortgage contracts may well, in the FCA's view, cause the person to be advising on regulated mortgage contracts; the FCA considers that it
In the FCA's view, advice requires an element of opinion on the part of the adviser which steers or is intended to steer a borrower or potential borrower in the direction of one or more particular mortgages. In effect, it is a recommendation as to a course of action. Information on the other hand, involves objective statements of facts and figures.
In the FCA's opinion, however, such information is likely take on the nature of advice if the circumstances in which it is provided give it the force of a recommendation as described in PERG 4.6.10 G. Examples of situations where information provided by a person ('P') are likely to take the form of advice are given below.(1) P provides information on a selected, rather than balanced and neutral, basis that would tend to influence the decision of the borrower. This may arise where
Undertaking the process of scripted questioning gives rise to particular issues concerning advice. These mainly involve two aspects of this regulated activity. These are that advice must relate to a particular regulated mortgage contract (see PERG 4.6.5 G) and the distinction between information and advice (see PERG 4.6.13 G). Whether or not scripted questioning in any particular case is advising on regulated mortgage contracts will depend on all the circumstances. If the process
The potential for variation in the form, content and manner of scripted questioning is considerable, but there are two broad types. The first type involves providing questions and answers which are confined to factual matters (for example, whether a borrower wishes to pay a fixed or variable rate of interest or the size of deposit available). In the FCA's view, this does not of itself amount to advising on regulated mortgage contracts, as it involves the provision of information
In the scenarios identified inPERG 4.6.23G (3)1 andPERG 4.6.24G (2)1, the FCA considers that it is necessary to look at the process and outcome of scripted questioning as a whole. It may be that the element of advice incorporated in the questioning may properly be viewed as generic advice if it were considered in isolation. But, although the actual advice may be generic, the process has ended in identifying one or more particular regulated mortgage contracts. The combination of
2Further examples of what is and is not regulated advice
This table belongs to PERG 4.6.33 G.
Example of what the firm3 says and does 3 |
Regulated or not? |
(1) The firm says “We have a wide range of mortgages, including fixed and variable rates. Here are some leaflets which set out the main features.” |
No. Leaflets that just explain the terms and conditions of a lender’s products are not advice (see PERG 4.6.15G (1)). Even if the leaflet contains promotional material, merely handing over the leaflet does not mean that the firm is giving advice. |
(2) The firm says “We have a wide range of mortgages, our best rates are two-year fixed rates, you might want to look at those.” |
Yes. The firm has identified specific products that it offers and is steering the customer to those products. Identifying which products have the lowest rates is not advice on its own, only facts. However, “best” involves a value judgment, particularly when a comparison is made with other products that have different periods for which interest is fixed or that have variable interest rates. |
(3) The firm says “In order to provide you with an illustration, I need to know how much you want to borrow, the term and the property value. Which product or products would you like an illustration for?” |
No. The firm is collecting factual information to provide the customer with an illustration of costs. |
(4) The firm says “Based on what you’ve told me I think you would be best to look at two-year fixed rates. Here is some information about our products.” |
Yes. The firm has made a judgment on what type of product is best for the customer and has identified specific products of that type that it offers. |
(5) The firm says “Our fixed rates start at 4.99% for two years with a £900 fee. Our variable rates start at 4.50% with a £800 fee. Depending on how much you want to borrow and your circumstances, this may affect the rate available to you.” |
No. The firm is comparing two products without recommending either, nor is the firm steering the customer to one over the other. |
(6) A lender with just one mortgage product advises a customer to take out that mortgage. The lender makes it clear that it does not give advice about products other than its own. |
Yes. The lender may argue that this is not regulated advice because it is not recommending one product over another as it only has one product itself and does not give advice about the products of other lenders. However, in the FCA's view this is still regulated advice. For advice to be regulated it must be advice on the merits of entering into a particular regulated mortgage contract (or varying one). It is possible to give advice about the merits of a product without comparing that product with another. |
Note: Unless otherwise specified, the firm might be the lender or an advisory or intermediary firm. |
|
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 FCA3 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 FCA3 recognises the benefits of such agreements, in that they offer the potential for securing earlier redress or protection for
In appropriate cases the FCA's3 approach will be to negotiate with the person concerned to agree in principle the amount of a financial penalty having regard to the FCA's3statement of policy as set out in DEPP 6.5 to DEPP 6.5D and DEPP 6.6.1 (This starting figure will take no account of the existence of the settlement discount scheme described in this section.) Such amount ("A") will then be reduced by a percentage of A according to the stage in the process at which agreement
- (1)
The FCA3 has identified four stages of an action for these purposes:
3- (a)
the period from commencement of an investigation until the FCA3 has:
3 - (b)
the period from the end of stage 1 until the expiry of the period for making written representations or, if sooner, the date on which the written representations are sent in response to the giving of a warning notice ("stage 2");
- (c)
the period from the end of stage 2 until the giving of a decision notice ("stage 3");
- (d)
the period after the end of stage 3, including proceedings before the Tribunal and any subsequent appeals ("stage 4").
- (a)
- (2)
The communication of the FCA's3 assessment of the appropriate penalty for the purposes of DEPP 6.7.3G (1)(a) need not be in a prescribed form but will include an indication of the breaches alleged by the FCA3. It may include the provision of a draft warning notice.
33 - (3)
The reductions in penalty will be as follows:
Stage at which agreement reached
Percentage reduction
Stage 1
30
Stage 2
20
Stage 3
10
Stage 4
0
(1) Any settlement agreement between the FCA3 and the person concerned will therefore need to include a statement as to the appropriate penalty discount in accordance with this procedure.3(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
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
(1) Regulation 15(8)(f) of the OEIC Regulations (Requirements for authorisation) requires independence between the depositary, the ICVC and the ICVC's directors, as does section 243(4) of the Act (Authorisation orders) for the trustee and manager of an AUT, and section 261D(4) of the Act (Authorisation orders) for the depositary and authorised fund manager of an ACS6. COLL 6.9.3 G to COLL 6.9.5 G give the6FCA's view of the meaning of independence of these relationships. An ICVC,
(1) Independence is likely to be lost if, by means of executive power, either relevant party could control the action of the other.(2) The board of one relevant party should not be able to exercise effective control of the board of another relevant party. Arrangements which might indicate this situation include quorum provisions and reservations of decision-making capacity of certain directors.(3) For an AUT or ACS6, the FCA would interpret the concept of directors in common to
Independence is likely to be lost if either of the relevant parties could control the actions of the other by means of shareholders' votes. The FCA considers this would happen if any shareholding by one relevant party and their respective associates in the other exceeds 15% of the voting share capital, either in a single share class or several share classes. The FCA would be willing, however, to look at cross-shareholdings exceeding 15% on a case-by-case basis to consider if there
(1) Regulation 15(9) of the OEIC Regulations, and sections 243(8) and 261D(10)6 of the Act require that an authorised fund's name must not be undesirable or misleading. This section contains guidance on some specific matters the FCA will consider in determining whether the name of an authorised fund is undesirable or misleading. It is in addition to the requirements of regulation 19 of the OEIC Regulations (Prohibition on certain names).6(2) The FCA will take into account whether
An ICVC must notify the FCA within 14 days of the occurrence of any of the following:(1) any amendment to the instrument of incorporation;(2) any change in the address of the head office of the ICVC;(3) any change of director;(4) any change of depositary;(5) in respect of any director or depositary, any change in the information mentioned in regulation 12(1)(b) or (c) of the OEIC Regulations (Applications for authorisation);(6) any change of the auditor of the ICVC;(7) any order
The purpose of this section is to give directions to authorised payment institutions and small payment institutions under regulation 82 (Reporting requirements) of the Payment Services Regulations in relation to:(1) the information in respect of their provision of payment services and their compliance with requirements imposed by or under Parts 2 to 6 of the Payment Services Regulations that they must provide to the FCA12; and12(2) the time at which and the form in which they
(1) An authorised payment institution or a small payment institution must submit to the FCA12 the duly completed return applicable to it as set out in column (2) of the table in SUP 16.13.4D.2212(2) An authorised payment institution or a small payment institution must submit the return referred to in (1):(a) in the format specified as applicable in column (3) of the table in SUP 16.13.4D;(b) at the frequency and in respect of the periods specified in column (4) of that table;(c)
The following documents must be submitted, in final form, to the FCA by midday two business days before the FCA is to consider the application:(1) a completed Application for Admission of Securities to the Official List;(2) one of:(a) the prospectus, or listing particulars, that has been approved by the FCA; or(b) a copy of the prospectus, a certificate of approval and (if applicable) a translation of the summary of the prospectus, if another EEA State is the home Member State
The1 following documents signed by a sponsor (if a sponsor is required under LR 8) or by a duly authorised officer of the applicant (if a sponsor is not required under LR 8) 1must be submitted, in final form, to the FCA before 9 a.m. on the day the FCA is to consider the 1application:1(1) a completed Shareholder Statement, in the case of an applicant that is applying for a listing of a class of 1shares4 for the first time; or [Note: see LR 8.4.3 R and LR 8.4.9 R1];414(2) a completed
If written confirmation of the number of shares 4to be allotted pursuant to a board resolution1 cannot be submitted to the FCA by the deadline set out in LR 3.3.2 R or the number of shares4to be admitted is lower than the number notified under LR 3.3.2 R,1 written confirmation of the number of shares4to be allotted or admitted must be provided to the FCA by 1the applicant or its sponsor at least one hour before the admission to listing is to become effective.14144141
1If the FCA has considered an application for listing and the shares4the subject of the application are not all allotted and admitted following the initial allotment of the shares4(for example, under an offer for subscription), further allotments of shares4may be admitted if before 4pm on the day before admission is sought the FCA has been provided with:444(1) written confirmation of the number of shares4allotted pursuant to a board resolution; and4(2) a copy of the RIS announcement
Requests for individual guidance may be made in writing or orally. Requests for individual guidance in relation to the Part 6 rules should be made in writing other than in circumstances of exceptional urgency or in the case of a request from a sponsor in relation to the provision of a sponsor service. 2If oral queries raise complex or significant issues, the FCA will normally expect the details of the request to be confirmed in writing. Simple requests for guidance may often be
A firm and its professional advisers should address requests for individual guidance to the firm's usual supervisory contact at the FCA4, with the exception of requests for guidance on the Code of Market Conduct (MAR 1) which should be addressed to the specialist team within the Markets Division. A firm may wish to discuss a request for guidance with the relevant contact before making a written request. 44
The FCA will aim to respond quickly and fully to reasonable requests. The FCA will give high priority to enquiries about areas of genuine uncertainty or about difficulties in relating established requirements to innovative practices or products. What constitutes a 'reasonable request' is a matter for the FCA. It will depend on the nature of the request and on the resources of the firm or other person making it. The FCA will expect the person to have taken reasonable steps to research
The FCA will always need sufficient information and time before it can properly evaluate the situation and respond to a request. If a request is time-critical, the person or its professional adviser should make this clear. The more notice a person can give the FCA, the more likely it is that the FCA will be able to meet the person's timetable. However, the time taken to respond will necessarily depend upon the complexity and novelty of the issues involved. In making a request,
(1) A firm carrying out contracts of insurance, or a managing agent managing insurance business, including in either case business accepted under reinsurance to close, which includes United Kingdom commercial lines employers' liability insurance, must:(a) produce an employers’ liability register complying with the requirements in (2) and ICOBS 8 Annex 1;(b) obtain and submit to the FCA2 a written statement, by a director of the firm responsible for the production of the employers’
(1) For the purposes of ICOBS 8.4.4R (2)(c) and ICOBS 8.4.4R (2)(d), a firm may put in place appropriate screening on its employers’ liability register to monitor:(a) requests for information and searches to ensure that they are being made for a legitimate purpose by persons falling into one of the categories in ICOBS 8.4.4R (2)(c); and(b) requests from tracing offices to ensure that the information is necessary, and will only be used by the tracing office, for the purposes of
A firm must:(1) notify the FCA, within one month of falling within ICOBS 8.4.1R (2), as to whether or not it, or, if relevant, a member of the syndicates it manages, carries on business falling within ICOBS 8.4.4R (1) and, if it does, include in that notification: (a) details of the internet address of the firm or tracing office at which the employers’ liability register is made available;(b) the name of a contact person at the firm and their telephone number or postal address,
2A firm with potential liability under an excess policy and which satisfies the requirements in ICOBS 8 Annex 1 1.1B R must notify the FCA before the date upon which it first seeks to rely upon that rule and ensure that the requirements of ICOBS 8.4.6R (2) are satisfied in respect of this notification.
(1) A firm must make available:(a) the information on the employers’ liability register either:(i) on the firm's website at the address notified to the FCA in ICOBS 8.4.6R (1); or(ii) by arranging for a tracing office which meets the conditions in ICOBS 8.4.9 R to make the information available on the tracing office’s website; and(b) the latest director's certificate and the latest report prepared by an auditor for the purposes of ICOBS 8.4.4R (1)(c), to a tracing office which
(1) ICOBS 8.4.4R (2)(b) and ICOBS 8.4.9R (1) require a firm, or a tracing office used by a firm, to have an effective search function in relation to the employers’ liability register database. In the FCA's view an effective search function is one which finds all matches in the register to any specified whole word.(2) For the purposes of ICOBS 8.4.9R (5) the term ‘without delay’ should have the same meaning as in ICOBS 8.4.5G (2). (3) In order to assist firms with their obligations
(1) A firm must notify the FCA:(a) of any information provided to the FCA under ICOBS 8.4.6 R or ICOBS 8.4.6A R2 which ceases to be true or accurate; and(b) of the new position, in accordance with the notification requirements in ICOBS 8.4.6 R;within one month of the change.(2) A firm producing an employers’ liability register must:(a) update the register with any new or more accurate information falling within ICOBS 8 Annex 1:(i) by virtue of the entry into or renewal of, or
(1) 3Where a firm has established that a historical policy does exist, the response should confirm what cover was provided and set out any available information that is relevant to the request received.(2) Where there is evidence to suggest that a historical policy does exist, but the firm is unable to confirm what cover was provided, the response should set out any information relevant to the request and describe the next steps (if any) the firm will take to continue the search.
The activity in article 25(1) is carried on only if the arrangements bring about, or would bring about, the transaction to which the arrangement relates. This is because of the exclusion in article 26 of the Regulated Activities Order (Arrangements not causing a deal). Article 26 excludes from article 25(1) arrangements which do not bring about or would not bring about the transaction to which the arrangements relate. In the FCA's view, a person would bring about a contract of
Article 25(2) may, for instance, include activities of persons who help potential policyholders fill in or check application forms in the context of ongoing arrangements between these persons and insurance undertakings. A further example of this activity would be a person introducing customers to an intermediary either for advice or to help arrange an insurance policy. The introduction might be oral or written. By contrast, the FCA considers that a mere passive display of literature
In the FCA's view, 'incidental' in this context means that the activity must arise out of, be complementary to or otherwise be sufficiently closely connected with the profession or business. In other words, there must be an inherent link between the activity and the firm's main business. For example, introducing dental insurance may be incidental to a dentist's activities; introducing pet insurance would not be incidental to his activities. In addition, to be considered 'incidental',
This exclusion applies to a person whose profession or business does not otherwise consist of regulated activities. In the FCA's view, the fact that a person may carry on regulated activities in the course of the carrying on of a profession or business does not, of itself, mean that the profession or business consists of regulated activities. This is provided that the main focus of the profession or business does not involve regulated activities and that the regulated activities
In the FCA's view, the crucial element of the exclusion in article 27 is the inclusion of the word 'merely'. When a publisher, broadcaster or internet website operator goes beyond what is necessary for him to provide his service of publishing, broadcasting or otherwise facilitating the issue of promotions, he may well bring himself within the scope of article 25(2). Further detailed guidance relating to the scope of the exclusion in article 27 is contained in PERG 2.8.6G (2) (Arranging
The restriction in the scope of article 28 raises an issue where there is a trust with co-trustees, where each trustee will be a policyholder with equal rights and obligations. If the activities of one of the trustees include arranging in respect of contracts of insurance, that trustee could be viewed as arranging on behalf of his co-trustees who will also be policyholders. Similar issues also arise in respect of trustees assisting in the administration and performance of a contract
The effect of PERG 5.6.17G (4) is that some persons who, in making introductions, are making arrangements with a view to transactions in investments under article 25(2) of the Regulated Activities Order, cannot use the introducing exclusion. This is if, in general terms, the arrangements for making introductions relate to contracts of insurance (PERG 5.6.19 G has further guidance on when arrangements for introductions may be regarded as relating to contracts of insurance). However,
Where a person is making arrangements with a view to transactions in investments by way of making introductions, and he is not completely indifferent to whether or not transactions may result, it may still be the case that the exclusion in article 33 will apply. In the FCA's view, this is where:(1) the introduction is for independent advice on investments generally; and(2) the introducer is indifferent as to whether or not a contract of insurance may ultimately be bought (or
In the FCA's view, the matters identified in PERG 8.10.2 G mean that:(1) for a communication to be real time it must be made in course of an interactive dialogue; but that(2) if the interactive dialogue takes place by means of the exchange of letters or e-mails or in a publication, the communication will be deemed to be non-real time. In this case, publications include newspapers, journals, magazines or other periodical publications, websites or similar systems for the electronic
The words ‘personal visit, telephone conversation or other interactive dialogue’ clearly imply that the first two are types of the third. In the FCA's view, it is difficult to envisage circumstances in which a personal visit or telephone conversation would not be interactive. The very fact of a conversation taking place would mean two or more persons were interacting with each other. A telephone call is not the same thing as a conversation. It may be made to, or even by, an intelligent
In the FCA's view, the fact that scope for interaction is essential if a financial promotion is to be real time leads to the following conclusions.(1) Most communications made in written or pictorial form will not offer scope for interaction. The most likely exception to this is where persons are expected to respond immediately. This situation may arise, for example, where the equivalent of a telephone conversation is conducted by e-mail. This is the basis of the exemption in
In the FCA's view, a communication which may exist in enduring form will be a non-real time communication. Examples of this include videos, audio cassettes, bulletin boards, websites and recorded telephone messages. Messages placed on Internet chat-rooms will also be non-real time. Radio or television programmes or teletext services may contain communications that involve an interactive dialogue. For example, a communication made by the broadcaster and addressed to an interviewee
PERG 8.6.9 G explains that article 6 of the Financial Promotion Order has the broad effect that a communication is made to another person where it is addressed to a particular person or persons. It also states that a ‘recipient’ of a communication is the person or persons to who it is made (that is to whom it is addressed). This takes on importance where certain exemptions which apply to real time financial promotions made to a person are concerned. It appears to the FCA that,
In the FCA's view, persons who may be engaging in investment activity jointly include:(1) a married couple;(2) two or more persons, who will invest jointly in a product (for example, a cohabiting couple who are not married or members of a family);(3) the directors of a company or partners in a firm;(4) members of a group of companies;(5) the participants in a joint commercial enterprise;(6) the members of an investment club; and(7) the managers or prospective managers of a company
In the FCA's view, the mere fact of a person accepting an invitation to attend a meeting does not automatically mean that he has initiated any dialogue which may take place during the meeting and which may amount to a financial promotion. This will depend on the facts of each case and such matters as the manner in which the invitations are made, the arrangements for acceptance and how the meeting is conducted. For example, the fact that investments or investment services will
An applicant must submit, in final form, to the FCA by midday two business days before the FCA is to consider the application:1(1) a completed Application for Admission of Securities to the Official List;(2) either:(a) the prospectus, or listing particulars that has been approved by the FCA; or(b) a copy of the prospectus, a certificate of approval and (if applicable) a translation of the summary of the prospectus, if another EEA State is the home Member State for the securities;1(3)
11If confirmation of the number of securities to be issued pursuant to a board resolution cannot be submitted to the FCA by the deadline set out in LR 3.4.4 R or, the number of securities to be admitted is lower than the number notified under LR 3.4.4 R, written confirmation of the number of securities to be issued or admitted must be provided to the FCA by the applicant at least one hour before the admission to listing is to become effective.
An applicant must comply with LR 3.4.4 R to LR 3.4.6 R with the following modifications:1(1) [deleted]11(2) if the FCA approves the application it will admit to listing all debt securities which may be issued under the programme within 12 months after the publication of the base prospectus or listing particulars subject to the FCA:(a) being advised of the final terms of each issue for which a listing is sought; and1(b) receiving and approving for publication any supplementary
(1) The final terms must be submitted in writing to the FCA as soon as possible after they have been agreed and no later than 2 p.m. on the day before listing is to become effective.(2) The final terms may be submitted by:(a) the applicant; or(b) a duly authorised officer of the applicant.11(3) [deleted]11Note: For further details on final terms, see PR 2.2.9 R.1
A public sector issuer that seeks admission of debt securities referred to in paragraphs 2 and 4 of Schedule 11A of the Act must submit to the FCA in final form a completed Application for Admission of Securities to the Official List.Note: The Application for Admission of Securities to the Official List form can be found on the UKLA section of the FCA's website.1