Related provisions for IPRU-INV 4.2.2
1 - 20 of 640 items.
4The effect of section 64C of the Act and SUP 15.11.6R is that the reporting obligation in section 64C of the Act and in this section: (a) only applies to relevant authorised persons; and(b) only covers persons who are subject to COCON (who are called conduct rules staff in the FCA Handbook) rather than to the whole workforce of a relevant authorised person.
A firm should make a separate notification about a person under section 64C of the Act where:(1) it has made a notification to the FCA about a person pursuant to SUP 15.3.11R(1)(a) because of a breach of COCON2; and(2) it subsequently takes disciplinary action against the person for the action, failure to act, or circumstance, that amounted to a breach of COCON.
If, after a firm has made a notification for a person (A) pursuant to section 64C of the Act,2 it becomes aware of facts or matters which cause it to change its view that A has breached COCON, or cause it to determine that A has breached a provision of COCON other than the provision to which the notification related, the firm should inform the FCA of those facts and matters and its revised conclusion in line with a firm’s obligation to comply with Principle 11, SUP 15.6.4R and,
If a firm takes disciplinary action as a result of a conduct breach (see SUP 15.11.6R) against an employee but the employee has appealed or plans to appeal, the firm should still report the disciplinary action under section 64C of the Act but should include the appeal in the notification. The firm should update the FCA on the outcome of any appeal.2
(1) A firm must make any notifications required pursuant to section 64C of the Act relating to conduct rules staff other than SMF managers4in accordance with SUP 15.11.13R to SUP 15.11.15R.3(2) That notification must be made annually.3(3) Each notification must:3(a) cover the 12 month period ending on the last day of August; and3(b) be submitted to the FCA:3(i) within two months of the end of the reporting period; or3(ii) (if the end of the reporting period in (b)(i) falls on
(1) A firm other than a credit union must make each notification pursuant to SUP 15.11.13R (notifications about section 64C of the Act relating to conduct rules staff other than SMF managers4) by submitting it online through the FCA’s website using the electronic system made available by the FCA for this purpose.3(2) A firm must use the version of Form H (named REP008 – Notification of Disciplinary Action) 4made available on the electronic system referred to in (1), which is based
The obligations to make a notification pursuant to2section
64C of the Act apply notwithstanding any agreement (for example a 'COT 3'
Agreement settled by the Advisory, Conciliation and Arbitration Service
(ACAS)) or any other arrangements entered into by a firm and an employee
upon termination of the employee's employment. A firm should not enter
into any such arrangements or agreements that could conflict with its
obligations under this section.
FCA6 staff under executive procedures will take the decision to give a warning notice if the FCA6 proposes to:66(1) refuse an application for a Part 4A permission6 or to refuse an application to cancel a Part 4A permission6;66(2) impose a limitation or a requirement which was not applied for, or specify a narrower description of regulated activity than that applied for, on the grant of a Part 4A permission6;6(3) refuse an application to vary a Part 4A permission6, or to restrict
A fundamental variation or requirement means:66(1) removing a type of activity or investment from the firm'spermission; or(2) refusing an application to include a type of activity or investment; or(3) [deleted]66(4) imposing or varying an assets requirement (as defined in section 55P6 of the Act (Prohibitions and restrictions)), or refusing an application to vary or cancel such a requirement.6
FCA6 staff under executive procedures will take the following statutory notice decisions:6(1) the refusal of an application for listing of securities;(2) the suspension of listing on the FCA's6 own initiative or at the request of the issuer;6(3) [deleted]22(4) the discontinuance of listing of securities at the issuer's request;(5) the exercise of any of the powers in sections 87K or 87L of the Act in respect of a breach of any applicable provision; and2(6) [deleted]22(7) the refusal
If securities have matured or otherwise ceased to exist the FCA6 will remove any reference to them from the official list. This is a purely administrative process, and not a discontinuance of listing in the sense used in Part 6 of the Act. Decisions relating to imposition of limitations or other restrictions of sponsors and primary information providers.66
6Under section 88(4)(aa) of the Act, if the FCA proposes to impose limitations or other restrictions on the services to which a sponsor's approval relates, it must give him a warning notice. If, after considering any representations made in response to the warning notice, the FCA decides to impose limitations or other restrictions on the services to which a sponsor's approval relates, it must give him a decision notice. Where the sponsor has requested or otherwise agrees to the
6If the FCA is proposing or deciding to refuse a sponsor's application for the withdrawal or variation of a limitation or other restriction on the services to which a sponsor's approval relates under section 88(8)(d) of the Act, the decision maker will be FCA staff under executive procedures where FCA staff decided to impose the limitation or other restriction. Otherwise, the RDC will take the decision to give the warning notice and decision notice.
6Under section 89P(5)(b) of the Act, if the FCA proposes to impose limitations or other restrictions on the dissemination of regulated information to which a primary information provider's approval relates, it must give him a warning notice. If, after considering any representations made in response to the warning notice, the FCA decides to impose limitations or other restrictions on the dissemination of regulated information to which a primary information provider's approval
6Under section 89P(9)(d) of the Act, if the FCA is proposing or deciding to refuse a primary information provider's application for the withdrawal or variation of a limitation or other restriction on the dissemination of regulated information to which a primary information provider's approval relates, the decision maker will be FCA staff under executive procedures where FCA staff decided to impose the limitation or other restriction. Otherwise, the RDC will take the decision to
The decisions referred to in DEPP 2.5.12 G are:(1) the decision to give a supervisory notice pursuant to section 259(3), (8) or 9(b) (directions on authorised unit trust schemes); section 268(3), 7(a) or 9(a) (directions in respect of recognised overseas schemes); or section 282(3), (6) or (7)(b) (directions in respect of relevant recognised schemes) of the Act;(1A) the decision to give a supervisory notice pursuant to section 261Z1(3), (8) or (9)(b) (Procedure on giving directions
The FCA6 expects to adopt a procedure in respect of notices under enactments other than the Act which is similar to that for statutory notices under the Act, but which recognises any differences in the legislative framework and requirements. DEPP 2 Annex 1 and DEPP 2 Annex 2 therefore identify notices to be given pursuant to other enactments and the relevant FCA6 decision maker.66
Some of the distinguishing features of notices given under enactments other than the Act are as follows: (1) [deleted]66(2) [deleted]66(3) Friendly Societies Act 1992, section 58A1: The warning notice and decision notice must set out the terms of the direction which the FCA6 proposes or has decided to give and any specification of when the friendly society is to comply with it. A decision notice given under section 58A(3) must give an indication of the society's right, given by
(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.
6Firms carrying on, or seeking to carry on, a PRA-regulated activity, should note that the PRA is also responsible for assessing effective supervision under its own threshold conditions. Paragraphs 4F and 5F of Schedule 6 to the Act set out the effective supervision threshold conditions which are relevant to the discharge by the PRA of its functions under the Act in relation to firms carrying on, or seeking to carry on, a PRA-regulated activity. For the avoidance of doubt, this
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
(1) Section 420(1) of the Act (Parent and subsidiary undertaking) states that, except in relation to an incorporated friendly society, 'parent undertaking' and 'subsidiary undertaking' have the same meaning as in the Companies Acts (see section 1162 of, and schedule 7 to, the Companies Act 2006)4. These are the cases referred to in COND 2.3.7 G (1)(a) to (f).4(2) Section 420(2) of the Act supplements these definitions in two ways; these are the cases referred to in COND 2.3.7
(1) For the purposes of the threshold conditions set out in paragraphs 2C and 3B of Schedule 6 to the Act,6 and except in relation to an incorporated friendly society, an undertaking is a parent undertaking of another undertaking (a subsidiary undertaking) if any of the following apply to it:6(a) it holds a majority of the voting rights in the subsidiary undertaking; or(b) it is a member of the subsidiary undertaking and has the right to appoint or remove a majority of its board
Section 420(3) of the Act (Parent and subsidiary undertaking) states that an incorporated friendly society is a parent undertaking of another body corporate (a subsidiary undertaking) if it has the following relationship to it:6(1) it holds a majority of the voting rights in the subsidiary undertaking; or(2) it is a member of the subsidiary undertaking and has the right to appoint or remove a majority of the subsidiary undertaking's board of directors; or(3) it is a member of
For the purposes of6 the threshold conditions set out in paragraphs 2C and 3B of Schedule 6 to the Act6, an undertaking is a subsidiary undertaking of another undertaking if:6(1) the other undertaking (its parent) is a member of the undertaking;(2) a majority of the undertaking's board of directors who have held office during the financial year and during the preceding financial year have been appointed solely as a result of the exercise of the parent's voting rights; and(3) no
5Paragraphs 2C(2)(e) and (f) and 3B(2)(e) and (f)6 of Schedule 6 to the Act reflect legislation initially introduced in the Post-BCCI Directive, which defines close links, in part, by reference to participation. Recital 5 of the Post-BCCI Directive gives further guidance on what is meant by ‘participation’ for the purposes of the directive. It states that the sole fact of having acquired a significant proportion of a company’s capital does not constitute participation for the
12SUP 11 Annex 6G provides guidance on when one person's holding of shares or voting power must be aggregated with that of another person for the purpose of determining whether an acquisition or increase of control will take place as contemplated by section 181 or 182 of the Act such that notice must be given to the appropriate regulator17 in accordance with section 178 of the Act before making the acquisition or increase. This will be:17(1) where those persons are acting in concert,
Sections 178(1) and 191D(1)10 of the Act require a person (whether or not he is an authorised person) to notify the appropriate regulator17 in writing if he decides 10to acquire, increase or reduce10control or to cease to have control10 over a UK domestic firm . Failure to notify is an offence under section 191F10 of the Act (Offences under this Part).46101710101010
The Treasury have made the following exemptions from the obligations under section 178 of the Act10:(1) controllers and potential controllers of non-directive friendly societiesare exempt from the obligation to notify a change in control (The Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2009 (SI 2009/77410));10(2) controllers and potential controllers of building societies are exempt from the obligation to notify a change in control unless the change
If a person decides10 to acquire control or increase control over a UK domestic firm in a way described in SUP 11.4.2 Ror acquire control in a way described in SUP 11.4.2AR (1)4, he must obtain the appropriate regulator's17 approval before doing so. Making an acquisition before the appropriate regulator17 has approved of it10is an offence under section 191F of the Act (Offences under this Part).10101710174610
6The appropriate regulator17 recognises that firms acting as investment managers may have difficulties in complying with the prior notification requirements in sections 178 and 191D 10of the Act as a result of acquiring or disposing of listed shares in the course of that fund management activity. To ameliorate these difficulties, the appropriate regulator17 may accept pre-notification of proposed changes in control, made in accordance with SUP D, and may grant approval of such
6The appropriate regulator17 may treat as notice given in accordance with sections 178 and 191D17 of the Act a written notification from a firm which contains the following statements:171017(1) that the firm proposes to acquire and/or dispose of control, on one or more occasions, of any UK domestic firm whose shares or those of its ultimate parent undertaking are, at the time of the acquisition or disposal of control, listed, or which are traded or admitted to trading on a MTF
A section 178 notice10 given to the appropriate regulator17 by a person who is acquiring control or increasing his control over a UK domestic firm, in a way described in SUP 11.4.2 R (1) to (4), or acquiring control in a way described in SUP 11.4.2A R, must contain the information and be accompanied by such documents as are required by the controllers form approved by the appropriate regulator17 for the relevant application. 4610171017
(1) A person who has submitted a section 178 notice10under SUP 11.3.7 D must notify the appropriate regulator17 immediately if he becomes aware, or has information that reasonably suggests, that he has or may have provided the appropriate regulator17 with information which was or may have been false, misleading, incomplete or inaccurate, or has or may have changed, in a material particular. The notification must include:101717(a) details of the information which is or may be false,
In addition to the general factors outlined in DEPP 6.2.1 G, there are some additional considerations that may be relevant when deciding whether to take action against an individual under6section 66 of the Act. This list of those considerations is non-exhaustive. Not all considerations below may be relevant in every case, and there may be other considerations, not listed, that are relevant.(1) The individual's6 position and responsibilities. The FCA4 may take into account the
9The FCA is able to take action against an SMF manager under section 66A(5) of the Act where: (1) there has been (or continues to be) a contravention of a relevant requirement by the SMF manager’sfirm;(2) at the time of the contravention, the SMF manager was responsible for the management of any of the firm’s activities in relation to which the contravention occurred; and(3) the SMF manager did not take such steps as a person in their position could reasonably be expected to take
9When determining, for the purposes of section 66A(5) of the Act, whether an SMF manager was responsible for the management of any of the firm’s activities in relation to which a contravention of a relevant requirement by the firm occurred, the FCA will consider the full circumstances of each case. A list of considerations that may be relevant for this purpose is set out below. This list is not exhaustive.(1) The SMF manager’sstatement of responsibilities, including whether the
9Under section 66A(5)(d) of the Act, such steps as a person in the position of the SMF manager could reasonably be expected to take to avoid the firm’s contravention of a relevant requirement occurring (or continuing) are: (1) such steps as a competent SMF manager would have taken:(a) at that time;(b) in that specific individual’s position;(c) with that individual’s role and responsibilities; and(d) in all the circumstances.
9When determining under section 66A(5)(d) of the Act whether or not an SMF manager has taken such steps as a person in their position could reasonably be expected to take to avoid the contravention of a relevant requirement by the firm occurring (or continuing), additional considerations to which the FCA would expect to have regard include, but are not limited to:(1) the role and responsibilities of the SMF manager (for example, such steps as an SMF manager in a non-executive
3In addition to the general factors outlined in DEPP 6.2.1 G, there are some additional considerations that the FCA4 will have regard to when deciding whether to take action against a person that performs a controlled function without approval contrary to section 63A of the Act.4(1) The conduct of the person. The FCA4 will take into consideration whether, while performing controlled functions without approval, the person committed misconduct in respect of which, if he had been
The primary responsibility for ensuring compliance with Part VI of the Act, the Part 6 rules, the prospectus rules or a provision otherwise made in accordance with the Prospectus Directive or a requirement imposed under such provision rests with the persons identified in section 91(1) and section 91(1A) (Penalties for breach of Part 6 rules) of the Act respectively. Normally therefore, any disciplinary action taken by the FCA4 for contraventions of these obligations will in the
However, in the case of a contravention by a person referred to in section 91(1)(a) or section 91(1)(b) or section 91(1A) of the Act ("P"), where the FCA4 considers that another person who was at the material time a director of P was knowingly concerned in the contravention, theFCA4 may take disciplinary action against that person. In circumstances where the FCA4 does not consider it appropriate to seek a disciplinary sanction against P (notwithstanding a breach of relevant requirements
The Principles are set out in PRIN 2.1.1 R. The Principles are a general statement of the fundamental obligations of firms under the regulatory system. The Principles derive their authority from the FCA's4 rule-making powers set out in section 137A4(General rule-making power) of the Act. A breach of a Principle will make a firm liable to disciplinary action. Where the FCA4 considers this is appropriate, it will discipline a firm on the basis of the Principles alone.444
The Listing Principles and Premium Listing Principles5 are set out in LR 7. The Listing Principles set out in LR 7.2.1 R5 are a general statement of the fundamental obligations of all5listed companies. In addition to the Listing Principles, the Premium Listing Principles set out in LR 7.2.1A R are a general statement of the fundamental obligations of all listed companies with a premium listing of equity shares. The Listing Principles and Premium Listing Principles5 derive their
In any case where the FCA4 considers that the use of its powers under any of sections 123, 123A, 123B,7 129, 381, 383 or 384 of the Act may be appropriate, if that use may affect the timetable or outcome of a takeover bid or where it is appropriate in the context of any exercise by the Takeover Panel of its powers and authority, the FCA4 will consult the Takeover Panel before using any of those powers.44
Under section 63E(1) of the Act, a firm must take reasonable care to ensure that no employee of the firm performs an FCA-specified significant-harm function under an arrangement entered into by the firm in relation to the carrying on by that firm of a regulated activity, unless the employee has a valid certificate issued by that firm to perform the function to which certificate relates.
Under section 63F of the Act, in assessing if a person is fit and proper to perform an FCA-specified significant-harm function, a firm must have regard, in particular, to whether that person:(1) has obtained a qualification;(2) has undergone, or is undergoing, training;(3) possesses a level of competence; or(4) has the personal characteristics,required by general rules made by the FCA.
(1) A person seconded from a contractor may fall into the certification regime. The material in SYSC 5.2.21G is relevant to when this is the case.(2) In deciding if a person seconded from a contractor is fit and proper, the firm may take into account information and references from the contractor.(3) In deciding how much reliance to put on the contractor, the firm should take into account:(a) the familiarity of the contractor with the obligations of firms under SYSC 5.2, the corresponding
Under section 63F of the Act, a certificate issued by a firm to a person must:(1) state that the firm is satisfied that the person is fit and proper to perform the function to which the certificate relates; and(2) set out the aspects of the affairs of the firm in which the person will be involved in performing the function.
(1) The Act says that a certificate is valid for a period of 12 months, beginning with the day on which it is issued. 3(2) The FCA believes that the Act allows a firm to draft a certificate to expire after fewer than 12 months. The FCA interprets the Act in this way because to require a firm to make a certificate last longer than the firm thinks best is likely to make it harder for the firm to ensure the fitness of its certification employees. That would undermine the purpose
Under section 63F of the Act, if, after having considered if a person is fit and proper to perform an FCA-specified significant-harm function, a firm decides not to issue a certificate to that person, the firm must give the person a notice in writing stating:(1) what steps (if any) the firm proposes to take in relation to the person as a result of the decision; and(2) the reasons for proposing to take those steps.
If, after having considered whether a person is fit and proper to perform an FCA-specified significant-harm function, a firm decides not to issue a certificate to that person, it should consider if the circumstances warrant making a notification to the FCA for a breach of the rules in COCON pursuant to SUP 15.3.11R (Breaches of rules and other requirements in or under the Act or the CCA)4.
In accordance with section 63E of the Act (Certification of employees by relevant authorised persons), a function is an FCA-specified significant-harm function only if, in relation to the carrying on of a regulated activity by a firm, that function:(1) is not a controlled function in relation to the carrying on of that regulated activity by that firm; and(2) will require the person performing it to be involved in one or more aspects of the firm's affairs, so far as relating to
The FCA interprets the phrase ‘dealing with’ in SYSC 5.2.19R as including having contact with clients and extending beyond ‘dealing’ as used in the phrase ‘dealing in investments’. ‘Dealing in’ is used in Schedule 2 to the Act to describe in general terms the regulated activities which are specified in Part II of the Regulated Activities Order.
(1) A person who works for an appointed representative of a firm may fall into the certification regime. In practice, however, they may not meet the conditions for the certification regime to apply.(2) One condition for the certification regime to apply to a person is that the person performs a specified significant-harm function under an arrangement entered into by the firm (see SYSC 5.2.4G). However, unlike the equivalent parts of the Act for the approved persons regime, the
Under section 63E(7) of the Act, SYSC 5.2 does not apply to an arrangement which allows an employee to perform a function if the question of whether the employee is fit and proper to perform the function is reserved under any of the Single Market Directives or the auction regulation to an authority in a country or territory outside the United Kingdom.
(1) A firm must notify the FCA as soon as practicable after it becomes aware, or has information which reasonably suggests, that it will submit a qualified Form C for an FCA-approved SMF manager.(2) Form C is qualified if the information it contains:(a) relates to the fact that the firm has dismissed, or suspended, the FCA-approved SMF manager from its employment; (b) relates to the resignation by the FCA-approved SMF manager while under investigation by the firm, the FCA or any
(1) If any of the details relating to:(a) the arrangements in relation to any of a firm'sFCA-approved SMF managers; or(b) any FCA-designated senior management functions of one of its FCA-approved SMF managers;are to change, the firm must notify the FCA on Form D (SUP 10A Annex 7R).(2) The notification under (1) must be made as soon as reasonably practicable after the firm becomes aware of the proposed change.(3) This rule does not apply to anything required to be notified under
If a firm is required to notify the FCA about an FCA-approved SMF manager under any of the following:(1) section 63(2A) of the Act (Duty to notify regulator of grounds for withdrawal of approval); or2(2) [deleted]2(3) section 64C of the Act (Requirement for relevant authorised persons to notify regulator of disciplinary action);it must give that notification:(4) under SUP 10C.14.5R (Form C) if that rule applies; (5) under SUP 10C.14.7R (Qualified Form C) if that rule applies;
Table: Explanation of the sections of the Act mentioned in SUP 10C.12.22G
1Section |
Summary of relevant parts |
Other Handbook material |
Comments |
Section 63(2A) (Duty to notify regulator of grounds for withdrawal of approval) |
At least once a year, each firm must, in relation to every SMF manager for whom an approval has been given on the application of that firm: (a) consider whether there are any grounds on which the FCA could withdraw the approval; and (b) if the firm is of the opinion that there are such grounds, notify the FCA of those grounds. |
FIT sets out guidance on the factors a firm should take into account when assessing the fitness and propriety of an approved person. |
|
Section 64C of the Act (Requirement for relevant authorised persons to notify regulator of disciplinary action) |
If: (a) a firm takes disciplinary action in relation to an SMF manager; and (b) the reason, or one of the reasons, for taking that action is a reason specified in SUP 15.11.6R; |
SUP 15.11 (Notification of COCON breaches and disciplinary action) |
An example of when a notification should be made using Form C rather than Form D is when a firm is required to notify the FCA under section 64C of the Act that it has dismissed an SMF manager. |
(1) The obligations to supply information to the FCA under:(a) SUP 10C; or(b) the sections of the Act listed in SUP 10C.14.22R;apply notwithstanding any agreement (for example, a 'COT 3' Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS)) or any other arrangements entered into by a firm and an employee upon termination of the employee's employment. (2) A firm should not enter into any such arrangements or agreements that could conflict with its obligations
If a firm is required to notify the FCA about a PRA-approved SMF manager who is not an FCA-approved SMF manager under one of the sections of the Act referred to in SUP 10C.14.28R, it should make a single notification under the PRA's requirements. There is no need for a separate notification to the FCA.
1The FCA’s approach to enforcing the Packaged Retail and Insurance-based Investment Products Regulations, whether the person is authorised or not, will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally,
1The Packaged Retail and Insurance-based Investment Products Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those it has under the Act. Key features of the FCA’s approach are described below.
1The Packaged Retail and Insurance-based Investment Products Regulations apply to much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Packaged Retail and Insurance-based Investment Products Regulations.
1For example, the FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the Packaged Retail and Insurance-based Investment Products Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in civil investigations
1The Packaged Retail and Insurance-based Investment Products Regulations do not require the FCA to have published procedures for commencing 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, as set out in EG 12.
1The Packaged Retail and Insurance-based Investment Products Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow its decision-making procedure for the equivalent decisions under the Act, as set out in EG 10 and EG 11.
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Packaged Retail and Insurance-based Investment Products Regulations to assist it exercise its functions under the Packaged Retail and Insurance-based Investment Products Regulations in the most efficient and economic way.
[Note: See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.]
1The Packaged Retail and Insurance-based Investment Products 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 Packaged Retail and Insurance-based Investment Products Regulations the FCA will follow the procedures described in DEPP 7.
Section 395 of the Act (The FCA's and PRA's procedures) requires the FCA2 to
publish a statement of its procedure for the giving of statutory
notices. The procedure must be designed to secure, among other
things, that the decision which gives rise to the obligation to give a statutory notice is taken by a person not
directly involved in establishing the evidence on which that decision is based or by two or more persons who include
a person not directly involved in establishing
Table: Summary of statutory and related notices
Notice |
Description |
Act reference |
Further information |
Gives the recipient details about action that the FCA2 proposes to take and about the right to make representations. 2 |
Section 387 |
||
Gives the recipient details about action that the FCA2 has decided to take. The FCA2 may also give a further decision notice if the recipient of the original decision notice consents. 22 |
Section 388 |
||
Identifies proceedings set out in a warning notice or decision notice and which are not being taken or are being discontinued. |
Section 389 |
||
Sets out the terms of the action that the FCA2 is taking. 2 |
Section 390 |
||
Gives the recipient details about action that the FCA2 has taken or proposes to take, for example to vary a Part 4A permission.2 22 |
Section 395(13) |
The requirement in section 395
of the Act to publish a procedure
for the giving of notices does not extend to the giving of a notice of discontinuance or a final notice. Neither of these notices is
a statutory notice for the
purposes of DEPP; nor is the
decision to give such a notice a statutory
notice associated decision.
2Section 395 of the Act also
requires the FCA to publish
a statement of its procedure for decisions which give3 rise to an obligation
for the PRA to include a statement
under section 387(1A) in a warning notice or
a statement under section 388(1A) in a decision
notice as follows:(1) Section 387(1A) provides that where
the FCA proposes to refuse
consent for the purposes of section 55F, 55I or 59 of the Act,
or to give conditional consent as mentioned in section 55F(5), 55I(8) or
2Where an application for Part
4A permission is made to the PRA as
the appropriate regulator (section 55A(2)(a) of the Act),
the PRA may only give permission
with the consent of the FCA (section
55F of the Act). FCA consent can be conditional on the PRA imposing limitations or specifying the
permission is for certain regulated activities only.
2Where an application to vary a Part
4A permission is made to the PRA as
the appropriate regulator (section 55A(2)(a) of the Act),
the PRA may only give permission
with the consent of the FCA (section
55I of the Act). The FCA may withhold its consent to a proposed
variation if it appears to it that it is desirable to do so in order to advance
one or more of its operational objectives. FCA consent
can be conditional on the PRA imposing
limitations, or the PRA specifying
the permission
2Where an application to perform a controlled
function is made to the PRA as
the appropriate regulator, the PRA can
only approve a person to perform a controlled
function with the consent of the FCA (section
59(4)(b) of the Act). Where the application is a relevant senior management application, the FCA’s consent can be conditional on the PRA imposing conditions, or the PRA giving approval only for a limited period.3
Decisions on whether to give a statutory notice will be taken by a 'decision
maker'. The FCA's2 assessment
of who is the appropriate decision maker is subject to the requirements of
section 395 of the Act and will
depend upon the nature of the decision, including its complexity, importance
and urgency. References to the 'decision maker' in DEPP are
to:2(1) the Regulatory
Decisions Committee (RDC);
or(2) FCA2 staff
under executive procedures;
or2(3) FCA2 staff
under the settlement
The decision maker will also take
decisions associated with a statutory notice (a
'statutory notice associated decision'). Statutory notice associated decisions include
decisions:(1) to set or extend the period for
making representations;(2) on whether the FCA2 is required to give a copy of
the statutory notice to any
third party and, if so, the period for the third party to make representations;
and2(3) on whether to refuse access to FCA2 material,
relevant to the relevant statutory
1The FCA’s approach to enforcing under the MiFI Regulations, whether the person is authorised or not, will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the
1The MiFI Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below.
1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the MiFI Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the MiFI Regulations is to use powers to
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the MiFI Regulations to assist us to exercise our functions under the MiFI 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.
1The FCA’s approach to enforcing the DRS Regulations will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter
1The DRS Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below.
1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the DRS Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the DRS Regulations is to use powers to compel
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the DRS Regulations to assist us to exercise our functions under the DRS Regulations in the most efficient and economic way.[Note: See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.]
If the RDC considers it relevant to its consideration, it may ask FCA1 staff to explain or provide any or all of the following:1(1) additional information about the matter (which FCA1 staff may seek by further investigation); or1(2) further explanation of any aspect of the FCA1 staff recommendation or accompanying papers; or1(3) information about FCA1 priorities and policies (including as to the FCA's view on the law or on the correct legal interpretation of provisions of the
If the RDC decides that the FCA1 should give a warning noticeor a first supervisory notice:1(1) the RDC will settle the wording of the warning notice or first supervisory notice, and will ensure that the notice complies with the relevant provisions of the Act;(2) the RDC will make any relevant statutory notice associated decisions;(3) the RDC staff will make appropriate arrangements for the notice to be given; and(4) the RDC staff will make appropriate arrangements for the disclosure
1If the RDC proposes that the FCA should publish information about the matter to which a warning notice falling within section 391(1ZB) of the Act relates:(1) the RDC will settle the wording of the statement it proposes the FCA should publish (warning notice statement);(2) the RDC staff will make appropriate arrangements for the warning notice statement it proposes the FCA should publish to be given to the persons to whom the warning notice was given or copied;(3) the proposed
(1) A warning notice or a first supervisory notice will (as required by the Act) specify the time allowed for making representations. This will not be less than 141 days.1(2) The FCA1 will also, when giving a warning notice or a first supervisory notice, specify a time within which the recipient is required to indicate whether he wishes to make oral representations.1
3If the person subject to enforcement action notifies the RDC that they wish to make an expedited reference to the Tribunal under DEPP 5.1.8GG, the RDC shall decide whether to give a decision notice in the light of any representations by any third party under section 393 of the Act and any other interested party under section 63 or 67 of the Act (see DEPP 5.1.8IG).
If the RDC decides that the FCA1 should give a decision notice or a second supervisory notice:1(1) the RDC will settle the wording of the notice which will include a brief summary of the key representations made and how they have been dealt with, and will ensure that the notice complies with the relevant provisions of the Act;(2) the RDC will make any relevant statutory notice associated decisions, including whether the FCA1 is required to give a copy of the notice to a third
Under section 294(4) of the Act, before the FCA1 may give a waiver of notification rules, it must be satisfied that:1(1) compliance by the recognised body with those notification rules, or with those rules as unmodified, would be unduly burdensome or would not achieve the purpose for which those rules were made; and(2) the waiver would not result in undue risk to persons whose interests those rules are designed to protect.
There is no application form, but applicants should make their application formally and in writing and in accordance with any direction the FCA1 may make under section 294(2) of the Act. Each application should set out at least:1(1) full particulars of the waiver which is requested; (2) the reason why the recognised body believes that the criteria set out in section 294(4) (and described in REC 3.3.3 G) would be met, if this waiver were granted; and (3) where the recognised body
Any waiver given by the FCA1 under section 294 of the Act will be made in writing, stating: 1(1) the name of the recognised body in respect of which the waiver is made;(2) the notification rules which are to be waived or modified in respect of that body;(3) where relevant, the manner in which any rule is to be modified;(4) any condition or time limit to which the waiver is subject; and(5) the date from which the waiver is to take effect.
The FCA1 will periodically review any waiver it has given. The FCA1 has the right to revoke a waiver under section 294(6) of the Act. This right is likely to be exercised in the event of a material change in the circumstances of the recognised body or in any fact on the basis of which the waiver was given.11
2SUP 5.5.1R and SUP 5.5.5R apply to former CBTL firms in relation to their CBTL business as guidance and as if:(1) a reference to firm in those rules were a reference to a CBTL firm;(2) section 166 of the Act were a reference to section 166 of the Act as applied by article 23(2)(b) of the MCD Order; and(3) the word “must” were replaced by the word “should”.
2The guidance in SUP 5.2.1G, SUP 5.3, SUP 5.4 (except SUP 5.4.1AG), and SUP 5.5 (except SUP 5.5.10G and SUP 5.5.11G) applies to CBTL firms and former CBTL firms in relation to their CBTL business as if:(1) a reference to firm in that guidance included a CBTL firm;(2) a reference to a section of the Act were a reference to that section as applied by article 23 of the MCD Order if applicable; and(3) a reference to the FCA's functions under the Act were a reference to the FCA's functions
(1) 3This chapter also applies, as guidance, to a designated bank,5designated credit reference agency or a designated finance platform5:(a) in relation to its activities under the Small and Medium Sized Business (Credit Information) Regulations or in relation to its activities under the Small and Medium Sized Business (Finance Platforms) Regulations, as the case may be5;(b) as if, in relation to the activities in (a), references to “must” in SUP 5 were read as “should”; and (c)
7The purpose of this chapter is to give guidance on the FCA’s4 use of the power in section 166 (Reports by skilled persons) and section 166A (Appointment of skilled person to collect and update information) of the Act. The purpose is also to make rules requiring a firm to give assistance to a skilled person and, where a firm is required to appoint a skilled person, to include certain provisions in its contract with a skilled person. These rules are designed to ensure that the
1The FCA's approach to taking enforcement action under the Immigration Regulations 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
1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the Immigration Regulations 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 civil investigations under the Immigration Regulations is to use powers to
1The Immigration Regulations apply the procedural provisions of Part 9 of the Act, as modified by the Immigration Regulations, in respect of matters that can be referred to the Tribunal. Referral to the Tribunal in respect of decision notices given under regulation 25(1) of the Immigration Regulations are treated as disciplinary referrals for the purpose of section 133 of the Act.
(1) Section 59 of the Act (Approval for particular arrangements) says that a firm must take reasonable care to ensure that no one performs an FCA controlled function (including an FCA-designated senior management function) unless that person is acting in accordance with an approval given by the FCA.(2) That means that where a candidate will be performing one or more FCA-designated senior management functions, a firm must take reasonable care to ensure that the candidate does not
(1) If a person performs an FCA controlled function (including an FCA-designated senior management function) without approval, it is not only the firm that is accountable. Under section 63A of the Act (Power to impose penalties), if the FCA is satisfied that:(a) a person (‘P’) has at any time performed an FCA controlled function without approval; and(b) at that time P knew, or could reasonably be expected to have known, that P was performing an FCA controlled function without
In accordance with section 60 of the Act (Applications for approval), applications must be submitted by, or on behalf of, the firm itself, not by:(1) the FCA candidate; or(2) (where the FCA candidate works for the firm'sparent undertaking or holding company) by the firm'sparent undertaking or holding company.
(1) The firm that is employing the FCA candidate to perform the FCA-designated senior management function will usually make the submission itself.
(SUP 10C.10.7G describes some common situations.)
(2) Where a firm has outsourced the performance of an FCA-designated senior management function, the details of the outsourcing determines whom the FCA anticipates will submit the FCA-approved persons application forms.(3) The firm which is outsourcing is referred to as ‘A’ and the
(1) An application by a firm for the FCA's approval under section 59 of the Act (Approval for particular arrangements) for the performance of an FCA-designated senior management function must be made by completing Form A (SUP 10C Annex 2D), except where SUP 10C.10.9D requires Form E.(2) If a firm must make an application using Form A, it must use Form A (shortened form) if:(a) the person has current approved person approval to perform:(i) an FCA controlled function that is a significant
(1) A firm must use Form E (SUP 10C Annex 3D) where an approved person is both ceasing to perform one or more controlled functions and needs to be approved in relation to one or more FCA-designated senior management function within the same firm or group. (2) A firm must not use Form E if the approved person has never before been approved to perform for any firm:(a) an FCA controlled function that is a significant influence function;(b) an FCA-designated senior management function;
Under section 60A of the Act, before a firm makes an application for approval, it should be satisfied that the candidate is a fit and proper person to perform the function to which the application relates. In deciding that question, the firm should have particular regard to whether the candidate, or any person who may perform a function on the candidate's behalf:(1) has obtained a qualification; (2) has undergone, or is undergoing, training; (3) possesses a level of competence;
(1) Application forms must always be completed fully and honestly. Further notes on how to complete the form are contained in each form. (2) If forms are not completed fully and honestly, applications will be subject to investigation and the FCA candidate's suitability to be approved to undertake an FCA controlled function will be called into question. (3) A person who provides information to the FCA that is false or misleading may commit a criminal offence and could face prosecution
1The FCA's approach to taking enforcement action under the Referral Fees Regulations 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
1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the Referral Fees Regulations 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 civil investigations under the Referral Fees Regulations is to use powers
1The Referral Fees Regulations apply the procedural provisions of Part 9 of the Act, as modified by the Referral Fees Regulations, in respect of matters that can be referred to the Tribunal. Referral to the Tribunal in respect of decision notices given under regulation 26(1) of the Referral Fees Regulations are treated as disciplinary referrals for the purpose of section 133 of the Act.
The terms of any proposed settlement:(1) will be put in writing and be agreed
by FCA4 staff
and the person concerned;4(2) may refer to a draft of the proposed statutory notices setting out the facts
of the matter and the FCA's4 conclusions; 4(3) may, depending upon the stage in
the enforcement process at which agreement is reached, include an agreement
by the person concerned to: (a) waive and not exercise any rights
under sections 387 (Warning notices) and 394 (Access to Authority
5The terms of any proposed focused resolution agreement:(1) will be put in writing and be agreed by FCA staff and the person concerned;(2) may refer to a draft of the proposed warning notice; and (3) may, depending upon the stage in the enforcement process at which agreement is reached, include an agreement by the person concerned to: (a) waive and not exercise any rights under sections 387 (Warning notices) and 394 (Access to Authority material) of the Act to notice of, or access
5To use the expedited reference procedure, the person subject to enforcement action must notify the FCA that they:(1) wish to make an expedited reference to the Tribunal; and(2) waive and will not exercise any rights under section 387(2) of the Act in respect of the warning notice given (or to be given) in relation to the proposed action.
5To use the expedited reference procedure before a warning notice has been given:(1) the notification set out in DEPP 5.1.8GG must be given to FCA staff; (2) the decision to issue a warning notice will then be taken by the settlement decision makers; and(3) the decision to issue a decision notice will also be taken by the settlement decision makers, taking into consideration any representations by any third party under section 393 of the Act or any interested party under section
5To use the expedited reference procedure after a warning notice has been given:(1) the notification set out in DEPP 5.1.8GG must be given to the RDC; and(2) the decision to issue a decision notice will then be taken by the RDC in light of any representations by any third party under section 393 of the Act and any interested party under section 63 or 67 of the Act.
5Once a decision notice has been given as part of the expedited reference procedure (whether by the settlement decision makers or the RDC), it is the responsibility of the person subject to enforcement action to seek to refer the matter to the Tribunal under the Act if they so wish. If the matter is not referred to the Tribunal within the time required under section 390(1) of the Act, the FCA will, on taking the action to which the decision notice relates, give a final notice
5If FCA staff consider that it is appropriate to publish information about the matter to which a warning notice falling within section 391(1ZB) of the Act relates and is given by the settlement decision makers, they will make a recommendation to the settlement decision makers that such information should be published.
5If the settlement decision makers propose that the FCA should publish information about the matter to which a warning notice falling within section 391(1ZB) of the Act relates:(1) the settlement decision makers will settle the wording of the statement it proposes the FCA should publish (warning notice statement);(2) the FCA staff will make appropriate arrangements for the warning notice statement that the settlement decisions makers propose the FCA should publish to be given
(1) DEPP 2.4 sets out the FCA's4 approach
to giving third parties copies of statutory
notices pursuant to section 393 (Third party rights) of the Act.4(2) The decision to give a warning notice or a decision
notice to a third party is a statutory
notice associated decision.(3) In cases therefore where the decision
to give a warning notice or decision notice is taken by settlement decision makers, those decision
makers will decide whether a copy of the notice should be given to
The appointment of a skilled person to produce a report under section 166 of the Act (Reports by skilled persons) is one of the FCA's5 regulatory tools. The tool may be used:66(1) for diagnostic purposes, to identify, assess and measure risks; (2) for monitoring purposes, to track the development of identified risks, wherever these arise;(3) in the context of preventative action, to limit or reduce identified risks and so prevent them from crystallising or increasing; and (4)
The decision by the FCA5 to require a report by a skilled person under section 166 of the Act5 (Reports by skilled persons) 6will normally be prompted by a specific requirement for information, analysis of information, assessment of a situation,4 expert advice or recommendations or by a decision to seek assurance in relation to a regulatory return4. It may4 be part of the risk mitigation programme applicable to a firm, or the result of an event or development relating or relevant
6The decision by the FCA5 to require the collection or updating of information by a skilled person under section 166A of the Act (Appointment of skilled person to collect and update information) will be prompted where the FCA5 considers there has been a breach of a requirement by a firm to collect, and keep up to date, information of a description specified in the FCA's5rules.
When making the decision to require a report by a skilled person under section 166 (Reports by skilled persons) or the collection or updating of information by a skilled person under section 166A (Appointment of skilled person to collect and update information) of the Act, the FCA5 will have regard, on a case-by-case basis, to all relevant factors. Those are likely to include:66(1) circumstances relating to the firm;(2) alternative tools available, including other statutory powers;(3)
The FCA5 will have regard to alternative tools that may be available, including for example:66(1) obtaining what is required without using specific statutory powers (for example, by a visit by staff5 of the FCA5 or a request for information on an informal basis); 66(2) requiring information from firms and others, including authorising an agent to require information, under section 165 of the Act (Power6 to require information);6(3) appointing investigators to carry out general
The FCA5 will have regard to legal and procedural considerations including:66(1) statutory powers: whether one of the other available statutory powers is more appropriate for the purpose than the power in section 166 (Reports by skilled persons) or section 166A (Appointment of skilled person to collect and update information) of the Act;66(2) subsequent proceedings: whether it is desirable to obtain an authoritative and independent report for use in any subsequent proceedings;
The FCA5 will have regard to the objectives of its enquiries, and the relative effectiveness of its available powers to achieve those objectives. For example:66(1) historic information or evidence: if the objectives are limited to gathering historic information, or evidence for determining whether enforcement action may be appropriate, the FCA's5 information gathering and investigation powers under sections 165 (Power to require information), 167 (Appointment of investigator
In accordance with its general policy the FCA5 will have regard to the question of cost, which is particularly pertinent in relation to skilled persons because:66(1) if the FCA5 uses the section 166 power (Reports by skilled persons) or the section 166A power (Appointment of skilled person to collect and update information), either 6the firm will appoint, and will have to pay for the services of, the skilled person, or the FCA5 will appoint, and will require under FEES 3.2.7
In having regard to the cost implications of using the section 166 power (Reports by skilled persons) or the section 166A power (Appointment of skilled person to collect and update information) 6alternative options (such as visits) or other powers, the FCA5 will take into account relevant factors, including:66(1) whether the firm may derive some benefit from the work carried out and recommendations made by the skilled person, for instance a better understanding of its business
Except in relation to a “relevant complaint” within the meaning of section 404B(3) of the Act10, a9 money award may be such amount as the Ombudsman considers to be fair compensation for one or more of the following:9(1) financial loss (including consequential or prospective loss); or(2) pain and suffering; or(3) damage to reputation; or(4) distress or inconvenience;whether or not a court would award compensation.17
17If the Ombudsman considers that fair compensation requires payment of a larger amount, he may recommend that the respondent pays the complainant the balance. The effect of section 404B(6) of the Act is that this is also the case in relation to a “relevant complaint” within the meaning of section 404B(3) of the Act.109
17
Except in relation to a “relevant complaint” within the meaning of section 404B(3) of the Act10, a9 direction may require the
respondent9
to take such steps in relation to the complainant as the Ombudsman considers just and appropriate (whether or not a court could order those steps to be taken).99