Related provisions for CREDS 3A.5.9
21 - 40 of 144 items.
(1) 1Under section 313A of the Act, the FCA5 may for the purpose of protecting:5(a) the interests of investors; or (b) the orderly functioning of the financial markets; require a UK RIE to suspend or remove a financial instrument from trading.(2) If the FCA5 exercises this power, the UK RIE concerned may refer the matter to the Tribunal.5
6Under sections 313CA(2) and (3) of the Act, if the FCA imposes a requirement to suspend or remove a financial instrument from trading, the FCA must require any trading venue or systematic internaliser, falling under its jurisdiction as defined in section 313D of the Act, which trades the same instrument to suspend or remove the instrument if the suspension or removal was due to suspected market abuse; a take-over bid; or the non-disclosure of inside information about the issuer
6Under sections 313CB (2) and (3) of the Act, if the FCA receives notice that a person operating a trading venue has suspended or removed a financial instrument from trading on the trading venue because the instrument no longer complies with the venue’s rules, the FCA must require any other trading venue or systematic internaliser, falling under its jurisdiction as defined in section 313D of the Act, which trades the same instrument to suspend or remove the instrument if the suspension
1Each of the exemptions listed below applies only if the retail client is of the type described for the exemption and provided any additional conditions for the exemption are met.
Title |
Type of retail client |
Additional conditions |
(a) An individual who meets the requirements set out in COBS 4.12.6R; or (b) a person (or persons) legally empowered to make investment decisions on behalf of an individual who meets the earnings or net asset requirements in (a) above.5 |
The firm must consider that the mutual society share is likely to be suitable for that individual, based on a preliminary assessment of that individual’s profile and objectives (see COBS 4.12.5G(2)). |
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(a) An individual who meets the requirements set out in COBS 4.12.7R; or (b) an individual who meets the requirements for (a) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm’s client.5 |
Not applicable. |
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(a) An individual who meets the requirements set out in COBS 4.12.8R; or (b) an individual who meets the requirements for (a) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm’s client.5 |
Not applicable. |
(1) 1For the purposes of any assessments or certifications required by the exemptions in COBS 22.2.4R, any references in COBS 4.12 provisions to non-mainstream pooled investments must be read as though they are references to mutual society shares.(2) If the firm is relying on the exemptions for certified high net worth investors, certified sophisticated investors or self-certified sophisticated investors to comply with this section, the statement the investor must sign should
1A firm which carries on an activity which is subject to this section must comply with the following record-keeping requirements:(1) the person allocated the compliance oversight function in 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 making of the record required in (1) may be delegated to one or more employees of the firm who report to and are supervised by the person allocated the
Regulations 17(2)(d) (requirements on issuer relating to the asset pool) and 23(2) (requirements on owner relating to the asset pool) require the issuer of a regulated covered bond and the owner of the relevant asset pool to make arrangements so that the asset pool is of sufficient quality to give investors confidence that in the event of the failure of the issuer there will be a low risk of default in the timely payment by the owner of claims attaching to a regulated covered
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)
2The FCA will not admit shares of a company incorporated in a third country9 that are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless the FCA is satisfied that the absence of the listing is not due to the need to protect investors. [Note: Article 51 CARD]
1Although there is no restriction on an applicant taking a controlling stake in an investee company, to ensure a spread of investment risk an applicant should avoid:(1) cross-financing between the businesses forming part of its investment portfolio including, for example, through the provision of undertakings or security for borrowings by such businesses for the benefit of another; and(2) the operation of common treasury functions as between the applicant and investee compani
The information in the investment policy, including quantitative information concerning the exposures mentioned in LR 15.2.7 R, should be sufficiently precise and clear as to enable an investor to:(1) assess the investment opportunity;(2) identify how the objective of risk spreading is to be achieved; and(3) assess the significance of any proposed change of investment policy.
(1) 5Unless permitted by COBS 4.7.8 R, a firm must not communicate or approve a direct-offer financial promotion relating to a non-readily realisable security a P2P agreement or a P2P portfolio13 to or for communication to a retail client without the conditions in (2) and (3) being satisfied.(2) The first condition is that the retail client recipient of the direct-offer financial promotion is one of the following:(a) certified as a ‘high net worth investor’ in accordance with
5(1) 13A certified high net worth investor, a certified sophisticated investor or a self-certified sophisticated investor is an individual who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the terms set out in the applicable rule listed below and as modified by (2):13(a) certified high net worth investor: COBS 4.12.6 R;13(b) certified sophisticated investor: COBS 4.12.7 R;13(c) self-certified sophisticated
5A certified restricted investor is an individual who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the following terms, substituting “P2P agreements or P2P portfolios” for “non-readily realisable securities”, as appropriate13:
“RESTRICTED INVESTOR STATEMENT I make this statement so that I can receive promotional communications relating to non-readily realisable securities as a restricted investor. I declare that I qualify as a restricted investor because: |
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(a) |
in the twelve months preceding the date below, I have not invested more than 10% of my net assets in non-readily realisable securities; and |
(b) |
I undertake that in the twelve months following the date below, I will not invest more than 10% of my net assets in non-readily realisable securities. |
Net assets for these purposes do not include: |
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(a) |
the property which is my primary residence or any money raised through a loan secured on that property; |
(b) |
any rights of mine under a qualifying contract of insurance; or |
(c) |
any benefits (in the form of pensions or otherwise) which are payable on the termination of my service or on my death or retirement and to which I am (or my dependants are), or may be entitled; or7 |
7 (d) |
any withdrawals from my pension savings (except where the withdrawals are used directly for income in retirement). |
I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me to seek advice from an authorised person who specialises in advising on non-readily realisable securities. Signature: Date:” |
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The activity of arranging (bringing about) deals in investments is aimed at arrangements that would have the direct effect that a particular transaction is concluded (that is, arrangements that bring it about). The activity of making arrangements with a view to transactions in investments is concerned with arrangements of an ongoing nature whose purpose is to facilitate the entering into of transactions by other parties. This activity has a potentially broad scope and typically
8It is of note, however, that the regulated activity of making arrangements with a view to transactions in investments is not limited to arrangements that are participated in by investors. It is also not necessary that both the buyer and the seller under the transaction that is being arranged should participate in the arrangements. So, arrangements may come within the activity if they are participated in only by product companies with a view to their issuing investments. A person
8It is also the FCA's view that certain arrangements may come within the activity even though the parties may have already committed to the transaction using other arrangements. This would typically apply to a clearing house whose clearing and settlement facilities may be seen to be made with a view to the members of the clearing house, as participants in its arrangements, entering into transactions (usually through an investment exchange) which must be cleared through the clearing
The advice must also be given to someone who holds specified investments or is a prospective investor (including trustees, nominees or discretionary fund managers). This requirement excludes advice given to a person who receives it in another capacity. An example of this might be a tax professional to whom advice is given to inform the practice of his profession or advice given to an employer for the purposes of setting up a group personal pension scheme. Further guidance on the
6An AIFM must take all reasonable steps to identify conflicts of interest that arise, in the course of managing AIFs, between:(1) the AIFM, including its managers, employees or any person directly or indirectly linked to the AIFM by control, and an AIF managed by the AIFM or the investors in that AIF; or(2) an AIF or the investors in that AIF, and another AIF or the investors in that AIF; or(3) an AIF or the investors in that AIF, and another client of the AIFM; or(4) an AIF or
6An AIFM must take all reasonable steps to avoid conflicts of interest and, when they cannot be avoided, manage, monitor and (where applicable) disclose those conflicts of interest in order to prevent them from adversely affecting the interests of the AIFs and their investors, and to ensure that the AIFs it manages are fairly treated.[Note: article 12(1)d of AIFMD]
6An AIFM must:(1) maintain and operate effective organisational and administrative arrangements, with a view to taking all reasonable steps designed to identify, prevent, manage and monitor conflicts of interest in order to prevent them from adversely affecting the interests of the AIFs and their investors;(2) segregate, within its own operating environment, tasks and responsibilities which may be regarded as incompatible with each other or which may potentially generate systematic
6If the organisational arrangements made by the AIFM to identify, prevent, manage and monitor conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to investors' interests will be prevented, the AIFM must:(1) clearly disclose the general nature or sources of conflicts of interest to the investors before undertaking business on their behalf; and(2) develop appropriate policies and procedures.[Note: article 14(2) of AIFMD]
Activities which are purely profile raising and which do not identify and promote particular investments or investment services or services which constitute a controlled claims management activity8 may not amount to either an invitation or inducement of any kind. Examples of this include where listed companies sponsor sporting events or simply put their name or logo on the side of a bus or on an umbrella. This is usually done with a view, among other things, to putting their names
A person ('A') may enquire:(1) whether another person is certified as a high net worth individual or a sophisticated investor so that A may determine whether an exemption applies; or(2) whether a person has received material sent to him; or(3) how a person might propose to react to a take-over offer. or8(4) whether a person has been involved in an accident.8Enquiries of this or a similar kind will not amount to inducements to engage in investment activity or to engage in claims
The person who responds to the request for the material in the circumstances in PERG 8.4.29 G may make a financial promotion in the form of a covering letter or oral communication ('C'). This will not mean that the material accompanying C must itself be treated as an inducement. This will depend on the circumstances. The material itself would only become an inducement if it is turned into part of the financial promotion in C. For example, C may refer to the contents or part of
Things such as help-lines for persons who wish to make an investment will not usually involve invitations or inducements to engage in investment activity. This is where their purpose is merely to explain or offer guidance on how to invest or to accept an offer. In such cases, the investor will already have decided to invest and there will be no element of persuasion on the part of the person giving the explanation or guidance.
34In most cases where there is a loss, the endowment policy will be surrendered and put towards the cost of setting up a suitable repayment mortgage. Where this is the case, that part of the surrender value relating to the windfall augmentation should be paid as a cash lump sum to the investor or to the investor's order as part of the redress package. Only that part of the surrender value which does not relate to the windfall augmentation should be put towards the cost of setting
34Firms are entitled to mitigate losses by making use of the Traded Endowment Policy (TEP) market (see DISP App 1.3.8 G to DISP App 1.3.10 G). This allows firms to sell policies on the TEP market to meet the costs of redress, rather than using the surrender value. Where this method is adopted, firms should pay to the investor, as part of the redress package, a cash lump sum representing that proportion of the policy realised which would have related to the windfall augmentati
(1) When deciding whether to take enforcement
action under Part 7 of the RCB Regulations,
and what form that enforcement action should take, the FCA will consider all relevant factors,
including:(a) the relevant factors on decisions to take action set out in DEPP 6.2.1 G;(b) whether any contractual or other arrangements agreed between the
parties can be used effectively to address any perceived failure under the RCB Regulations; and(c) the interests of investors in the relevant
When considering whether to impose
a financial penalty, the amount of penalty, and whether to impose the penalty
on the issuer or the owner, the FCA will have regard, where relevant,1 to:(1) the statement on determining the appropriate level of a financial
penalty set out 1in DEPP 6.5 to DEPP 6.5D1;(2) the particular arrangements between the issuer and
the owner; (3) the likely impact of the penalty on the interests of investors
in a regulated covered bond;
and(4) the conduct
Under article 53(1)1 of the Regulated Activities Order, for anyone except a person in PERG 8.24.1AG,4advising on investments (except P2P agreements)1 covers advice which:(1) is given to a person in his capacity as an investor or potential investor, or in his capacity as agent for an investor or a potential investor; and(2) is advice on the merits of his (whether as principal or agent):42(a) 4buying, selling, subscribing for, exchanging, redeeming, holding4 or underwriting a particular
For advice to be covered by4PERG 8.24.1 G:4(1) it must relate to an investment which is a security, structured deposit2 or a relevant investment;(2) that investment must be a particular investment;(3) it must be given to persons in their capacity as investors or potential investors;(4) it must be advice (that is, not just information); and(5) it must relate to the merits of investors or potential investors (or their agents) buying, selling, subscribing for or underwriting (or
An operator of a recognised scheme3 must ensure the prospectus:(1) contains a statement that "Complaints about the operation of the scheme may be made to the FCA."; and(2) states whether or not investors in the scheme would be covered by the compensation scheme, and if so, it must state how they are covered and who they would need to contact for further information.
(1) 2The PRIIPs Regulation requires the manufacturer of a PRIIP to draw up a key information document in accordance with the PRIIPs Regulation before that PRIIP is made available to retail investors (as defined in the PRIIPs Regulation).(2) The requirements of the PRIIPs Regulation are directly applicable.(3) As a result, when a recognised scheme 3 is made available to retail clients in the United Kingdom the operator must draw up a key information document in accordance with
6The TD Major Holdings Regulation provides that:Recital 4The disclosure regime for financial instruments that have a similar economic effect to shares should be clear. Requirements to provide exhaustive details of the structure of corporate ownership should be proportionate to the need for adequate transparency in major holdings, the administrative burdens those requirements place on holders of voting rights and the flexibility in the composition of a basket of shares or an index.
6The TD Major Holdings Regulation provides that:Recital 6
Financial instruments which provide exclusively for a cash settlement should be accounted for on a delta–adjusted basis, with cash position having delta 1 in the case of financial instruments having a linear, symmetric pay-off profile in line with the underlying share and using a generally accepted standard pricing model in the case of financial instruments which do not have a linear, symmetric pay-off profile in line with
The risks arising from securitisation transactions in relation to which a firm is investor,3originator or sponsor, including reputational risks,3 must be evaluated and addressed through appropriate policies and procedures, to ensure in particular that the economic substance of the transaction is fully reflected in risk assessment and management decisions.[Note:BCD Annex V point 8]3
BIPRU 9 deals with:(1) requirements for investors,3originators and sponsors of securitisations of non-trading bookexposures;3(2) the calculation of risk weighted exposure amount for securitisation positions for the purposes of calculating either the credit risk capital component or the counterparty risk capital component; and3(3) the requirements that investors, originators and sponsors of securitisations in the trading book will have to meet (BIPRU 9.3.1AR, BIPRU 9.3.15R to BIPRU
Where, in relation to an offer in the United Kingdom, no prospectus is required under the Act, the issuer and offeror must ensure that material information they provide to qualified investors or special categories of investors, including information disclosed in the context of meetings relating to offers, is disclosed to all qualified investors or special categories of investors to whom the offer is exclusively addressed. [Note: article 15.5 PD]
Where there is a clean-up call option, the following conditions must be satisfied:(1) the clean-up call option is exercisable at the discretion of the originator;(2) the clean-up call option may only be exercised when 10% or less of the original value of the exposuressecuritised remains unamortised; and(3) the clean-up call option is not structured to avoid allocating losses to credit enhancement positions or other positions held by investors and is not otherwise structured to
The securitisation documentation must not contain clauses that:(1) other than in the case of early amortisation provisions, require positions in the securitisation to be improved by the originator including but not limited to altering the underlying credit exposures or increasing the yield payable to investors in response to a deterioration in the credit quality of the securitised exposures; or(2) increase the yield payable to holders of positions in the securitisation in response
(1) The authorised fund manager of a UCITS scheme that is a merging UCITS or a receiving UCITS in a proposed UCITS merger must ensure that a document containing appropriate and accurate information on the merger is provided to the unitholders of that scheme so as to enable them to:(a) make an informed judgment about the impact of the proposal on their investment;(b) exercise their rights under regulation 12 (Right of redemption) of the UCITS Regulations 2011; and(c) where applicable,
(1) The information document that must be provided to unitholders under COLL 7.7.10 R (Information to be given to unitholders) by the authorised fund manager of a UCITS scheme must be written in a concise manner and in non-technical language.(2) [deleted]6(3) The information to be provided to the unitholders of the merging UCITS must meet the needs of investors who have no prior knowledge of the features of the receiving UCITS or of the manner of its operation, drawing their attention
An issuer may wish to take account of the following factors when considering whether the information in question would be likely to be used by a reasonable investor as part of the basis of his investment decisions:1(1) 1the significance
of the information in question will vary widely from issuer to issuer, depending on a variety of factors
such as the issuer's size, recent
developments and the market sentiment about the issuer and
the sector in which it operates; and(2) the likelihood1
It is not possible to prescribe
how the reasonable investor test will apply in all possible situations. Any
assessment may need to1 take into consideration the anticipated impact of the information
in light of the totality of the issuer's activities,
the reliability of the source of the information and other market variables
likely to affect the relevant financial instrument in
the given circumstances. However, information which is likely to be considered
relevant to a reasonable
(1) 1In general terms, simply giving information without making any comment or value judgment1 on its relevance to decisions which an investor may make is not advice.(2) 1The provision of purely factual information does not become regulated advice merely because it feeds into the customer’s own decision-making process and is taken into account by them.(3) 1Regulated advice includes any communication with the customer which, in the particular context in which it is given, goes
In the FCA's opinion, however, such information may take on the nature of advice if the circumstances in which it is provided give it the force of a recommendation. For example:(1) a person may offer to provide information on directors’ dealings on the basis that, in his opinion, were directors to buy or sell investors would do well to follow suit;(2) a person may offer to tell a client when certain shares reach a certain value (which would be advice if the person providing the
(1) The instrument constituting the fund5 may provide for different classes of unit to be issued in an authorised fund and, for a scheme which is an umbrella, provide that classes of units may be issued for each sub-fund.5(2) In order to be satisfied that COLL 3.2.2 R (Relationship between the Instrument constituting the fund5and the rules) is complied with, the FCA will take into account the principles in (a) to (c) when considering proposals for unit classes:5(a) a unit class
(1) 1Before undertaking a class hedging transaction for a class of units, the authorised fund manager should:2(a) ensure that the relevant prospectus clearly:(i) states that such a transaction may be undertaken for the relevant class of units2; and(ii) explains the nature of the risks that such a transaction may pose to investors in all classes;(b) consult the depositary about the adequacy of the systems and controls it uses to ensure compliance with COLL 3.3.5A R (Hedging of