Related provisions for CREDS 3A.5.9

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CASS 7.16.36RRP
A firm with a Part 30 exemption order which also operates an LME bond arrangement for the benefit of US-resident investors must exclude the client equity balances for transactions undertaken on the LME on behalf of those US-resident investors from the calculation of the margined transaction requirement, to the extent those transactions are provided for by an LME bond arrangement (see CASS 12.2.3 G).1
DISP App 1.4.14GRP

12Example 8

Example 8

Term extends beyond retirement age and policy reconstruction

Background

45 year old male non-smoker, having taken out a £50,000 loan in 1998 for a term of 25 years. Unsuitable sale identified on the grounds of affordability and complaint raised on 12th policy anniversary.

It has always been the intention of the complainant to retire at State retirement age 65.

Term from date of sale to retirement is 20 years and the maturity date of the mortgage is 5 years after retirement.

Established facts

Established premium paid by investor on policy of original term (25 years):

£81.20

Premium that would have been payable on policy with term from sale to retirement (20 years):

£111.20

Actual policy value at time complaint assessed:

£12,500

Value of an equivalent 20-year policy at time complaint assessed:

£21,300

Difference in policy values at time complaint assessed:

£8,800

Difference in outgoings (20 year policy - 25 year policy):

£4,320

Basis of compensation

The policy is reconstructed as if it had been set up originally on a term to mature at retirement age, in this example, a term of 20 years. The difference in the current value of the policy actually sold to the complainant and the current value of the reconstructed policy, as if the premium on the reconstructed policy had been paid from outset, is calculated. The complainant has gained from lower outgoings (lower premiums) of the actual endowment policy to date. In calculating the redress, the gain may be offset against the loss unless the complainant's particular circumstances are such that it would be unreasonable to take account of the gain.

Redress generally if it is not unreasonable to take account of the whole of the gain from lower outgoings

Loss from current value of reconstructed policy less current value of actual policy:

(£8,800)

Gain from total lower outgoings under actual policy:

£4,320

Net loss:

(£4,480)

Therefore total redress is:

£4,480

Redress if it is unreasonable to take account of gain from lower outgoings

Loss from current value of reconstructed policy less current value of actual policy:

(£8,800)

Gain from total lower outgoings under actual policy:

Ignored

Therefore total redress is:

£8,800

Additional Information

If the policy is capable of reconstruction, the complainant must now fund the higher premiums himself for the remainder of the term of the shortened policy until maturity. In this example the higher premium could be £111.20. However the firm should provide the complainant with a reprojection letter based on the reconstructed policy such that the actual monthly payment required to achieve the target sum could be even higher, say £130. The reprojection letter should set out the range of options facing the complainant to deal with the projected shortfall, if any.

REC 6.3.2UKRP

Sections 292(3) and 292(4) state:

2Section 292(3)

The requirements are that-

(a)

investors are afforded protection equivalent to that which they would be afforded if the body concerned were required to comply with -4

3

4(i) recognition requirements, other than any such requirements which are expressed in regulations under section 286 not to apply for the purposes of this paragraph; and

4(ii) requirements contained in any directly applicable Community regulation made under the markets in financial instruments directive or markets in financial instruments regulation;

(b)

there are adequate procedures for dealing with a person who is unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the [ROIE]

3

(c)

the applicant is able and willing to co-operate with the[FCA]3by the sharing of information and in other ways; and

3

(d)

adequate arrangements exist for co-operation between the[FCA]3and those responsible for the supervision of the applicant in the country or territory in which the applicant's head office is situated.

3

Section 292(4)

In considering whether it is satisfied as to the requirements mentioned in subsections (3)(a) and (b), the[FCA]3is to have regard to-

3

(a)

the relevant law and practice of the country or territory in which the applicant's head office is situated;

(b)

the rules and practices of the applicant.
COLL 6.9.6GRP
(1) Regulation 15(9) of the OEIC Regulations, and sections 243(8) and 261D(10)6 of the Act require that an authorised fund's name must not be undesirable or misleading. This section contains guidance on some specific matters the FCA will consider in determining whether the name of an authorised fund is undesirable or misleading. It is in addition to the requirements of regulation 19 of the OEIC Regulations (Prohibition on certain names).6(2) The FCA will take into account whether
PERG 8.33.2GRP
Article 29 of the Regulated Activities Order states that certain arrangements are not covered by article 25. These are arrangements made by an unauthorised person ('A'). The arrangements must be made for or with a view to a transaction which is or is to be entered into by another person (the client) with or through an authorised person. It must also be the case that:(1) the transaction is or will be entered into on advice given to the client by an authorised person; or(2) it is
MIPRU 4.2BA.52RRP
The conditions for the application of a conversion factor of 50% are:(1) the liquidity facility documentation must clearly identify and limit the circumstances under which the facility may be drawn;(2) it must not be possible for the facility to be drawn so as to provide credit support by covering losses already incurred at the time of drawdown, for example by providing liquidity for exposures in default at the time of drawdown or by acquiring assets at more than fair value;(3)
EG 10.2.2RP
1The broad test the FCA will apply when it decides whether to seek an injunction is whether the application would be the most effective way to deal with the FCA's concerns. In deciding whether an application for an injunction is appropriate in a given case, the FCA will consider all relevant circumstances and may take into account a wide range of factors. The following list of factors is not exhaustive; not all the factors will be relevant in a particular case and there may be
PERG 7.4.8GRP
Looking at the first disqualifying purpose set out in the exclusion, all the matters relevant to whether the regulated activities of advising on investments, advising on regulated credit agreements for the acquisition of land,9advising on a home finance transaction or advising on conversion or transfer of pension benefits9 are being carried on must be taken into account (see PERG 8.24 (Advising on investments)). If the principal purpose of a publication or service is to give to
MCOB 2A.2.3RRP
An MCD mortgage lender may request the consumer, family member or close relation of the consumer to:(1) open or maintain a payment or a savings account, where the only purpose of the account is to accumulate capital to repay the credit, to service the credit, to pool resources to obtain the credit, or to provide additional security for the MCD mortgage lender in the event of default;(2) purchase or keep an investment product or a private pension product, where such product primarily
EG 19.17.3RP
1The FCA's approach to the use of its enforcement powers, and its statement of policy in relation to imposing and determining financial penalties under the RCB Regulations, are set out in RCB 4.2. The FCA's penalty policy includes having regard, where relevant, DEPP 6.5 to DEPP 6.5D and such other specific matters as the likely impact of the penalty on the interests of investors in the relevant bonds. The FCA's statement of procedure in relation to giving warning notices or decision
EG 6.2.6RP
3The FCA will take the following initial steps in considering whether it is appropriate to exercise this power: (1) It will consider whether it is appropriate to publish details of the warning notice in order to enable consumers, firms and market users to understand the nature of the FCA’s concerns. The FCA will consider the circumstances of each case but expects normally to consider it appropriate to publish these details. (2) Where the FCA considers it is appropriate to publish
COLL 6.2.7RRP
(1) The authorised fund manager may require, on agreement with the depositary, or may permit, on the request of the investor, direct issues and cancellations of units by an ICVC or by the depositary of an AUT or ACS7.7(2) If (1) applies:(a) the instrument constituting the fund8 must provide for this; and(b) the prospectus must provide details of the procedure to be followed which must be consistent with the rules in this section.8
LR 2.2.5GRP
The FCA may modify LR 2.2.4 R to allow partly paid securities to be listed if it is satisfied that their transferability is not restricted and investors have been provided with appropriate information to enable dealings in the securities to take place on an open and proper basis. [Note: articles 46 and 54 CARD]
EG 6.1.3RP
1Where it is investigating any matter, the FCA will, in exceptional circumstances, make a public announcement that it is doing so if it considers such an announcement is desirable to: (1) maintain public confidence in the financial system or the market; or (2) protect consumers or investors; or (3) prevent widespread malpractice; or (4) help the investigation itself, for example by bringing forward witnesses; or (5) maintain the smooth operation of the market. In deciding whether
DTR 6.3.9RRP
An issuer or person must not charge investors any specific cost for providing regulated information. [Note: article 21(1) of the TD]
SYSC 22.5.11GRP

Table: Examples of factors to take into account when deciding whether old misconduct is sufficiently serious to disclose

Factors to take into account

Comments

(A) Whether P has committed a serious breach of individual conduct requirements.

Individual conduct requirements has the same meaning as in Part Two of SYSC 22 Annex 1R (Template for regulatory references given by SMCR firms2 and disclosure requirements).

Factors to take into account in deciding whether the breach is serious include the following.

(1) The extent to which the conduct was deliberate or reckless.

(2) The extent to which the conduct was dishonest.

(3) Whether the breaches are frequent or whether they have continued over a long period of time. The fact that breaches were frequent or repeated may increase the likelihood that they should be disclosed since the breaches may show a pattern of non-compliance.

(4) The extent of loss, or risk of loss, caused to existing, past or potential investors, depositors, policyholders or other counterparties or customers.

(5) The reasons for the breach. For example, where the breach was caused by lack of experience which has been remedied by training or further experience, it is less likely that the breach will still be relevant.

(B) Whether the conduct caused B to breach requirements of the regulatory system or P was concerned in a contravention of such a requirement by B and, in each case, whether P’s conduct was itself serious.

(1) The factors in (A) are relevant to whether P’s conduct was serious.

(2) The seriousness of the breach by B is relevant. The factors in (A) are also relevant to this.

(3) A breach by B of certain requirements is always likely to be serious under (2). Breach of the threshold conditions is an example. However that does not mean that P’s involvement will automatically be serious.

(C) Whether P’s conduct involved dishonesty (whether or not also involving a criminal act).

Dishonesty is an important factor but it is not automatically decisive in every case. For instance, a small one-off case of dishonesty many years ago may not be sufficiently serious to require disclosure.

(D) Whether the conduct would have resulted in B’s dismissing P, had P still been working for B, based on B's disciplinary policies and the requirements of the law about unfair dismissal.

(E) Whether the conduct was such that, if B was considering P for a role today and became aware of the historical conduct, B would not employ P today notwithstanding the time that has passed.

Note 1: P refers to the employee about whom the reference is being written.

Note 2: B refers to the firm giving the reference.
COLL 7.1.3GRP
(1) This chapter helps to achieve the statutory objective of protecting investors by ensuring the authorised fund manager does not sell5 or redeemunits at a price that cannot be calculated accurately. For instance, due to unforeseen circumstances, it may be impossible to value, or to dispose of and obtain payment for, all or some of the scheme property of an authorised fund or sub-fund. COLL 7.2.-3R, COLL 7.2.-2R, COLL 7.2.-1R, and5COLL 7.2.1 R set5 out the circumstances in which
COLL 8.2.6RRP

This table belongs to COLL 8.2.5 R

1

Description of the authorised fund

Information detailing:

(1)

the name of the authorised fund;

(2)

that the authorised fund is a qualified investor scheme; and

(3)

in the case of an ICVC, whether the head office of the company is situated in England and Wales or Wales or Scotland or Northern Ireland.

3Property Authorised Investment Funds

1A

For a property authorised investment fund, a statement that:

(1)

it is a property authorised investment fund;

(2)

no body corporate may seek to obtain or intentionally maintain a holding of more that 10% of the net asset value of the fund; and

(3)

in the event that the authorised fund manager reasonably considers that a body corporate holds more than 10% of the net asset value of the fund, the authorised fund manager is entitled to delay any redemption or cancellation of units in accordance with 6A if the authorised fund manager reasonably considers such action to be:

(a)

necessary in order to enable an orderly reduction of the holding to below 10%; and

(b)

in the interests of the unitholders as a whole.

2

Constitution

The following statements:

(1)

the scheme property of the scheme is entrusted to a depositary for safekeeping (subject to any exception permitted by the rules);

(2)

if relevant, the duration of the scheme is limited and, if so, for how long;

(3)

charges and expenses of the scheme may be taken out of scheme property;

(4)

for an ICVC:

(a)

what the maximum and minimum sizes of the scheme's capital are; and

(b)

the unitholders are not liable for the debts of the company;5

6

5(4A)

for an ICVC which is an umbrella, a statement that the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella, or any other sub-fund, and shall not be available for any such purpose;6

6(4B)

for a co-ownership scheme which is an umbrella, the property subject to a sub-fund is beneficially owned by the participants in that sub-fund as tenants in common (or, in Scotland, is the common property of the participants in that sub-fund) and must not be used to discharge any liabilities of, or meet any claims against, any person other than the participants in that sub-fund;

6(4C)

for a limited partnership scheme, that the scheme prohibits pooling as is mentioned in section 235(3)(a) of the Act in relation to separate parts of the scheme property, with the effect that the scheme cannot be an umbrella;

(5)

for an AUT:

(a)

the trust deed:

(i)

is made under and governed by the law of England and Wales, or the law of Scotland or the law of Northern Ireland;

(ii)

is binding on each unitholder as if he had been a party to it and that he is bound by its provisions; and

(iii)

authorises and requires the trustee and the manager to do the things required or permitted of them by its terms;

(b)

subject to the provisions of the trust deed and all the rules made under section 247 of the Act (Trust scheme rules):

(i)

the scheme (other than sums held to the credit of the distribution account) is held by the trustee on trust for the unitholders according to the number of units held by each unitholder or, where relevant, according to the number of individual shares in the scheme property represented by the units held by each unitholder; and

(ii)

the sums standing to the credit of any distribution account are held by the trustee on trust to distribute or apply in accordance with COLL 8.5.15 R (Income);

(c)

a Unitholder is not liable to make any further payment after he has paid the price of his units and that no further liability can be imposed on him in respect of the units he holds; and

(d)

payments to the trustee by way of remuneration are authorised to be paid (in whole or in part) out of the scheme property; and6

6

(6)6

for an ACS:

(a)

the contractual scheme deed:

(i)

is made under and governed by the law of England and Wales, or the law of Scotland or the law of Northern Ireland;

(ii)

is binding on each unitholder as if he had been a party to it and that he is bound by its provisions;

(iii)

authorises and requires the depositary and the authorised contractual scheme manager to do the things required or permitted of them by its terms; and

(iv)

states that units may not be issued to a person other than a person7:

(A)

who 7is a:

(i)

professional ACS investor;

(ii)

large ACS investor; or

(iii)

person who already holds units in the scheme; and

(B)

to whom units in a qualified investor scheme may be promoted under COBS 4.12.4 R;7

7

(v)

states that the authorised contractual scheme manager of an ACS must redeemunits as soon as practicable after becoming aware that those units are vested in anyone (whether as a result of subscription or transfer of units) other than a person meeting the criteria in (iv)(A) and (B);

(vi)

states that for a co-ownership scheme:

(A)

the scheme property is beneficially owned by the participants as tenants in common (or, in Scotland, is the common property of the participants);

(B)

the arrangements constituting the scheme are intended to constitute a co-ownership scheme as defined in section 235A(2) of the Act; and

(C)

the operator and depositary are required to wind up the scheme if directed to do so by the FCA in exercise of its power under section 261X (Directions) or section 261Z (Winding up or merger of master UCITS) of the Act;

(vii)

states:

(A)

whether the transfer of units in the ACS scheme or, for a co-ownership scheme which is an umbrella (sub-funds of which pursue differing policies in relation to transfer of units), in each particular sub-fund, is either:

(i)

prohibited; or

(ii)

allowed;

(B)

where transfer of units is allowed by the scheme or, where appropriate the sub-fund, in accordance with (A)(ii), units may only be transferred in accordance with the conditions specified by FCArules, including that units may not be transferred to a person other than a person :

7

(i)

who 7is a:

(1)

professional ACS investor; or

(2)

large ACS investor; or

(3)

person who already holds units in the scheme; and

(ii)

to whom units in a qualified investor scheme may be promoted under COBS 4.12.4 R; and7

7

(viii)

states that for a limited partnership scheme, the scheme is not dissolved on any person ceasing to be a limited partner or nominated partner provided that there remains at least one limited partner;

(b)

subject to the provisions of the contractual scheme deed and all the rules made under section 261I of the Act (Contractual scheme rules) and for the time being in force:

(i)

the scheme property (other than sums standing to the credit of the distribution account) is held by, or to the order of, the depositary for and on behalf of the unitholders according to the number of units held by each unitholder or, where relevant, according to the number of individual shares in the scheme property represented by the units held by each unitholder; and

(ii)

the sums standing to the credit of any distribution account are held by the depositary to distribute or apply them in accordance with COLL 8.5.15 R(Income); and

(c)

a unitholder in a co-ownership scheme is not liable to make any further payment after he has paid the price of his units and that no further liability can be imposed on him in respect of the units he holds;

(d)

a unitholder in a limited partnership scheme is not liable for the debts or obligations of the limited partnership scheme beyond the amount of the scheme property which is available to the authorised contractual scheme manager to meet such debts or obligations, provided that the unitholder does not take part in the management of the partnership business;

(e)

the exercise of rights conferred on limited partners by FCA rules does not constitute taking part in the management of the partnership business;

(f)

the limited partners, other than the nominated partner, are to be the participants in the scheme; and

(g)

the operator of a co-ownership scheme is authorised to:

(i)

acquire, manage and dispose of the scheme property; and

(ii)

enter into contracts which are binding on unitholders for the purposes of, or in connection with, the acquisition, management or disposal of scheme property.

3

Investment objectives

A statement of the object of the scheme, in particular the types of investments and assets in which it and each sub-fund (where applicable) may invest and that the object of the scheme is to invest in property of that kind with the aim of spreading investment risk.

4

Units in the scheme

A statement of:

(1)

the classes of units which the scheme may issue, indicating, for a scheme which is an umbrella, which class or classes may be issued in respect of each sub-fund; and

(2)

the rights attaching to units of each class (including any provisions for the expression in two denominations of such rights).

5

Limitation on issue of and redemption of units

Details as to:

(1)

the provisions relating to any restrictions on the right to redeem units in any class; and

(2)

the circumstances in which the issue of the units of any particular class may be limited.

6

Income and distribution

Details of the person responsible for the calculation, transfer, allocation and distribution of income for any class of unit in issue during the accounting period.

3Redemption or cancellation of units on breach of law or rules

6A

A statement that where any holding of units by a unitholder is (or is reasonably considered by the authorised fund manager to be) an infringement of any law, governmental regulation or rule, those units must be redeemed or cancelled.

7

Base currency

A statement of the base currency of the scheme.

8

Meetings

Details of the procedures for the convening of meetings and the procedures relating to resolutions, voting and the voting rights for unitholders.

9

Powers and duties of the authorised fund manager and depositary

Where relevant, details of any function to be undertaken by the authorised fund manager and depositary which the rules in COLL require to be stated in the instrument constituting the fund.8

8

10

Termination and suspension

Details of:

(1)

the grounds under which the authorised fund manager may initiate a suspension of the scheme and any associated procedures; and

(2)

the methodology for determining the rights of unitholders to participate in the scheme property on winding up.

110A

Investment in overseas2 property through an intermediate holding vehicle1

If investment in an overseas2 immovable is to be made through an intermediate holding vehicle or a series of intermediate holding vehicles, a statement that the purpose of that intermediate holding vehicle or series of intermediate holding vehicles will be to enable the holding of overseas2 immovables by the scheme.1

11

Other relevant matters

Details of those matters which enable the scheme, authorised fund manager or depositary to obtain any privilege or power conferred by the rules in COLL which is not otherwise provided for in the instrument constituting the fund.8

8