Related provisions for BIPRU 7.5.12
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The CFEB levy is calculated as follows:(1) identify each of the activity groups set out in Part 1 of FEES 7 Annex 1 that apply to the business of the firm for the relevant period (for this purpose, the activity groups are defined in accordance with Part 1 of and the activity groups under are defined in accordance with Part 1 of that Annex);FEES 4 Annex 1A);66(2) for each of those activity groups, calculate the amount payable in the way set out in FEES 7.2.3 R;(3) add the amounts
The amount payable by a firm with respect to a particular activity group is calculated as follows:(1) calculate the size of the firm's tariff base for that activity group using the tariff base calculations in Part 3 of FEES 4 Annex 1A6 and Part 3 of FEES 4 Annex 111 and the valuation date requirements in Part 5 of FEES 4 Annex 1A6 and Part 3 of FEES 4 Annex 11;1(2) use the figure in (1) to calculate which of the bands set out in column 2 of the table in Part 1 of FEES 7 Annex
In some cases, a FEES 4rule incorporated into FEES 7 in the manner set out in FEES 7.2.7 G will refer to another rule in FEES 4 that has not been individually incorporated into FEES 7. Such a reference should be read as being to the corresponding provision in FEES 7. The main examples are set out in FEES 7.2.12 G.
The following is a non-exhaustive list of examples of conduct that would be in breach of rule SC1.(1) Failing to take reasonable steps to apportion responsibilities for all areas of the business under the approved person's control.(2) Failing to take reasonable steps to apportion responsibilities clearly among those to whom responsibilities have been delegated, which includes establishing confusing or uncertain:(a) reporting lines; or(b) authorisation levels; or(c) job descriptions
The following is a non-exhaustive list of examples of conduct that would be in breach of rule SC2.(1) Failing to take reasonable steps to implement (either personally or through a compliance department or other departments) adequate and appropriate systems of control to comply with the relevant requirements and standards of the regulatory system for the activities of the firm.(2) Failing to take reasonable steps to monitor (either personally or through a compliance department
A senior conduct rules staff member should have reasonable grounds for believing that the delegate has the competence, knowledge, skill and time to deal with the issue. For instance, if the compliance department only has sufficient resources to deal with day-to-day issues, it would be unreasonable to delegate to it the resolution of a complex or unusual issue without ensuring it had sufficient capacity to deal with the matter adequately.
The following is a non-exhaustive list of examples of conduct that would be in breach of rule SC3.(1) Failing to take reasonable steps to maintain an appropriate level of understanding about an issue or part of the business that the senior conduct rules staff member has delegated to an individual(s) (whether in-house or outside contractors) including:(a) disregarding an issue or part of the business once it has been delegated;(b) failing to require adequate reports once the resolution
A designated client fund account may be used for a client only where that client has consented to the use of that account and all other designated client fund accounts which may be pooled with it. For example, a client who consents to the use of bank A and bank B should have his money held in a different designated client fund account at bank B from a client who has consented to the use of banks B and C. If a firm deposits client money into a designated client fund account then,
If a firm is unable to identify money that it has received as either client money or its own money under CASS 7.13.37 R, it should consider whether it would be appropriate to return the money to the person who sent it or to the source from where it was received (3for example, the banking institution).
- (1)
In the FCA's view:
- (a)
- (b)
a person who performs a significant influence function for, or is a senior manager of, a firm would normally be expected to be part of the firm'sBIPRU Remuneration Code staff;
- (c)
the table in (2) provides a non-exhaustive list of examples of key positions that should, subject to (d), be within a firm's definition of staff who are risk takers;
- (d)
firms should consider how the examples in the table in (2) apply to their own organisational structure;
1 - (e)
firms may find it useful to set their own metrics to identify their risk takers based, for example, on trading limits; and
- (f)
a firm should treat a person as being BIPRU Remuneration Code staff in relation to remuneration in respect of a given performance year if they were BIPRU Remuneration Code staff for any part of that year.
[Note: The FCA has published guidance on the application of particular rules on remuneration structures in relation to individuals who are BIPRU Remuneration Code staff for only part of a given performance year. This guidance is available at www.fca.org.uk/firms/remuneration
.]
- (2)
High-level category
Suggested business lines
Heads of significant business lines (including regional heads) and any individuals or groups within their control who have a material impact on the firm's risk profile
Fixed income
Foreign exchange
Commodities
Securitisation
Sales areas
Investment banking (including mergers and acquisitions advisory)
Commercial banking
Equities
Structured finance
Lending quality
Trading areas
Research
Heads of support and control functions and other individuals within their control who have a material impact on the firm's risk profile
Credit/market/operational risk
Legal
Treasury controls
Human resources
Compliance
Internal audit
(1) Regarding SYSC 19C.3.47R (3), the 50% minimum threshold for instruments must be applied equally to the non-deferred and the deferred components; in other words, firms must apply the same chosen ratio between instruments and cash for their total variable remuneration to both the upfront and deferred components. (2) This simplified example illustrates the operation of (1). The variable remuneration of a material risk taker (X) is 100, and by SYSC 19C.3.49R (3) X is required
(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 FCA may ask firms to provide a copy of their policies and expects firms to make adequate records of material decisions to operate
A firm to which CASS 7.11.12 R applies should, for example, update its records under CASS 7.15 (Records, accounts and reconciliations) and segregate the money as client money under CASS 7.13 (Segregation of client money), from the relevant time at which the firm is required to treat the money as client money.
Money held as client money becomes due and payable to the firm or for the firm's own account, for example, because the firm acted as principal in the contract or the firm, acting as agent, has itself paid for securities in advance of receiving the purchase money from its client. The circumstances in which it is due and payable will depend on the contractual arrangement between the firm and the client.
A firm is reminded that when CASS 7.10.1 R applies it should treat client money in an appropriate manner so that, for example:(1) if it holds client money in a client bank account that account is held in the firm's name in accordance with CASS 7.13.13 R;(2) if it allows another person to hold client money this is effected under CASS 7.14; and(3) its internal client money reconciliation takes into account any client equity balance relating to its margined transaction requireme
(1) 4Where a firm has made an election under CASS 7.10.7AR: (a) it should treat money held for a client as client money both in the course of or in connection with: (i) operating an electronic system in relation to lending; and(ii) operating an electronic system in relation to non-P2P agreements;(b) (a) is regardless of whether, at the time the firm is holding the money, the client could or could not be a lender under a P2P agreement; and(c) under SYSC 4.1.8ER(2) it will be not
When a firm undertakes a range of business for a professional client and has separate agreements for each type of business undertaken, the firm may treat client money held on behalf of the client differently for different types of business; for example, a firm may, under CASS 7.10.10 R or CASS 7.10.12 R, elect to segregate client money in connection with securities transactions and not segregate (by complying with CASS 7.10.10 R or CASS 7.10.12 R) money in connection with contingent
A trustee firm may wish to make an election under CASS 7.10.38 R if, for example, it acts for a number of distinct trusts which it wishes, or is required, to keep operationally separate. If a firm makes such an election then it should:(1) establish and maintain adequate internal systems and controls to effectively segregate client money held for one trust from client money held for another trust; and(2) conduct internal client money reconciliations as set out in CASS 7.16 and
[deleted]131(1) In the FCA's view the requirement in COLL 5.2.22R (1)(a) can be met where:(a) the risks of the underlying financial instrument of a derivative can be appropriately represented by another financial instrument and the underlying financial instrument is highly liquid; or(b) the authorised fund manager or the depositary has the right to settle the derivative in cash, and cover exists within the scheme property which falls within one of the following asset classes:(i)
13Authorised fund managers of UCITS schemes or EEA UCITS schemes should bear in mind that where a UCITS scheme, or an EEA UCITS scheme that is a recognised scheme under section 264 of the Act, employs particular investment strategies such as investing more than 35% of its scheme property in government and public securities, or investing principally in units in collective investment schemes, deposits or derivatives, or replicating an index, COBS 4.13.2R (Marketing communications
(1) 15A syndicated loan for the purposes of this guidance means a form of loan where a group or syndicate of parties lend money to a third party and, in return, receive interest payments during the life of the debt and a return of principal either at the end of the loan period or amortised over the life of the loan. Such loans are usually arranged through agent banks which may, among other things, maintain a record of the lenders’ interest in the loan and arrange or act as a
(1) One way a firm may give advice on a fair analysis basis is by using ‘panels’ of insurance undertakings which are sufficient to enable the firm to give advice on a fair analysis basis and are reviewed regularly. (2) A firm which provides a service based on a fair analysis of the market (or from a sector of the market) should ensure that its analysis of the market and the available contracts is kept adequately up-to-date. For example, a firm should update its selection of contracts
12(1) Principle 6 (Customers' interests) requires that a firm must pay due regard to the interests of its customers and treat them fairly. This means, for example, that a firm should avoid selling practices that commit customers (or lead customers to believe that they are committed) to any regulated mortgage contract or home reversion plan before they have been able to consider the illustration and offer document. One such practice might be to present a new customer with an illustration,
Principle 7 (Communications with clients) requires that a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. This means, for example, that a firm should avoid giving any customer a false impression about the availability of a regulated mortgage contract, home reversion plan1 or regulated sale and rent back agreement2, such as describing it as a 'special offer' not available after
(1) If a firm'sremuneration policy is not aligned with effective risk management it is likely that employees will have incentives to act in ways that might undermine effective risk management.(2) The Remuneration Code covers all aspects of remuneration that could have a bearing on effective risk management including salaries, bonuses, long-term incentive plans, options, hiring bonuses, severance packages and pension arrangements. In applying the Remuneration Code, a firm should
(1) There are certain additional disclosure requirements laid down by the Distance Marketing Directive that will have to be provided by a mortgage intermediary,6 a home purchase intermediary and a SRB intermediary64 to a consumer5 prior to the conclusion of a distance mortgage mediation contract,66 a distance home purchase mediation contract4 or a distance regulated sale and rent back mediation contract.6 The purpose of this section, MCOB 4.5, is to set out those additional requirements.
(1) The information in MCOB 4 Annex 3 will be provided in 'good time' for the purposes of MCOB 4.5.2 R (1), if provided in sufficient time to enable the customer to consider properly the services on offer.(2) An example of the circumstances in which MCOB 4.5.2 R (4) or (5) may apply is given in MCOB 4.4.4 G. If the initial disclosure document and accompanying information (including that in MCOB 4 Annex 3) was previously provided to a customer and continues to be appropriate, there
(1) 1A firm must not enter into an agreement with a customer under which a charge is, or may become, payable for an optional additional product unless the customer has actively elected to obtain that specific product. (2) A firm must not impose a charge on a customer for an optional additional product under an agreement entered into on or after 1 April 2016 unless the customer actively elected to obtain that specific product before becoming bound to pay the charge.(3) A firm must
If the SRB agreement seller or a member of his family makes contact with the SRB agreement provider during the 14 day cooling-off period, for example because he wants to query a term of the written pre-offer document, the provider must endeavour to answer the query in as factual a manner as the circumstances permit but avoid any language or conduct which could be interpreted as amounting to an attempt to exert pressure on the SRB agreement seller to enter into the proposed ag
The SRB agreement provider must keep a record of the written pre-offer document at Stage One and the written offer document for signing at Stage Two for a period of:(1) one year after the end of the fixed term of the tenancy under the regulated sale and rent back agreement; or(2) five years from the date of the disclosures and warnings, written offer documents and cooling-off period notices;whichever is the longer.
This section sets out the requirements a firm must comply with when it allows another person to hold client money, other than under CASS 7.13.3 R, without discharging its fiduciary duty to that client. Such circumstances arise when, for example, a firm passes client money to a clearing house in the form of margin for the firm's obligations to the clearing house that are referable to transactions undertaken by the firm for the relevant clients. They may also arise when a firm passes
A firm may allow another person, such as an exchange, a clearing house or an intermediate broker, to hold client money, but only if:(1) the firm allows that person to hold the client money:(a) for the purpose of one or more transactions for a client through or with that person; or(b) to meet a client's obligation to provide collateral for a transaction (for example, an initial margin requirement for a contingent liability investment); and(2) in the case of a retail client, that
1The FCA is responsible for monitoring and enforcing compliance with the Regulations not only by authorised firms who are within the Money Laundering Regulations’ scope, but also by what the Regulations describe as “Annex I financial institutions”. These are businesses which are not otherwise authorised by us but which carry out certain of the activities listed in Annex I of the Banking Consolidation Directive28, now Annex I of the CRD. The activities include lending (e.g. forfaiters
1The Money Laundering Regulations add to the range of options available to the FCA for dealing with anti-money laundering failures. These options are: • to prosecute both authorised firms and Annex I financial institutions;to take regulatory action against authorised firms for failures which breach the FCA'srules and requirements (for example, under Principle 3 or SYSC 3.2.6R or SYSC 6.1.1R); and• to impose civil penalties on both authorised firms and Annex I financial institutions
Principles 3 (Management and control), 4 (Financial prudence) and (in so far as it relates to disclosing to the appropriate regulator) 11 (Relations with regulators) take into account the activities of members of a firm's group. This does not mean that, for example, inadequacy of a group member's risk management systems or resources will automatically lead to a firm contravening Principle 3 or 4. Rather, the potential impact of a group member's activities (and, for example, risk
Breaching a Principle makes a firm liable to disciplinary sanctions. In determining whether a Principle has been breached it is necessary to look to the standard of conduct required by the Principle in question. Under each of the Principles the onus will be on the appropriate regulator to show that a firm has been at fault in some way. What constitutes "fault" varies between different Principles. Under Principle 1 (Integrity), for example, the appropriate regulator would need
2When the FCA has concerns about the fitness and propriety of an approved person, it may consider whether it should prohibit that person from performing functions in relation to regulated activities, withdraw its approval, or both. In deciding whether to withdraw its approval and/or make a prohibition order, the FCA will consider in each case whether its statutory objectives can be achieved adequately by imposing disciplinary sanctions, for example, public censures or financial
2The following are examples of types of behaviour which have previously resulted in FCA the deciding to issue a prohibition order or withdraw the approval of an approved person:(1) Providing false or misleading information to the FCA; including information relating to identity, ability to work in the United Kingdom, and business arrangements;
(2)
Failure to disclose material considerations on application forms, such as details of County
1Before concluding a GAP contract, a firm should have regard to the information needs of its customers and consider whether it would be in the customer’s interest to receive the information in ICOBS 6A.1.4R again, for example, if a long time has passed between providing the information and the conclusion of the contract.
416These procedures should, taking into account the nature, scale and complexity of the respondent's business, ensure that lessons learned as a result of determinations by the Ombudsman are effectively applied in future complaint handling, for example by:(1) relaying a determination by the Ombudsman to the individuals in the respondent who handled the complaint and using it in their training and development;(2) analysing any patterns in determinations by the Ombudsman concerning
In respect of complaints that do not relate to MiFID business, a respondent must put in place appropriate management controls and take reasonable steps to ensure that in handling complaints it identifies and remedies any recurring or systemic problems, for example, by: 1(1) analysing the causes of individual complaints so as to identify root causes common to types of complaint;(2) considering whether such root causes may also affect other processes or products, including those