Related provisions for MCOB 9.4.52
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The appropriate regulator may ask the auditor to attend meetings and to supply it with information about the firm. In complying with SUP 3.8.2 R, the auditor should attend such meetings as the appropriate regulator requests and supply it with any information the appropriate regulator may reasonably request about the firm to enable the appropriate regulator to discharge its functions under the Act.
SUP 3.6.1 R requires a firm to cooperate with its auditor. SUP 3.6.3 G refers to the rights to information which an auditor is granted by the Act. SUP 3.6.4 G refers to similar rights granted by the Companies Act 1985 or where applicable, the Companies Act 2006,2 the Building Societies Act 1986 and the Friendly Societies Act 1992.
Within the legal constraints that apply, the appropriate regulator may pass on to an auditor any information which it considers relevant to his function. An auditor is bound by the confidentiality provisions set out in Part XXIII of the Act (Public record, disclosure of information and cooperation) in respect of confidential information he receives from the appropriate regulator. An auditor may not pass on such confidential information without lawful authority, for example if
(1) Auditors are subject to regulations made by the Treasury under sections 342(5) and 343(5) of the Act (Information given by auditor or actuary to a regulator). Section 343 and the regulations also apply to an auditor of an authorised person in his capacity as an auditor of a person who has close links with the authorised person.3(2) These regulations oblige auditors to report certain matters to the appropriate regulator. Sections 342(3) and 343(3) of the Act provide that an
If an auditor ceases to be, or is formally notified that he will cease to be, the auditor of a firm, he must notify the appropriate regulator without delay:(1) of any matter connected with his so ceasing which he thinks ought to be drawn to the appropriate regulator's attention; or (2) that there is no such matter.
(1) An authorised fund manager of a UCITS scheme 6 must assess, monitor and periodically review:(a) the adequacy and effectiveness of the risk management policy and of the arrangements, processes and techniques referred to in COLL 6.12.5 R;(b) the level of compliance by the authorised fund manager 6 with the risk management policy and with those arrangements, processes and techniques referred to in COLL 6.12.5 R; and(c) the adequacy and effectiveness of measures taken to address
Authorised fund managers6 are advised that when they applied for authorisation from the FCA under the Act, their ability to comply with the requirements in COLL 6.12.7 R would have been assessed by the FCA as an aspect of their fitness and properness in determining whether the threshold conditions set out in Schedule 6 (Threshold conditions) of the Act were met. Firms are further advised that their compliance with these requirements is subject to review by the FCA on an ongoing
(1) An authorised fund manager of a UCITS scheme 6 must adopt adequate and effective arrangements, processes and techniques in order to:(a) measure and manage at any time the risks to which that UCITS is or might be exposed; and(b) ensure compliance with limits concerning global exposure and counterparty risk, in accordance with COLL 5.2.11B R (Counterparty risk and issuer concentration) and COLL 5.3 (Derivative exposure).(2) For the purposes of (1), the authorised fund manager
(1) An authorised fund manager 6 must employ an appropriate liquidity risk management process in order to ensure that each UCITS it manages is able to comply at any time with COLL 6.2.16 R (Sale and redemption)6.(2) Where appropriate, the authorised fund manager 6 must conduct stress tests to enable it to assess the liquidity risk of the UCITS under exceptional circumstances.[Note: article 40(3) of the UCITS implementing Directive]
To enable the FCA to be satisfied that the issuer and the proposed owner will comply with requirements imposed on the issuer or owner, as the case may be, by or under the RCB Regulations, the applicant should use the application form to provide relevant details of the proposed covered bond or programme and demonstrate how each of the requirements will be complied with.
In relation to registration of an issuer of regulated covered bonds, the FCA will need to be satisfied that the issuer's compliance with the requirements of the regulatory system has been adequate and does not give rise to any material cause for concern over the issuer's ability to issue regulated covered bonds in compliance with the RCB Regulations.
To demonstrate that the issuer and the proposed owner will comply with Regulation 17, and Regulations 23 and 24 of the RCB Regulations (capability of the asset pool to cover claims), the issuer should set out what it considers to be the risks of the regulation not being complied with and show how those risks have been adequately mitigated by reference to the tests and provisions set out in the covered bond or programme documentation.
The risk factors which the FCA will take into account in assessing the issuer's and owner's compliance with Regulations 17(2)(d) (general requirements on issuer in relation to the asset pool) and 23(2) (requirements on owner relating to the asset pool) will include credit risk of the assets, concentration risk, market risk and counterparty risk.
The FCA expects the issuer to demonstrate, as part of showing that Regulations 17 (general requirements on issuer in relation to the asset pool) and 24 (requirements on owner relating to the asset pool) of the RCB Regulations will be complied with, that there are provisions in the covered bond or programme which enable the views and interests of investors in the regulated covered bond to be taken account of in an appropriate and timely way by a suitably qualified, adequately resourced,
(1) The FCA expects legal advice to deal adequately with at least the following matters in relation to the actual or proposed arrangements:(a) whether the transfer of the assets to the owner would be upheld in the event of liquidation or administration, or similar collective insolvency proceedings, of the issuer or the transferor (if different from the issuer);(b) the risk of the transfer of an asset to the owner being re-characterised as the creation of a security interest;(c)
(1) The FCA expects the report from the accountants to address at least the following matters:(a) that the level of over collateralisation meets the limits set out in the covered bond arrangements which are designed to ensure compliance with the requirement that the asset pool is capable of covering claims attaching to the bond in Regulation 17 (requirements on issuer in relation to the asset pool) of the RCB Regulations; and(b) that appropriate due diligence procedures (which
9In order to comply with LR 9.2.2ADR(1)13, where a listed company will have more than one controlling shareholder, the listed company will not be required to enter into a separate agreement with each controlling shareholder if: (1) the listed company reasonably considers, in light of its understanding of the relationship between the relevant controlling shareholders, that a controlling shareholder can procure the compliance of another controlling shareholder and that controlling
9In addition to the annual confirmation required to be included in a listed company's annual financial report under LR 9.8.4R (14), the FCA may request information from a listed company under LR 1.3.1 R (3) to confirm or verify that an undertaking in LR 6.5.4R or LR 9.2.2ADR(1)13 or a procurement obligation (as set out in LR 6.5.5R(2)(a)13 or LR 9.2.2BR (2)(a)) contained in an agreement entered into under LR 6.5.4R or LR 9.2.2ADR(1)13 is being or has been complied with.
A listed company that is not already required to comply with the obligations referred to under article 17 of the Market Abuse Regulation12 must comply with those obligations12 as if it were an issuer for the purposes of the disclosure requirements12 and transparency rules subject to article 22 of the Market Abuse Regulation12.1
A listed company must ensure that the FCA is provided with up to date contact details of at least one appropriate person nominated by it to act as the first point of contact with the FCA in relation to the company's compliance with the listing rules and the disclosure requirements12 and transparency rules.
9A listed company must notify the FCA without delay if: (1) it no longer complies with LR 9.2.2G R; (2) it becomes aware that an undertaking in LR 6.5.4R or LR 9.2.2ADR(1)13 has not been complied with by the controlling shareholder or any of its associates; or(3) it becomes aware that a procurement obligation (as set out in LR 6.5.5R(2)(a)13 or LR 9.2.2BR (2)(a)) contained in an agreement entered into under LR 6.5.4R or LR 9.2.2ADR(1)13 has not been complied with by a controlling
If the relevant credit union client is not receiving advice that constitutes a regulated activity on the deferred share, the firm must assess whether investment in the deferred share is appropriate for the relevant credit union client, complying with the requirements in COBS 10 as if the firm were providing non-advised investment services in the course of MiFID or equivalent third country business.
(1) Where a firm applies any exemption set out in COBS 22.2.4R under CREDS 3A.5.1R(3)2, any reference in COBS 22.2.4R to mutual society share must be read as though it includes a deferred share or credit union subordinated debt, as applicable.(2) For the purposes of any assessments or certifications required by the exemptions in COBS 22.2.4R, as applied for the purposes of this section under CREDS 3A.5.1R(3)2, any reference in COBS 4.12 provisions to non-mainstream pooled investments
A firm which carries on an activity which is subject to this section must comply with the following record-keeping and disclosure requirements:(1) the firm must make a record at or near the time of the activity certifying it complies with the requirements set out in this section;(2) the record in (1) must include information and evidence demonstrating compliance with each of the requirements in this section, as applicable;(3) if the requirements of this section did not apply because
A primary information provider must ensure that if circumstances arise which prevent it from disseminating and continuously receiving regulated information, it has adequate arrangements in place to ensure that it can continue to satisfy its obligations as a primary information provider with minimal disruption.
In considering whether a primary information provider satisfies the requirements of DTR 8.4.31 R, the FCA will consider, among other things, whether the primary information provider has in place appropriate measures to identify new and emerging risks which would be likely to prevent its compliance with DTR 8.4.11 R, DTR 8.4.19 R or DTR 8.4.20 R.
335(1) 5If an auditor expects that it will fail to comply with SUP 3.10.7 R, it must no later than the end of the four month period in question:(a) notify the FCA that it expects that it will be unable to deliver a client assets report by the end of that period; and(b) ensure that the notification in (a) is accompanied by a full account of the reasons for its expected failure to comply with SUP 3.10.7 R.(2) If an auditor fails to comply with SUP 3.10.7 R, it must promptly:(a)
1The rights and duties of auditors are set out in SUP 3.8 (Rights and duties of all auditors) and SUP 3.10 (Duties of auditors: notification and report on client assets). SUP 3.8.10 G also refers to the auditor's statutory duty to report certain matters to the FCA imposed by regulations made by the Treasury under sections 342(5) and 343(5) of the Act (information given by auditor or actuary to a regulator). An auditor should bear these rights and duties in mind when carrying out
5An auditor must:(1) deliver to a firm a draft of its client assets report such that the firm has an adequate period of time to consider the auditor’s findings and to provide the auditor with comments of the kind to which SUP 3.11.1 G refers; and(2) unless it is the auditor of a firm falling within category (10) of SUP 3.1.2 R, deliver to the firm a copy of the final report at the same time as it delivers that report to the FCA in accordance with SUP 3.10.7 R.
(1) The authorised fund manager must manage the scheme in accordance with:(a) the instrument constituting the fund;1111(b) the 13applicable rules13;(c) the most recently published prospectus; 16(d) for an ICVC, the OEIC Regulations; and16(e) where applicable, the Money Market Funds Regulation.16(2) The authorised fund manager must take such steps as necessary to ensure compliance with the rules13that impose obligations upon the ICVC.(3) The authorised fund manager must:(a) make
(1) The authorised fund manager must make and retain for six years such records as enable:(a) the scheme and the authorised fund manager to comply with the rules in this sourcebook and the OEIC Regulations; and(b) it to demonstrate at any time that such compliance has been achieved.(2) The authorised fund manager must make and retain for six years a daily record of the units in the scheme held, acquired or disposed of by the authorised fund manager, including the classes of such
(1) The depositary of an authorised fund is responsible for the safekeeping of all of the scheme property (other than tangible movable property) entrusted to it and must:(a) take all steps and complete all documents needed to ensure completion of transactions properly entered into for the account of the scheme;(b) ensure that scheme property in registered form is, as soon as practicable, registered in the name of the depositary, its nominee, or (in the case of a non-UCITS retail
(1) The authorised fundmanager must avoid the scheme property being used or invested contrary to COLL 5, or any provision in the instrument constituting the fund11 or the prospectus as referred to in COLL 5.2.4 R (Investment powers:general), 16COLL 5.6.4 R (Investment powers: general) and, where the scheme is a regulated money market fund, the Money Market Funds Regulation16, except to the extent permitted by (3)(b).112(2) The authorised fund manager must, immediately upon becoming
(1) Directors of an ICVC, authorised fund managers and depositaries should also have regard to SYSC 8 (Outsourcing).66SYSC 8.1.6 R4 states that a firm remains fully responsible for discharging 6all of its obligations under the regulatory system6 if it outsources crucial or important operational functions4 or any relevant services and activities.6646644(2) SUP 15.8.6 R (Delegation by UCITS management companies) requires the 8authorised fund manager of a UCITS scheme to inform the
Before a firm appoints a person as an appointed representative (other than an introducer appointed representative) and on a continuing basis, it must establish on reasonable grounds that:11(1) the appointment does not prevent the firm from satisfying and continuing to satisfy the threshold conditions;(2) the person:(a) is solvent;(b) is otherwise 1suitable to act for the firm in that capacity;and1(c) has no close links which would be likely to prevent the effective supervision
(1) A firm must ensure that:13(a)
a tied agent that is an appointed representative;13(b) or
a MiFID optional exemption appointed representative; or13(c)
a structured deposit appointed representative,13
is of sufficiently good repute and that it possesses appropriate general, commercial and professional knowledge and competence so as to be able to communicate accurately all relevant information regarding the proposed service to the client or potential client. This does not
1If a firm proposes to appoint an appointed representative, but not to prohibit its appointment by any other principals (see SUP 12.5.2 G (3)), the firm should, in particular:(1) require, in the contract, that the appointed representative notifies the firm about other principals (see SUP 12.5.5 R (3)) and (2) unless the appointed representative is an introducer appointed representative:(a) take reasonable steps to check whether the appointed representative is already appointed
1Before a firm appoints a person as an appointed representative to carry on insurance distribution activity15, it must in relation to insurance distribution activity15 ensure that the person will comply on appointment, and will continue to comply with, the provisions of 20SYSC 28.3 (Good repute)15 as if the appointed representative were a firm.[Note: article 10(3) of the IDD]15333
10Before a firm appoints a person as an appointed representative to carry on an MCD credit intermediation activity, it must ensure that the person has, and will maintain on a continuing basis after appointment, professional indemnity insurance in accordance with the rules applicable to MCD credit intermediaries. A firm will satisfy this requirement if:(1) the appointed representative has professional indemnity insurance which satisfies the rules in MIPRU 3.2 applicable to the
(1) The authorised fund manager must manage the scheme in accordance with:(a) the instrument constituting the fund;1212(b) the16 applicable rules13; (c) the most recently published prospectus; 16(d) for an ICVC, the OEIC Regulations; and16(e) where applicable, the Money Market Funds Regulation.16(2) The authorised fund manager must carry out such functions as are necessary to ensure compliance with the rules13that impose obligations on the authorised fund manager or ICVC, as appropriate.(3)
(1) The depositary is responsible for the safekeeping of all the scheme property.(2) The depositary must:(a) take all steps to ensure that transactions properly entered into for the account of the scheme are completed;(b) take all steps to ensure that instructions properly given by the authorised fund manager in respect of the exercise of rights related to scheme property are carried out;(c) ensure that any scheme property in registered form is as soon as reasonably practicable
Directors of an ICVC, authorised fund managers and depositaries should also have regard to 6SYSC 85 (Outsourcing).6SYSC 8.1.6 R5states that a firm remains fully responsible for discharging all of its obligations under the regulatory system if it outsources crucial or important operational functions or any relevant services and activities. 5555
(1) The authorised fund manager must:(a) ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders of that class; and(b) not do, or omit anything that would, or might confer on itself a benefit or advantage at the expense of a unitholder or potential unitholder.(2) For the purposes of (1) the authorised fund manager may take into account sales and redemptions after the valuation point, provided it has
10The FCA recognises that some transfers of units arise by operation of law (such as upon death or bankruptcy of the unitholder, or otherwise) and are accordingly outside the control of the authorised contractual scheme manager. The authorised contractual scheme manager is expected to comply with its responsibilities under COLL 8.5.10E R (Redemption of ACS units in a QIS by an authorised contractual scheme manager) in those cases by redeeming those units.
The effect of SYSC 12.1.13 R (2)(dA) and SYSC 12.1.15 R is that the firm is required to ensure that the risk management processes and internal control mechanisms at the level of any consolidation group or non-UK sub-group3 of which a firm is a member comply with the obligations set out in this section on a consolidated (or sub-consolidated) basis.
(1) A firm's risk management and compliance functions should have appropriate input into setting the remuneration policy for other business areas. The procedures for setting remuneration should allow risk and compliance functions to have significant input into the setting of individual remuneration awards where those functions have concerns about the behaviour of the individuals concerned or the riskiness of the business undertaken.(2) Contravention of (1) may be relied on as
Non-financial performance metrics should form a significant part of the performance assessment process and should include adherence to effective risk management and compliance with the regulatory system and with relevant overseas regulatory requirements. Poor performance as assessed by non-financial metrics, such as poor risk management or other behaviours contrary to firm values, can pose significant risks for a firm and should, as appropriate, override metrics of financial performance.
1When considering whether to cancel a sponsor's approval on its own initiative, the FCA will take into account all relevant factors, including, but not limited to, the following: (1) the competence of the sponsor;
(2) the adequacy of the sponsor's systems and controls;
(3) the sponsor's history of compliance with the listing rules;
(4) the nature, seriousness and duration of the suspected failure of the sponsor to meet (at
1When considering whether to cancel a primary information provider’s approval on its own initiative, the FCA will take into account all relevant factors, including, but not limited to, the following: (1) the competence of the primary information provider; (2) the adequacy of the primary information provider’s systems and controls;
(3) the primary information provider’s history of compliance with DTR 8; (4) the nature, seriousness and duration of the suspected
A person may need to ask the FCA for individual guidance on how the rules and general guidance in the Handbook, the Act or other regulatory requirements apply in their particular circumstances. This chapter describes how a person may do this. Section 139A of the Act gives the FCA the power to give guidance consisting of such information and advice as it considers appropriate.
(1) In relying on MCOB 2.5.2 R, a firm should take reasonable steps to establish that the other person providing the information is: (a) not connected with the firm; and(b) competent to provide the information.(2) Compliance with (1) may be relied on as tending to establish compliance with MCOB 2.5.2 R.(3) Contravention of (1) may be relied on as tending to establish contravention of MCOB 2.5.2 R.
(1) Any information which a rule in MCOB requires to be sent to a customer may be sent to another person on the instruction of the customer, so long as the recipient is not connected with the firm. (2) There is no need for a firm to send information to a customer where it has taken reasonable steps to establish that this has been or will be supplied by another person.
Under section 296 of the Act (FCA's4 power to give directions)5 and (for RAPs) under regulation 3 of the RAP regulations,6 the FCA4 has the power to give directions to a recognised body to take specified steps 1in order to secure its compliance with the recognised body requirements. In the case of a UK RIE (including one which operates a RAP)65those steps may include granting the FCA4 access to the UK RIE's premises for the purposes of inspecting those premises or any documents
The FCA4 is likely to exercise its power under section 296 of the Act or regulation 3 of the RAP regulations65if it considers that:43(1) there has been, or was likely to be, a failure to satisfy one or more of the recognised body requirements31which has serious consequences; (2) compliance with the direction would ensure that 1one or more of the recognised body requirements is3 satisfied; and(3) the recognised body is capable of complying with the direction.
1The FCA wishes to encourage firms to exercise judgement about, and take responsibility for, what the Principles mean for them in terms of how they conduct their business. But we also recognise the importance of an environment in which firms understand what is expected of them. So we have indicated that firms must be able reasonably to predict, at the time of the action concerned, whether the conduct would breach the Principles. This has sometimes been described as the “reasonable
1To determine whether there has been a failure to comply with a Principle, the standards we will apply are those required by the Principles at the time the conduct took place. The FCA will not apply later, higher standards to behaviour when deciding whether to take enforcement action for a breach of the Principles. Importantly, however, where conduct falls below expected standards the FCA considers that it is legitimate for consequences to follow, even if the conduct is widespread
A depositary appointed under COLL 6.6A.8R(3) must: (1) ensure that it has the infrastructure necessary to keep in custody UCITS custodial assets that can be registered in a financial instruments account opened in the depositary’s books; (2) establish adequate policies and procedures sufficient to ensure the compliance of the depositary, including its managers and employees, with its obligations under the regulatory system; (3) have: (a) sound administrative and accounting procedures
A depositary may delegate the functions in COLL 6.6B.18R and COLL 6.6B.19R to one or more third parties if:(1) the tasks are not delegated with the intention of avoiding the requirements of the UCITS Directive, as implemented in this chapter4;(2) the depositary can demonstrate that there is an objective reason for the delegation;(3) the depositary:(a) has exercised all due skill, care and diligence in the selection and appointment of any third party to whom it intends to delegate
A depositary must ensure that a third party to whom the depositary has delegated functions under COLL 6.6B.25R does not, in turn, sub-delegate those functions unless the delegate complies with the same requirements that apply to the depositary, with any necessary changes, in relation to the delegation by the depositary of its functions in COLL 6.6B.25R and COLL 6.6B.26R. [Note: article 22a(3) third paragraph of the UCITS Directive]
Where the authorised fund manager of a feeder UCITS has submitted the documents required under COLL 11.6.3R (1), COLL 11.6.3R (2), COLL 11.6.5R (1), COLL 11.6.5R (2) or COLL 11.6.5R (3) and has received written notice of any required approvals from the FCA, it must:(1) inform the master UCITS of those approvals; and(2) in the case of the required approvals received in respect of documents submitted under COLL 11.6.3 R (1) and COLL 11.6.5 R (2), take the necessary measures to comply
Where the authorised fund manager of a feeder UCITS gives notice to the FCA under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations that it intends to wind up the scheme, it must inform:(1) the unitholders of the feeder UCITS; and(2) where notice is given under COLL 11.6.5R (4) (Application for approval by a feeder UCITS where a master UCITS merges or divides), the authorised fund manager of the master UCITS;of its intention without undue delay.[Note:
A firm must establish and implement effective arrangements for complying with the obligation to take all reasonable steps to obtain the best possible result for its clients. In particular, the firm must establish and implement an order execution policy to allow it to obtain, for its client orders, the best possible result in accordance with that obligation.42
A firm must, when providing the service of portfolio management4,2 comply with the obligation to act in accordance with the best interests of its clients when placing orders with other entities for execution that result from decisions by the firm to deal in financial instruments on behalf of its client.42
In order to comply with the obligation to act in accordance with the best interests of its clients when it places an order with, or transmits an order to, another entity for execution, a firm must:42(1) take all reasonable steps to obtain the best possible result for its clients taking into account the execution factors. The relative importance of these factors must be determined by reference to the execution criteria and, for retail clients,2 to the requirement to determine the