Related provisions for IPRU-INV 4.2.2

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EG 19.30.4RP
1The FCA's approach to taking enforcement action under the MCDO will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its action,
EG 19.30.5RP
1The MCDO, for the most part, applies or mirrors the FCA's investigative and sanctioning powers under the Act. The FCA has adopted procedures and policies for the use of those powers that are akin to those it has under the Act. Key features of the FCA's approach are described below.
EG 19.30.6RP
1Article 23 of the MCDO applies many of the provisions of the Act in relation to the FCA’s investigation and information-gathering powers in respect of a registered firm. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating contraventions of the MCDO.
EG 19.30.7RP
1For example, the FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the MCDO and the reasons for the appointment, unless notification is likely to result in the investigation being frustrated. In most cases, the FCA expects to carry out a scoping visit early on in the enforcement process. The FCA's policy in regulatory investigations under the MCDO is to use powers to compel information, in the same way as
EG 19.30.10RP
1Article 18(3) applies sections 393 and 394 of the Act to warning notices and decision notices given under the MCDO and so require the FCA to give third party rights and to give access to material as set out under the Act. Article 24(1) applies the procedural provisions of Part 9 of the Act, in respect of matters that can be referred to the Tribunal, and article 24(2) applies Part 26 of the Act to warning and decision notices given under the MCDO.
EG 19.30.12RP
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the MCDO to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.
PERG 9.10.1GRP
A number of controls apply under the Act to the promotion of shares or securities that are issued by any body corporate. These controls differ according to whether the person making the promotion is an unauthorised person (see PERG 9.10.2 G) or an authorised person (see PERG 9.10.3 G to PERG 9.10.6 G). In addition, where a body corporate is not an open-ended investment company:(1) the requirements of Prospectus Rules relating to the publication of an approved prospectus may1 apply
PERG 9.10.2GRP
The controls under the Act that apply to promotions of shares or securities by unauthorised persons are in section 21 of the Act (Restrictions on financial promotion). These controls apply where an unauthorised person makes a financial promotion in, or from, the United Kingdom that relates to the shares in or securities of any body corporate. The same controls apply regardless of whether the shares or securities being promoted are issued by a body corporate that is an open-ended
PERG 9.10.3GRP
Promotions made by authorised persons in the United Kingdom are generally subject to the controls inCOBS 4 (Communicating with clients, including financial promotions).3 However, in the case of shares in, or securities of, a body corporate which is an open-ended investment company, additional controls are imposed by Chapter II of Part XVII of the Act (Restrictions on promotion of collective investment schemes) (see PERG 8.20). Section 238 of the Act (Restrictions on promotion)
PERG 9.10.5GRP
There are a number of other exemptions in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (SI 2001/1060). In general terms, these exemptions are equivalent to the exemptions from section 21 of the Act that apply to units. There is guidance on those exemptions in PERG 8.20.3 G (Additional restriction on the promotion of collective investment schemes).
PERG 9.10.10GRP
7(1) A person carrying on the regulated activity of establishing, operating or winding up a collective investment scheme that is constituted as an open-ended investment company will need permission for those activities. In line with section 237(2) of the Act (Other definitions), the operator of a collective investment scheme that is an open-ended investment company is the company itself and therefore the starting point for an open-ended investment company that is incorporated
SUP 12.3.1GRP
In determining whether a firm has complied with any provision in or under the Act such as any Principle or other rule, or with any provision in Part 3 of the MCD Order, 4anything that an appointed representative has done or omitted to do as respects the business for which the firm has accepted responsibility will be treated as having been done or omitted to be done by the firm (section 39(4) of the Act and article 17 of the MCD Order4).
SUP 12.3.2GRP
The firm is responsible, to the same extent as if it had expressly permitted it, for anything the appointed representative does or omits to do, in carrying on the business for which the firm has accepted responsibility (section 39(3) of the Act and article 17 of the MCD Order).44
SUP 12.3.3GRP
In determining whether the firm has committed any offence,3 however, the knowledge or intentions of an appointed representative are not attributable to the firm, unless in all the circumstances it is reasonable for them to be attributed to it (section 39(6) of the Act).3
SUP 12.3.6GRP
1The effect of section 39A(6)(b) of the Act is to prohibit a UK MiFID investment firm from appointing an FCA registered tied agent unless it has accepted responsibility in writing for the agent's activities in acting as a tied agent.
PERG 2.5.1GRP
In addition to the requirements as to the business test and the link to the United Kingdom, two other essential elements must be present before a person needs authorisation under the Act. The first is that the investments must come within the scope of the system of regulation under the Act (see PERG 2.6). The second is that the activities, carried on in relation to those specified investments, are regulated under the Act (see PERG 2.7). Both investments and activities are defined
PERG 2.5.2GRP
The Regulated Activities Order contains exclusions. Exclusions may exist in relation to both the element of investment and the element of activity. Each should therefore be checked carefully. The exclusions that relate to specified investments are considered in PERG 2.6, together with the outline of the specified investments. The exclusions that relate to activities are considered separately from the outline of activities (see PERG 2.8 and PERG 2.9).
PERG 2.5.4GRP
It remains the Government's responsibility to ensure the proper implementation of MiFID2. Certain2persons subject to the requirements of MiFID2 must be brought within the scope of regulation under the Act. A core element of MiFID is the concept of investment firm.2 An investment firm is any person whose regular occupation or2 business is2 the provision of one or more2investment services to third parties or the performance of one or more investment activities on a professional
PERG 2.5.5GRP
For persons who are MiFID2investment firms, the activities that must be caught by the Regulated Activities Order are those that are caught by MiFID2. To achieve this result, some of the exclusions in the Order (that will apply to persons who are not caught by MiFID2) have been made unavailable to MiFID2investment firms when they provide or perform investment services and activities. A "MiFID investment firm", for these purposes, includes credit institutions to which MiFID applies
PERG 2.5.6GRP
The Insurance Mediation Directive has in part been implemented through various amendments to the Regulated Activities Order. These include article 4(4A) (Specified activities: general) which precludes a person who, for remuneration, takes up or pursues insurance mediation or reinsurance mediation in relation to a risk or commitment situated in an EEA State from making use of certain exclusions. In other cases, some of the exclusions provided in relation to particular regulated
SUP 18.1.1CGRP
3References to the ‘Memorandum of Understanding’ in this chapter is to the memorandum of understanding in force between the regulators under section 3E of the Act.
SUP 18.1.3GRP
Insurance business transfers are subject to Part VII of the Act and must be approved by the court under section 111. The following statutory pieces of legislation also apply:33(1) 3The Financial Services and Markets Act 2000 (Control of Business Transfers) (Requirements on Applicants) Regulations 2001 (SI 2001/3625), as amended by the Financial Services and Markets Act 2000 (Control of Business Transfers)(Requirements on Applicants) (Amendment) Regulations 2008 (SI 2008/1467)
SUP 18.1.4GRP
An insurance business transfer scheme is defined in section 105 of the Act and the definition has been extended to transfers from underwritingmembers and former members3 of Lloyd's.333(1) [deleted]3(a) [deleted]33(b) [deleted]33(c) [deleted]33(2) [deleted]33The business transferred may include liabilities and potential liabilities on expired policies, liabilities on current policies and liabilities on contracts to be written in the period until the transfer takes effect. The parties
SUP 18.1.6GRP
Under section 112 of the Act, the court has wide discretion to transfer property and liabilities to the transferee and to make orders in relation to incidental, consequential and supplementary matters.3
SUP 18.1.8GRP
3Legislation in respect of other transactions, for example, cross-border mergers, does not negate the requirements under Part VII of the Act. It is for the firms participating in such transactions to determine whether or not the proposed transfer gives rise to an insurance business transfer. The regulators expect firms proposing such transactions to discuss the proposal with them as soon as practicable.
PERG 9.8.1GRP
The test in section 236(3)(a) of the Act is whether the reasonable investor would expect that, were he to invest, he would be in a position to realise his investment within a period appearing to him to be reasonable. In the FCA's view, this is an objective test with the appropriate objective judgment to be applied being that of the hypothetical reasonable investor with qualities such as those mentioned in PERG 9.7.2 G (The investment condition: the 'reasonable investor').
PERG 9.8.2GRP
In the FCA's view, the 'realisation' of an investment means converting an asset into cash or money. The FCA does not consider that 'in specie' redemptions (in the sense of exchanging shares or securities of BC with other shares or securities) will generally count as realisation. Section 236(3)(a) refers to the realisation of an investment, the investment being represented by the 'value' of shares or securities held in BC. In the FCA's view, there is no realisation of value where
PERG 9.8.5GRP
The use of an expectation test ensures that the definition of an open-ended investment company is not limited to a situation where a holder of shares in, or securities of, a body corporate has an entitlement or an option to realise his investment. It is enough if, on the facts of any particular case, the reasonable investor would expect that he would be able to realise the investment. The following are examples of circumstances in which the FCA considers that a reasonable investor
PERG 9.8.7GRP
In the FCA's view, the fact that a person may invest in the period shortly before a redemption date would not cause a body corporate, that would not otherwise be regarded as such, to be open-ended. This is because the investment condition must be applied in relation to BC as a whole (see PERG 9.6.3 G (The investment condition (section 236(3) of the Act): general).
PERG 9.8.8GRP
Similarly, if BC issues shares or securities on different terms as to the period within which they are to be redeemed or repurchased (see PERG 9.6.4 G (The investment condition (section 236(3) of the Act): general), BC must be considered as a whole. Whether or not the expectation test is satisfied in relation to a particular body corporate is bound to involve taking account of the terms on which its shares or securities, or classes of shares or securities, are issued. But this
EG 19.31.2RP
1As the provision of credit data on companies is not a regulated activity under the Act, the Regulations create a separate monitoring and enforcement regime but apply, or make provision corresponding to, certain aspects of the Act. The FCA's approach to taking enforcement action under the Regulations will reflect its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive
EG 19.31.3RP
1Regulation 26 of the Small and Medium Sized Business (Credit Information) Regulations applies many of the provisions of the Act regarding the FCA’s investigation and information-gathering powers to designated banks and designated credit reference agencies. The effect is to apply the same procedures under the Act for appointing investigators and requiring information when investigating any breaches of the Small and Medium Sized Business (Credit Information) Regulations.
EG 19.31.4RP
1For example, the FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation and the reasons for the appointment. The FCA's policy in regulatory investigations under the Small and Medium Sized Business (Credit Information) Regulations is to use powers to compel information, in the same way as it would in the course of an investigation under the Act.
EG 19.31.6RP
1Regulation 46 of the Small and Medium Sized Business (Credit Information) Regulations applies the procedural provisions of Part 9 of the Act, in respect of matters that can be referred to the Tribunal, and regulation 44 of the Small and Medium Sized Business (Credit Information) Regulations applies Part 26 of the Act to warning and decision notices given under the Regulations.
EG 19.31.8RP
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the Small and Medium Sized Business (Credit Information) Regulations to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.
REC 4.2C.1GRP
1Section 301A(1) of chapter3 1A of Part XVIII of the Act places an obligation on a person who decides to acquire or increase control (see sections 301D and 301E of the Act) over a UK RIE3to notify the FCA5, before making the acquisition3. Furthermore, those persons are required to obtain the FCA's5 approval before acquiring control 3or increasing the level of control held.3353533
REC 4.2C.2GRP
The FCA5 will approve an acquisition or an increase in 3control if it is satisfied that the acquisition by the person seeking approval does not pose a threat to the sound and prudent management of any financial market operated by the UK RIE (see section 301F(4) of the Act). 4The reference to any financial market is to be read as including a reference to any auction platform as a result of the RAP regulations.35333
REC 4.2C.3GRP
If a proposed acquirer 3has complied with the obligation to notify, the procedure the FCA5 will follow if it approves or does not approve of that person acquiring or increasing control 3is set out in sections3 301F and 301G 3of the Act.3533
REC 4.2C.8GRP
The powers the FCA5 can exercise in the event that a person acquires or continues to exercise control notwithstanding the FCA's5 refusal to approve the acquisition of control or the FCA's5 objection to the exercise of control are set out in sections 301J and 301K 3of the Act.5553
REC 4.2C.9GRP
The offences for which a person who fails to comply with the obligations set out in Chapter 1A of Part XVIII of the Act is liable are set out in section 301L 3of the Act. 3
SUP App 3.10.7GRP
Most of the exclusions under the Directives, however, are not excluded from being regulated activities. For example, the activities of "non-directive friendly societies"7 are regulated under the Act, on a "lighter basis" than the activities of other insurers.7
SUP App 3.10.8GRP
Under the Act and the Regulated Activities Order, the activities of effecting and carrying out contracts of insurance are treated as being carried on in the United Kingdom on the basis of legal tests under which the location of the risk is only one factor. If the risk is located in the United Kingdom, then (other relevant factors being taken into account) the activity will, in the vast majority of cases, also be viewed as carried on in the United Kingdom. There are exceptions,
SUP App 3.10.9GRP
So, the effect of App 3.12.1 is that an insurer may be carrying on insurance business in the United Kingdom which is to be treated as a regulated activity under article 10 to the Regulated Activities Order (Effecting and carrying out contracts of insurance) in circumstances where the risks covered are treated as located in another EEA State. In that event, the insurer is required by Schedule 3 to the Act to passport into the State concerned and may be subject to conduct of business
An insurer authorised in another EEA State who is insuring UK risks and so passports on a services basis under the Solvency II Directive7 into the United Kingdom may not be carrying on a regulated activity in the United Kingdom. But, if it passports into the United Kingdom, it will qualify for authorisation under paragraph 12 of Schedule 3 to the Act (Firms qualifying for authorisation). Where this is the case, the insurer will be subject to conduct of business requirements in
The financial promotion regime under section 21 of the Act (Restrictions on financial promotion) may also apply to EEA insurance undertakings regardless of whether they carry on a regulated activity in the United Kingdom or passport into the United Kingdom.
GEN 2.2.3RRP
Any rule in the Handbook which has the status letter "E" in the margin or heading:(1) is to be taken also to provide that contravention of the rule does not give rise to any of the consequences provided for by provisions of the Act other than section 138C36 (Evidential provisions); and36(2) incorporates the status letter "E" in the margin or heading as part of the rule.
GEN 2.2.4GRP
(1) The rules to which section 138C36 of the Act applies ("evidential provisions") are identified in the Handbook by the status letter "E" in the margin or heading.36(2) Other provisions in the Handbook, although also identified by the status letter "E" in the margin or heading, are actually not rules but provisions in codes and GEN 2.2.3 R does not apply to them.17361313
GEN 2.2.12GRP
The application of the Interpretation Act 1978 to the Handbook has the effect, in particular, that:(1) expressions in the Handbook used in the Act have the meanings which they bear in the Act, unless the contrary intention appears;(2) where reference is made in the Handbook to an enactment, it is a reference to that enactment as amended and includes a reference to that provision as extended or applied by or under any other enactment, unless the contrary intention appears; and(3)
GEN 2.2.18RRP
(1) If a firm, which is a partnership7 or unincorporated association, is dissolved, but its authorisation continues to have effect under section 32 of the Act (Partnerships and unincorporated associations) in relation to any partnership or unincorporated association7 which succeeds to the business of the dissolved firm, the successor partnership or unincorporated association7 is to be regarded as the same firm for the purposes of the Handbook unless the context otherwise requires7.77(2)
GEN 2.2.19GRP
In principle, it is possible to view a change of partners7 in a partnership7, or a change in the membership of the unincorporated association, as the formation of a new partnership7 or association. GEN 2.2.18 R reflects section 32 of the Act (Partnerships and unincorporated associations), which provides for the continuing authorisation of partnerships7 and unincorporated associations following a change in partners7 or members if certain conditions are satisfied. GEN 2.2.18 R
GEN 2.2.25GRP
36Examples of rules being interpreted as cut back by GEN 2.2.23 R include the following:(1) [deleted]1212(2) SYSC 6.1.1 R requires a firm to maintain adequate policies and procedures to ensure compliance with its obligations under the regulatory system; SYSC 6.1.1 R should be interpreted:(a) as applied by the FCA in respect of a PRA-authorised person's compliance with regulatory obligations that are the responsibility of the FCA (for example, in respect of a bank maintaining policies
LR 4.2.1GRP
Section 80 (1) of the Act (general duty of disclosure in listing particulars) requires listing particulars submitted to the FCA to contain all such information as investors and their professional advisers would reasonably require, and reasonably expect to find there, for the purpose of making an informed assessment of:(1) the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the securities; and(2) the rights attaching to the securi
LR 4.2.2RRP
(1) The listing particulars must contain a summary that complies with the requirements in section 87A(5) and (6) of the Act and PR 2.1.4 EU to PR 2.1.7 R (as if those requirements applied to the listing particulars).(2) Paragraph (1) does not apply:(a) in relation to specialist securities referred to in LR 4.1.1R (2); or(b) if, in accordance with PR 2.1.3 R, no summary would be required in relation to the securities.
LR 4.2.9GRP
Under section 82 of the Act (exemptions from disclosure) the FCA may authorise the omission from listing particulars of information on specified grounds.
LR 4.2.10RRP
A request to the FCA to authorise the omission of specific information in a particular case must:(1) be in writing from the issuer;(2) identify the specific information concerned and the specific reasons for the omission; and(3) state why in the issuer's opinion one or more of the grounds in section 82 of the Act applies.
LR 4.2.11RRP
For the purposes of section 82(1)(c)3 of the Act, specialist securities are specified.
DEPP 7.2.1GRP
Under section 169(1)(b) and section 131FA2 of the Act, the FCA3 may appoint an investigator to investigate any matter at the request of an overseas regulator or EEA regulator2. The powers of the investigator appointed by the FCA3 (referred to here as the 'FCA's3 investigator') include the power to require persons to attend at a specified time and place and answer questions (the compulsory interview power).333
DEPP 7.2.2GRP
Where the FCA3 appoints an investigator in response to a request from an overseas regulator or EEA regulator2 it may, under section 169(7) or section 131FA2 of the Act, direct him to permit a representative of that regulator to attend and take part in any interviews conducted for the purposes of the investigation. The FCA3 may only give a direction under section 169(7) or section 131FA2 if it is satisfied that any information obtained by an overseas regulator or EEA regulator2
DEPP 7.2.3GRP
Part XXIII of the Act contains restrictions on the disclosure of confidential information. The restrictions are subject to exceptions contained in regulations made by the Treasury under section 349.
DEPP 7.2.6GRP
Before making a direction under section 169(7) or section 131FA2 the FCA3 will discuss and determine with the overseas regulator or EEA regulator2 how this statement of policy will apply to the conduct of the interview, taking into account all the circumstances of the case. Amongst other matters, the FCA3 will at this stage determine the extent to which the representative of the overseas regulator or EEA regulator2 will be able to participate in the interview. The overseas regulator
DEPP 7.2.12GRP
The interviewee will normally be given a copy of the direction issued under section 169(7) or section 131FA2 in advance of the interview unless to do so would be likely to result in the investigation being frustrated. The interviewee will also be provided with a copy of this statement of policy.
REC 5.2.1AGRP
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
REC 5.2.3GRP
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
REC 5.2.3AGRP
1The information required pursuant to sub-sections 287(c), (d) and (e) of the Act is:(1) a programme of operations which includes the types of business the applicant proposes to undertake and the applicant's proposed organisational structure;(2) particulars of the persons who effectively direct the business and operations of the exchange; and(3) particulars of the ownership of the exchange, and in particular the identity and scale of interests of the persons who are in a position
REC 5.2.6GRP
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
REC 5.2.6AGRP
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
REC 5.2.12GRP
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
EG 19.22.3RP
1The Payment Service Regulations do not require the FCA to have published procedures to launch criminal prosecutions. However, in these situations the FCA expects that it will normally follow its decision-making procedures for the equivalent decisions under the Act.
EG 19.22.4RP
1The Payment Service Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.
EG 19.22.7RP
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Payment Services Regulations to assist it to exercise its functions under the Regulations in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.
EG 19.22.8RP
1The Payment Services Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Payment Services Regulations the FCA will follow the procedures described in DEPP 7.
SUP 7.2.1GRP
The FCA5 has the power under sections 55J and 55L5of the Act to vary a firm'sPart 4A permission and/or impose a requirement on a firm.5 Varying a firm'sPart 4A permission5 includes imposing a limitation on that Part 4A permission.5555551
SUP 7.2.2GRP
The circumstances in which the FCA5 may vary a firm'sPart 4A permission5 on its own initiative or impose a requirement on a firm5 under sections 55J or 55L5 of the Act include where it appears to the FCA5 that:5555(1) one or more of the threshold conditions for which the FCA is responsible5 is or is likely to be no longer satisfied; or(2) it is desirable to vary a firm's permission in order to meet any of the FCA's5 statutory objectives under the Act; or5335(3) a firm has not
SUP 7.2.3GRP
The FCA5 may also use its own-initiative powers5 for enforcement purposes. EG 82 sets out in detail the FCA's5 powers under sections 55J and 55L of the Act5 and the circumstances under which the FCA5 may use its own-initiative powers5 in this way, whether for enforcement purposes or as part of its day to day supervision of firms. This chapter provides additional guidance on when the FCA5 will use these powers for supervision purposes.55255555
SUP 7.2.4GRP
The FCA5 may use its own-initiative powers5 only in respect of a firm's5Part 4A permission5; that is, a permission granted to a firm under sections 55E or 55F5 of the Act (Giving permission) or having effect as if so given. In respect of an incoming EEA firm, an incoming Treaty firm, or a UCITS qualifier, this power applies only in relation to any top-up permission that it has. There are similar but more limited powers under Part XIII of the Act in relation to the permission
SUP 13A.4.1GRP
(1) Before an EEA firm5(other than an EEA pure reinsurer or an EEA firm that has received authorisation under article 18 of the auction regulation)53exercises an EEA right to establish a branch in the United Kingdom other than under the Insurance Mediation Directive, the Act requires it to satisfy the establishment conditions, as set out in paragraph 13(1) of Part II of Schedule 3 to the Act. (2) For the purposes of paragraph 13(1)(b)(iii) of Part II of Schedule 3 to the Act,
SUP 13A.4.2GRP
Where an EEA firm exercises its EEA right to establish a branch in the United Kingdom under the Insurance Mediation Directive, the Act requires it to satisfy the establishment conditions, as set out in paragraph 13(1A) of Part II of Schedule 3 to the Act.
SUP 13A.4.3GRP
For the purposes of paragraph 13(2)(b) of Part II of Schedule 3 to the Act, the applicable provisions may include the appropriate UK regulator's11rules. The EEA firm is required to comply with relevant rules when carrying on a passported activity through a branch in the United Kingdom as well as with relevant UK legislation.11
SUP 13A.4.4GRP
(1) When the appropriate regulator11 receives a consent notice from the EEA firm'sHome State regulator, it will, under paragraphs 13(2)(b), (c) and 13(3) of Part II of Schedule 3 to the Act, notify the applicable provisions (if any)911within two months of the notice2 date.2(1A) The notice date is:2(a) for a MiFID investment firm, the date on which the Home State gave the consent notice; and2(b) in any other case, the date on which the appropriate UK regulator11 received the consent
SUP 13A.4.4-AGRP
8When the FCA receives a consent notice from the EEA firm'sHome State regulator in respect of a EEA firm within paragraph 5(i) of Part I of Schedule 3 to the Act, it will, under paragraph 13(3A);(1) notify the firm of the applicable provisions (if any); and (2) use the information received from the EEA firm'sHome State regulator to enter the necessary information into the Financial Services Register.
EG 1.1.1RP
3This guide describes the FCA's approach to exercising the main enforcement powers given to it by the Financial Services and Markets Act 2000 (the Act) and by other legislation. It is broken down into two parts. The first part provides an overview of enforcement policy and process, with chapters about the FCA's approach to enforcement (chapter 2), the use of its main information gathering and investigation powers under the Act and the CRA (chapter 3), the conduct of investigations
EG 1.1.2RP
3In the areas set out below, the Act expressly requires the FCA to prepare and publish statements of policy or procedure on the exercise of its enforcement and investigation powers and in relation to the giving of statutory notices. (1) section 63C requires the FCA to publish a statement of its policy on the imposition, and amount, of financial penalties on persons that perform a controlled function without approval; (1-A) 1section 63ZD requires the FCA, among other things, to
EG 1.1.3RP
3This guide includes material on the investigation, disciplinary and criminal prosecution powers that are available to the FCA when it is performing functions as the competent authority under Part VI of the Act (Official listing). The Act provides a separate statutory framework within which the FCA must operate when it acts in that capacity. When determining whether to exercise its powers in its capacity as competent authority under Part VI, the FCA will have regard to the matters
EG 1.1.5RP
3Since most of the FCA’s enforcement powers are derived from it, this guide contains a large number of references to the Act. Users of the guide should therefore refer to the Act as well as to the guide where necessary. In the event of a discrepancy between the Act, or other relevant legislation, and the description of an enforcement power in the guide, the provisions of the Act or the other relevant legislation prevail. Defined terms used in the text are shown in italic type.
EG 1.1.8RP
3The material in this guide does not form part of the FCAHandbook and is not guidance on rules, but it is 'general guidance' as defined in section 139B of the Act. If you have any doubt about a legal or other provision or your responsibilities under the Act or other relevant requirements, you should seek appropriate legal advice from your legal adviser.
PERG 5.12.1GRP
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 customer is outside the United Kingdom or because some other element of the activity happens outside the United Kingdom,
PERG 5.12.2GRP
Even if a person concludes that he is not carrying on a regulated activity in the United Kingdom, he will need to ensure that he does not contravene other provisions of the Act that apply to unauthorised persons. These include the controls on financial promotion (section 21 (Financial promotion) of the Act) (see PERG 8 (Financial promotion and related activities)), and on giving the impression that a person is authorised (section 24 (False claims to be authorised or exempt)).
PERG 5.12.4GRP

Table Territorial issues relating to overseas insurance intermediaries carrying on insurance mediation activities in or into the United Kingdom

Needs Part 4A permission

Schedule 3 EEA passport rights available

Overseas persons exclusion available

Registered EEA-based intermediary with UK branch (registered office or head office in another EEA State)

No

Yes

No

Registered EEA-based intermediary with no UK branch providing cross-border services

No

Yes

Potentially available [see Note]

Third country intermediary operating from branch in the UK

Yes

No

No

Third country intermediary providing services in (or into) the UK

Yes unless overseas persons exclusion applies

No

Potentially available

This does not, however, affect the firm'sauthorisation under Schedule 3 to the Act (see PERG 5.12.9 G to PERG 5.12.10 G (Passporting)).

3For EEA-based intermediaries this table assumes that the insurance mediation activities are within the scope of the Insurance Mediation Directive.

PERG 5.12.6GRP
In determining the location of an activity, and hence whether it is carried on in the United Kingdom, various factors need to be taken into account in turn, notably:(1) section 418 of the Act (Carrying on regulated activities in the United Kingdom);(2) the nature of the activity; and(3) the overseas persons exclusion (see PERG 5.12.9 G to PERG 5.12.10 G (Overseas persons)).
PERG 5.12.7GRP
Section 418 of the Act extends the meaning that 'carry on regulated activity in the United Kingdom' would normally have by setting out additional cases in which a person who would not otherwise be regarded as carrying on the activity in the United Kingdom is to be regarded as doing so. Each of the following cases thus amounts to carrying on a regulated activity in the United Kingdom:(1) where a UK-based person carries on a regulated activity in another EEA State in the exercise
PERG 5.12.9GRP
Article 72 of the Regulated Activities Order (Overseas persons) provides a potential exclusion for persons with no permanent place of business in the United Kingdom from which regulated activities are conducted or offers to conduct regulated activities are made. Where these persons carry on insurance mediation activities in the United Kingdom, they may be able to take advantage of the exclusions in article 72 of the Regulated Activities Order. In general terms, these apply where
SUP 2.1.2AGRP
6CBTL firms are subject to a duty to deal with the FCA in an open and co-operative manner under article 18(1)(d) of the MCD Order. SUP 2.3 applies to CBTL firms in relation to complying with that duty as though:(1) a reference to firm included a reference to a CBTL firm;(2) a reference to the regulatory system were a reference to the provisions of the MCD Order, rules, directions and guidance applicable to CBTL firms;(3) a reference to Principle 11 were a reference to the duty
SUP 2.1.3GRP
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
SUP 2.1.4GRP
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
SUP 2.1.5GRP
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
SUP 2.1.7GRP
The FCA operates in the context of the Act and the general law. The purpose of SUP 2.2 is to explain how certain provisions of the Act and the general law are relevant to the FCA's methods of information gathering described in SUP 2.3 and SUP 2.4.
SUP 2.1.8GRP
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.
PERG 9.3.1GRP
For a body corporate to be an open-ended investment company, as defined in section 236(1) of the Act:(1) it must be a collective investment scheme;(2) it must satisfy the property condition in section 236(2); and(3) it must satisfy the investment condition in section 236(3).
PERG 9.3.2GRP
Each of these aspects of the definition is considered in greater detail in PERG 9.4 (Collective investment scheme (section 235 of the Act)) to PERG 9.9 (The investment condition: the 'satisfaction test' (section 236(3)(b) of the Act)). Although the definition has a number of elements, the FCA considers that it requires an overall view to be taken of the body corporate. This is of particular importance in relation to the investment condition (see PERG 9.6.3 G and PERG 9.6.4 G (The
PERG 9.3.5GRP
The FCA understands that the aim of the definition in section 236 of the Act is to include any body corporate which, looked at as a whole, functions as an open-ended investment vehicle. The definition operates against a background that there is a wide range of different circumstances in which any particular body corporate can be established and operated. For example, the definition applies to bodies corporate wherever they are formed. So, in the application of the definition to
PERG 9.3.6GRP
For a body corporate formed outside the United Kingdom, there is an additional issue as to how the applicable corporate law and the definition of open-ended investment company in the Act relate to one another. The FCA understands this to operate as follows. The term 'body corporate' is defined in section 417(1) of the Act (Interpretation) as including 'a body corporate constituted under the law of a country or territory outside the United Kingdom'. So, whether or not any particular