Related provisions for EG 13.10.3
21 - 40 of 512 items.
3For supervisory notices (as defined in section 395(13)) which have taken effect, decision notices and final notices, section 391 of the Act requires the FCA to publish, in such manner as it considers appropriate, such information about the matter to which the notice relates as it considers appropriate. Section 391 prevents the FCA from publishing warning notices, but the FCA may publish such information about the matter to which a warning notice falling within section 391(1ZB)
3The FCA may publish information about warning notices which fall within section 391(1ZB) of the Act. These are essentially disciplinary warning notices, for example, where the FCA is proposing to censure, fine, or impose a suspension, restriction, condition or limitation on1 a firm or individual. The power to publish information does not apply, for example, to warning notices which only propose to prohibit an individual, withdraw the approval of an individual or cancel the permission
3The FCA will take the following initial steps in considering whether it is appropriate to exercise this power: (1) It will consider whether it is appropriate to publish details of the warning notice in order to enable consumers, firms and market users to understand the nature of the FCA’s concerns. The FCA will consider the circumstances of each case but expects normally to consider it appropriate to publish these details. (2) Where the FCA considers it is appropriate to publish
3However, as required by the Act (see paragraph 6.2.1 above), the FCA will not publish information if publication of it would, in its opinion, be unfair to the person in respect of whom the action is taken or prejudicial to the interests of consumers, or detrimental to the stability of the UK financial system. It may make that decision where, for example, publication could damage market confidence or undermine market integrity in a way that could be damaging to the interests of
(1) In particular, this section sets out the FCA’s policies about varying conditional approvals at the request of a firm, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation). (2) This section does not deal with the FCA’s policies on varying a condition on its own initiative. DEPP 8 deals with that.
Under section 63ZB of the Act (Variation of senior manager's approval on initiative of regulator), the FCA may vary an approval given by the FCA or the PRA for the performance of a designated senior management function if the FCA considers that it is desirable to do so to advance one or more of its operational objectives.
1Under section 300B(2) of the Act, the FCA4may, by rules under section 293 (Notification requirements):4(1) 1specify descriptions of regulatory provision in relation to which, or circumstances in which, the duty in section 300B(1) does not apply, or(2) 1provide that the duty applies only to specified descriptions of regulatory provision or in specified circumstances.
1Under section 300B(3) of the Act, the FCA4may also by rules under section 293: 4(1) 1make provision as to the form and contents of the notice required, and(2) 1require the UK recognised body to provide such information relating to the proposal as may be specified in the rules or as the FCA4may reasonably require.4
1A notice under section 300B(1) of the Act of a proposal to make a regulatory provision must be in writing and state expressly that it is a notice for the purpose of that section. To be effective, a notice must: (1) 1contain full particulars of the proposal to make a regulatory provision which is the subject of that notice; and(2) 1either be accompanied by sufficient supporting information to enable the FCA4to assess the purpose and effect of the proposed regulatory provision
1The FCA has information gathering and sanctioning powers under the Act which are applicable to breaches of EMIR requirements
by authorised persons or recognised bodies. The OTC derivatives, CCPs and trade repositories regulation adds to the powers available to the FCA for dealing with breaches of EMIR requirements and sets out information gathering and sanctioning powers enabling the FCA to investigate and take action for breaches of the EMIR requirements
(1) 1The FCA has the power to publish a statement or impose a financial penalty of such amount as it considers appropriate on: (a) a financial counterparty who is not an authorised person, a non- financial counterparty or any other person who has breached an EMIR requirement or regulation 7 or 8 of the OTC derivatives,
CCPs and trade repositories regulation; (b) a financial counterparty who is an authorised person who has breached regulation 8 of the
1As the power to impose penalties for contravention of an EMIR requirement or regulations 7 or 8 of the OTC derivatives, CCPs and trade repositories regulation mirrors similar powers to that the FCA has under the Act, the FCA will adopt procedures and policies in relation to the use of those powers akin to those it has adopted under the Act, subject to EG 19.26.3(2).
Achieving the regulatory objectives involves the FCA informing itself of developments in firms and in markets. The Act requires the FCA to maintain arrangements for supervising authorised persons (section 1L(1)). 5 The Act also requires the FCA to take certain steps to cooperate with other relevant bodies and 3regulators (section 354A). For these purposes, the FCA needs to have access to a broad range of information about a firm's business.5
The FCA receives the information in SUP 2.1.3 G through a variety of means, including notifications by firms (see SUP 15) and regular reporting by firms (see SUP 16). This chapter is concerned with the methods of information gathering that the FCA may use on its own initiative in the discharge of its functions under the Act. This chapter does not deal with the information gathering powers that the FCA has under the Unfair Terms Regulations and the CRA. 7These are dealt with in
Part XI of the Act (Information Gathering and Investigations) gives the FCA10 statutory powers, including: 10(1) to require the provision of information (see sections 165 and 103EG 32);31032310(2) to require reports from skilled persons (see section 166 and SUP 5);(3) to appoint investigators (see sections 167, 168 and 169 of the Act and EG 32); and2(4) to apply for a warrant to enter premises (see section 176 of the Act and EG 42).2
The purpose of SUP 2.3 is to amplify Principle 11 in the context of information gathering by the FCA on its own initiative in the discharge of its functions under the Act. SUP 2.3 therefore sets out, in guidance on Principle 11 and in rules, how the FCA expects firms to deal with the FCA in that context, including the steps that a firm should take with a view to ensuring that certain connected persons should also cooperate with the FCA.
The appropriate regulator4 is required by sections 138B(1) and (2)4 of the Act to publish a waiver unless it is satisfied that it is inappropriate or unnecessary to do so. If the appropriate regulator4 publishes a waiver, it will not publish details of why a waiver was required or any of the supporting information given in a waiver application.444
4The FCA must consult the PRA before publishing or deciding not to publish a waiver which relates to:(1) a PRA-authorised person; or(2) an authorised person who has as a member of its immediate group a PRA-authorised person;unless the waiver relates to rules made by the FCA under sections 247 or 248 of the Act.
When considering whether it is satisfied under section 138B(2)4, the appropriate regulator4 is required by section 138B(3)4 of the Act:444(1) to take into account whether the waiver relates to a rule contravention of which is actionable under section 138D4 of the Act (Actions for damages); Schedule 5 identifies such rules;4(2) to consider whether its publication would prejudice, to an unreasonable degree, the commercial interests of the firm concerned, or any other member of its
Waivers can affect the legal rights of third parties, including consumers. In the appropriate regulator's4 view it is important that the fact and effect of such waivers should be transparent. So the fact that a waiver relates to a rule that is actionable under section 138D4 of the Act (see SUP 8.6.2 G (1)) will tend to argue in favour of publication.44
In considering whether commercial interests would be prejudiced to an unreasonable degree (see SUP 8.6.2 G (2)), the appropriate regulator4 will weigh the prejudice to firms' commercial interests against the interests of consumers, markets and other third parties in disclosure. In doing so the appropriate regulator4 will consider factors such as the extent to which publication of the waiver would involve the premature release of proprietary information to commercial rivals, for
When a firm appoints a skilled person4 to provide a report under section 166 (Reports by skilled persons) or collect or update information under section 166A (Appointment of skilled person to collect and update information) of the Act,4 the firm must, in a contract with the skilled person:44(1) require and permit the skilled person during and after the course of his appointment:(a) to cooperate with the appropriate regulator4 in the discharge of its functions under the Act in
In complying with the contractual duty in SUP 5.5.1 R (1) the appropriate regulator4 expects that a skilled person appointed by a firm4 under section 166 (Reports by skilled persons) or section 166A (Appointment of skilled person to collect and update information) of the Act4 will cooperate with the appropriate regulator4 by, amongst other things, providing information or documentation about the planning and progress of the report and its findings and conclusions, if requested
(1) 1Under section 313A of the Act, the FCA5 may for the purpose of protecting:5(a) the interests of investors; or (b) the orderly functioning of the financial markets; require a UK RIE to suspend or remove a financial instrument from trading.(2) If the FCA5 exercises this power, the UK RIE concerned may refer the matter to the Tribunal.5
The procedure the FCA5 will follow if it exercises its power to require a UK RIE to suspend or remove a financial instrument3 from trading is set out in sections 313B to 313BE of the Act.3 The FCA's internal arrangements provide for decisions to exercise this power to be taken at an appropriately senior level. If the FCA5 exercises this power, the UK RIE concerned and the issuer (if any) of the relevant financial instrument may refer the matter to the Tribunal(see EG 2.39)2.2
Section 19 of the Act (The general prohibition) provides that the requirement to be authorised under the Act only applies in relation to regulated activities which are carried on 'in the United Kingdom'. In many cases, it will be quite straightforward to identify where an activity is carried on. But when there is a cross-border element, for example because a borrower is outside the United Kingdom or because some other element of the activity happens outside the United Kingdom,
The FCA's view of the effect of the Act and Regulated Activities Order in various territorial scenarios is set out in the remainder of this section. In those scenarios:(1) the term "service provider" is used to describe a person carrying on any of the regulated mortgage activities;(2) the term "borrower" refers to a borrower who is an individual and not a trustee; the position of a borrower acting as a trustee is not considered; and(3) it is assumed that the activity is not an
The FCA4 uses various methods of information gathering on its own initiative which require the cooperation of firms:55(1) Visits may be made by representatives or appointees of the FCA4. These visits may be made on a regular basis, on a sample basis, for special purposes such as theme visits (looking at a particular issue across a range of firms), or when the FCA4 has a particular reason for visiting a firm. Appointees of the FCA4 may include persons who are not FCA4 staff, but
In complying with Principle 11, the FCA4 considers that a firm should, in relation to the discharge by the FCA4 of its functions under the Act:(1) make itself readily available for meetings with representatives or appointees of the FCA4 as reasonably requested;(2) give representatives or appointees of the FCA4 reasonable access to any records, files, tapes or computer systems, which are within the firm's possession or control, and provide any facilities which the representatives
(1) A firm must permit representatives of the FCA4 or persons appointed for the purpose by the FCA4 to have access, with or without notice, during reasonable business hours to any of its business premises in relation to the discharge of the FCA's4 functions under the Act or its obligations under the short selling regulation3.(2) A firm must take reasonable steps to ensure that its agents, suppliers under material outsourcing arrangements and appointed representatives permit
7In complying with Principle 11, the FCA considers that a firm should cooperate with it in providing information for other regulators. Sections 169 (Investigations etc. in support of overseas regulator) of the Act gives the FCA certain statutory powers to obtain information and appoint investigators for overseas regulators if required (see DEPP 7 and EG 3).
In addition, under section 290A
of the Act (Refusal of recognition
on ground of excessive regulatory provision), the FCA5 must refuse to make a recognition
order in relation to a body applying for recognition as a UK RIE if it appears to the FCA5 that an existing or proposed regulatory
provision of the applicant in connection with the applicant's
business as an investment exchange or the provision by the applicant of clearing facilitation services5 imposes, or will impose, an
An application should:(1) be
made in accordance with any directions the FCA5 may make under section 287 (Application by an investment exchange) of the Act or (for RAPs)
regulation 2 of the RAP regulations;353355(2) in
the case of an application under section5 287 of the Act, 3be accompanied by the applicant's regulatory
provisions and
in the case of an application under section 287 of the Act information
required pursuant to sub-sections 287(3)(c), (d) and (e) of the Act (see
Under section 289 of the Act (Applications: supplementary) or (for an RAP applicant)
regulation 2 of the RAP regulations,3 the FCA5 may
require the applicant to provide additional information, and may require the
applicant to verify any information in any manner. In view of their likely
importance for any application, the FCA5 will normally wish to arrange for its own inspection of an applicant's
information technology systems.55
1In
the case of an application to become a UK
RIE or an RAP3, under subsection 290(1B) of the Act and
(for an RAP applicant) regulation
2(8) of the RAP regulations3, the application must be determined by the FCA5 before the end of the period of six months beginning
with the date on which it receives the completed application.5
Where the FCA5 considers that it is unlikely to make a recognition
order it will discuss its concerns with
the applicant as early as possible with a view to enabling the applicant to
make changes to its rules or guidance, or other parts of the application (see REC 5.2.7 G).
If the FCA5 decides
that it will not make a recognition order,
it will follow the procedure set out in section 298 of the Act (Directions
and revocation: procedure) or
(in the case of an RAP) regulation
5 of
1Work done or commissioned by the firm does not fetter the FCA's ability to use its statutory powers, for example to require a skilled person’s report under section 166 of the Act or to carry out a formal enforcement investigation; nor can a report commissioned by the firm be a substitute for formal regulatory action where this is needed or appropriate. But even if formal action is needed, it may be that a report could be used to help the FCA decide on the appropriate action to
1The FCA is not able to require the production of “protected items”, as defined in the Act, but it is not uncommon for there to be disagreement with firms about the scope of this protection. Arguments about whether certain documents attract privilege tend to be time- consuming and delay the progress of an investigation. If a firm decides to give a report to the FCA, then the FCA considers that the greatest mutual benefit is most likely to flow from disclosure of the report itself
1This does not mean that information provided to the FCA is unprotected. The FCA is subject to strict statutory restrictions on the disclosure of confidential information (as defined in section 348 of the Act), breach of which is a criminal offence (under section 352 of the Act). Reports and underlying materials provided voluntarily to the FCA by a firm, whether covered by legal privilege or not, are confidential for these purposes and benefit from the statutory protections.
1Even in circumstances where disclosure of information would be permitted under the “gateways” set out in the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations, the FCA will consider carefully whether it would be appropriate to disclose a report provided voluntarily by a firm. The FCA appreciates that firms feel strongly about the importance of maintaining confidentiality, and that firms are more likely to volunteer information to the
(1) SUP 10C.12 describes the regime for conditional and time-limited approvals.(2) In particular, SUP 10C.12 sets out the FCA's policies on giving approval under section 59 subject to conditions or for a limited period only, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation).(3) The policies described in SUP 10C.12 also apply when the FCA is considering whether to give its consent to an application made to the PRA for approval.(4)
Sections 59 and 63A of the Act show that failure to observe a condition does not in itself invalidate an approval. Instead, both the firm and the SMF manager may be subject to a penalty for breach of the Act. Such a failure may also:(1) involve a breach of FCArules by the firm and a breach by the SMF manager of COCON; and(2) call into question the fitness of the SMF manager.
(1) 6A must be capable of being effectively supervised by the FCA having regard to all the circumstances including-(a) the nature (including the complexity) of the regulated activities that A carries on or seeks to carry on;(b) the complexity of any products that A provides or will provide in carrying on those activities;(c) the way in which A’s business is organised;(d) if A is a member of a group, whether membership of the group is likely to prevent the FCA’s effective supervision
6The guidance in COND 2.3 should be read as applying to both paragraph 2C of Schedule 6 of 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 3B of Schedule 6 of the Act.
In assessing the threshold conditions set out in paragraphs 2C and 3B of Schedule 6 to the Act6, factors which the FCA6 will take into consideration include, among other things, whether: 6(1) it is likely that the FCA6 will receive adequate information from the firm, and those persons with whom the firm has close links, to enable it to determine whether the firm is complying with the requirements and standards under the regulatory system for which the FCA is responsible6 and to
Where the amount or quality of capital which the FCA considers a firm should hold to meet the overall financial adequacy rule or as a capital planning buffer is not the same as that which results from a firm'sICAAP, the FCA usually expects to discuss any such difference with the firm. Where necessary, the FCA may consider the use of its powers under section 166 of the Act (Reports by skilled persons) to assist in such circumstances.
If, after discussion, the FCA and a firm still do not agree on an adequate level of capital, the FCA may consider using its powers under section55L of the Act on its own initiative to require the firm1 to hold capital in line with the FCA's view of the capital necessary to comply with the overall financial adequacy rule. In deciding whether it should use its powers under section 55L,1the FCA will take into account the amount and quality of the capital planning buffer which the
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
(1) 8The resources of A must be appropriate in relation to the regulated activities that A carries on or seeks to carry on.(2) The matters which are relevant in determining whether A has appropriate resources include-(a) the nature and scale of the business carried on, or to be carried on, by A;(b) the risks to the continuity of the services provided by, or to be provided by, A; and(c) A’s membership of a group and any effect which that membership may have.(3) Except in a case
(1) The non-financial resources of B must be appropriate in relation to the regulated activities that B carries on or seeks to carry on, having regard to the operational objectives of the FCA.(2) The matters which are relevant in determining whether the condition in sub-paragraph (1) is met include-(a) the nature and scale of the business carried on, or to be carried on, by B;(b) the risks to the continuity of the services provided by, or to be provided by, B;(c) B’s a member
8Paragraph 3C of Schedule 6 to the Act sets out the appropriate non-financial resources threshold condition which is relevant to the discharge by the FCA of its functions under the Act in relation to firms carrying on, or seeking to carry on, regulated activities which include a PRA-regulated activity.
8The guidance in COND 2.4 should be read as applying to both paragraph 2D of Schedule 6 of the Act and, as far as relevant to the discharge by the FCA of its functions in respect of firms carrying on, or seeking to carry on, a PRA-regulated activity under the Act, paragraph 3C of Schedule 6 of the Act.
(1) [deleted]88(2) In this context, the FCA will interpret the term 'appropriate88' as meaning sufficient in terms of quantity, quality and availability, and 'resources' as including all financial resources (though only in the case of firms not carrying on, or seeking to carry on, a PRA-regulated activity)8, non-financial resources and means of managing its resources; for example, capital, provisions against liabilities, holdings of or access to cash and other liquid assets, human
7Under section 60A(1) of the Act, before a relevant authorised person may make an application for the FCA's approval of a designated senior management function, the relevant authorised person8 must be satisfied that the person for whom the application is made is a fit and proper person to perform that function.8
7Under section 60A of the Act, in assessing whether a person is a fit and proper person to perform an FCA designated senior management function, a relevant authorised person must have particular regard to whether that person:(1) has obtained a qualification; or(2) has undergone, or is undergoing, training; or(3) possesses a level of competence; or(4) has the personal characteristics;required by general rules made by the FCA.
The Act does not prescribe the matters which the FCA7 should take into account when determining fitness and propriety. However, section 61(2) states that the FCA7 may have regard (among other things) to whether the candidate or approved person:777(1) has obtained a qualification; or(2) has undergone, or is undergoing, training; or(3) possesses a level of competence; or(4) has the personal characteristics;required by general rules made by the FCA.7
(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
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 (in relation to an FCA-approved person, 16see SUP 10A (FCA Approved Persons), SUP 10C (FCA senior management regime for approved persons in relevant authorised persons)16 and
(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
Where an ROIE1 includes in its report made under section 295(1) of the Act (Notification: overseas investment exchanges and overseas clearing houses) a statement in compliance with section 295(2)(a) of the Act that an event has occurred in the period covered by that report which is likely to affect the FCA's1 assessment of whether it is satisfied as to the requirements set out in section 292(3) (Overseas investment exchanges and overseas clearing houses), it must include particulars
An ROIE1 must include in the first report submitted under section 295(1) of the Act after the recognition order in relation to that ROIE1 is made: 11(1) particulars of any events of the kind described in section 295(2) of the Act which occurred; (2) particulars of any change specified in REC 6.7.4 R (1) or disciplinary action specified in REC 6.7.4 R (2) which occurred; and(3) any annual report and accounts which covered a period ending; after the application for recognition
Where an ROIE1 proposes to change: (1) its address in the United Kingdom for the service of notices or other documents required or authorised to be served on it under the Act; or(2) the address of its head office;it must give notice to the FCA1 and inform it of the new address at least 14 days before the change is effected.1
(1) Section 258A(1) and (2) and section 261Z(1) and (2)1 (Winding up or merger of master UCITS) of the Act, in implementation of article 60 of the UCITS Directive, provide1 that where a master UCITS is wound up, for whatever reason, the FCA is to direct the manager and trustee of any AUT or the authorised contractual scheme manager and depositary of any ACS1 which is a feeder UCITS of the master UCITS to wind up the scheme, unless one of the following conditions is satisfied:1(a)
Where the authorised fund manager of a UCITS scheme that is a feeder UCITS is notified that its master UCITS is to be wound up, it must submit to the FCA the following:(1) where the authorised fund manager of the feeder UCITS intends to invest at least 85% in value of the scheme property in units of another master UCITS:(a) its application for approval under section 283A of the Act for that investment;(b) where applicable, its notice under section 251 (Alteration of schemes and
Where the authorised fund manager of a UCITS scheme that is a feeder UCITS is notified that the master UCITS is to merge with another UCITS scheme or EEA UCITS scheme or divide into two or more such schemes, it must submit to the FCA the following:(1) where the authorised fund manager of the feeder UCITS intends it to continue to be a feeder UCITS of the same master UCITS:(a) its application under section 283A of the Act, for approval;(b) where applicable, a notice under section
Where:(1) the FCA approves an application under sections 283A (Master-feeder structures), 252A or 261S1 (Proposal to convert to a non-feeder UCITS) of the Act or regulation 22A of the OEIC Regulations that arises as a result of the winding-up, merger or division of the master UCITS (other than an application pursuant to COLL 11.6.5R (1)); and1(2) the authorised fund manager of the feeder UCITS holds or receives cash in accordance with COLL 11.6.9R (4) or as a result of a winding-up;the
Where the authorised fund manager of a feeder UCITS gives notice to the FCA under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations that it intends to wind up the scheme, it must inform:(1) the unitholders of the feeder UCITS; and(2) where notice is given under COLL 11.6.5R (4) (Application for approval by a feeder UCITS where a master UCITS merges or divides), the authorised fund manager of the master UCITS;of its intention without undue delay.[Note: