Related provisions for SYSC 19D.1.1A
141 - 160 of 1033 items.
1When the FCA has concerns about the fitness and propriety of a member to carry out exempt regulated activities, it will consider all the relevant circumstances of the case, including whether those concerns arise from the fitness and propriety of specific individuals engaged to perform the exempt regulated activities carried out by the member or whether its concerns arise from wider concerns about the member itself.
1The FCA will also take into account the potentially more serious consequences that a disapplication of an exemption will have for the member concerned compared with the consequences of a prohibition of a particular individual engaged in exempt regulated activities. However, the FCA may consider it appropriate in some cases to disapply an exemption where it decides that the member concerned is not fit and proper to carry out exempt regulated activities in accordance with section
1As an alternative to making an order to disapply an exemption, the FCA may consider issuing a private warning. A private warning may be appropriate where the FCA has concerns in relation to a member's fitness and propriety but feels that its concerns in relation to the conduct of exempt regulated activities can be more appropriately addressed by a private warning than by a disapplication of the member's exemption.
1When it decides whether to exercise its power to disapply an exemption from the general prohibition in relation to a member, the FCA will take into account all relevant circumstances which may include, but are not limited to, the following factors: (1) Disciplinary or other action taken by the relevant designated professional body, where that action relates to the fitness and propriety of the member concerned: where the FCA considers that its concerns in relation to the fitness
1Where the FCA is considering making a disapplication order against a member as a result of a breach of rules made by the FCA under section 323(1) of the Act, it will take into account any proposed application by the member concerned for authorisation under the Act. The FCA may refrain from making a disapplication order pending its consideration of the application for authorisation.
The FCA3 will usually consider revoking a recognition order if:3(1) the recognised body is failing or has failed to satisfy 2one or more of the recognised body requirements1and that failure has or will have serious consequences; or2(2) it would not be possible for the recognised body to comply with a direction under section 296 of the Act (FCA's3 power to give directions) or (for RAPs) regulation 3 of the RAP regulations5; or342(3) for some other reason, it would not be appropriate
The FCA3 would be likely to consider the conditions in REC 4.7.3 G (2) or REC 4.7.3 G (3) to be triggered1in the following circumstances:31(1) the recognised body appears not to have the resources or management to be able to organise its affairs so as to satisfy one or more of the recognised body requirements; or212(2) the recognised body does not appear to be willing to satisfy one or more of the recognised body requirements; or212(3) the recognised body is failing or has failed
In addition to the relevant 1factors set out in REC 4.7.4 G, the FCA3 will usually consider that it would not be able to secure an ROIE's3 compliance with the recognition requirements or other obligations in or under the Act by means of a direction under section 296 of the Act, if it appears to the FCA3 that the ROIE3 is prevented by any change in the legal framework or supervisory arrangements to which it is subject in its home territory from complying with the recognition requirements
(1) A firm carrying out contracts of insurance, or a managing agent managing insurance business, including in either case business accepted under reinsurance to close, which includes United Kingdom commercial lines employers' liability insurance, must:(a) produce an employers’ liability register complying with the requirements in (2) and ICOBS 8 Annex 1;(b) [deleted]5(c) [deleted]5(1A) [deleted]5(2) For the purposes of (1)(a) the employers’ liability register is required to:(a)
(1) For the purposes of ICOBS 8.4.4R (2)(c) and ICOBS 8.4.4R (2)(d), a firm may put in place appropriate screening on its employers’ liability register to monitor:(a) requests for information and searches to ensure that they are being made for a legitimate purpose by persons falling into one of the categories in ICOBS 8.4.4R (2)(c); and(b) requests from tracing offices to ensure that the information is necessary, and will only be used by the tracing office, for the purposes of
A firm must:(1) notify the FCA, within one month of falling within ICOBS 8.4.1R (2), as to whether or not it, or, if relevant, a member of the syndicates it manages, carries on business falling within ICOBS 8.4.4R (1) and, if it does, include in that notification: (a) details of the internet address of the firm or tracing office at which the employers’ liability register is made available;(b) the name of a contact person at the firm and their telephone number or postal address,
2A firm with potential liability under an excess policy and which satisfies the requirements in ICOBS 8 Annex 1 1.1B R must notify the FCA before the date upon which it first seeks to rely upon that rule and ensure that the requirements of ICOBS 8.4.6R (2) are satisfied in respect of this notification.
(1) A firm must make available:(a) the information on the employers’ liability register either:(i) on the firm's website at the address notified to the FCA in ICOBS 8.4.6R (1); or(ii) by arranging for a tracing office which meets the conditions in ICOBS 8.4.9 R to make the information available on the tracing office’s website; and(b) the latest director's certificate prepared in accordance with SUP 16.23A.5R(1)5 and the latest report prepared by an auditor for the purposes of
(1) ICOBS 8.4.4R (2)(b) and ICOBS 8.4.9R (1) require a firm, or a tracing office used by a firm, to have an effective search function in relation to the employers’ liability register database. In the FCA's view an effective search function is one which finds all matches in the register to any specified whole word.(2) For the purposes of ICOBS 8.4.9R (5) the term ‘without delay’ should have the same meaning as in ICOBS 8.4.5G (2). (3) In order to assist firms with their obligations
(1) A firm must notify the FCA:(a) of any information provided to the FCA under ICOBS 8.4.6 R or ICOBS 8.4.6A R2 which ceases to be true or accurate; and(b) of the new position, in accordance with the notification requirements in ICOBS 8.4.6 R;within one month of the change.(2) A firm producing an employers’ liability register must:(a) update the register with any new or more accurate information falling within ICOBS 8 Annex 1:(i) by virtue of the entry into or renewal of, or
(1) 3Where a firm has established that a historical policy does exist, the response should confirm what cover was provided and set out any available information that is relevant to the request received.(2) Where there is evidence to suggest that a historical policy does exist, but the firm is unable to confirm what cover was provided, the response should set out any information relevant to the request and describe the next steps (if any) the firm will take to continue the search.
(1) 1The FCA's3 approach to determining penalties described in DEPP 6.5 to DEPP 6.5C is intended to ensure that financial penalties are proportionate to the breach. The FCA3 recognises that penalties may affect persons differently, and that the FCA3 should consider whether a reduction in the proposed penalty is appropriate if the penalty would cause the subject of enforcement action serious financial hardship.333(2) Where an individual or firm claims that payment of the penalty
(1) In assessing whether a penalty would cause an individual serious financial hardship, the FCA3 will consider the individual’s ability to pay the penalty over a reasonable period (normally no greater than three years). The FCA's3 starting point is that an individual will suffer serious financial hardship only if during that period his net annual income will fall below £14,000 and his capital will fall below £16,000 as a result of payment of the penalty. Unless the FCA3 believes
In cases against individuals, including market abuse cases, the FCA3 may make a prohibition order under section 56 of the Act or withdraw an individual’s approval under section 63 of the Act, as well as impose a financial penalty. Such action by the FCA3 reflects the FCA's3 assessment of the individual’s fitness to perform regulated activity or suitability for a particular role, and does not affect the FCA's3 assessment of the appropriate financial penalty in relation to a breach.
(1) The FCA3 will consider reducing the amount of a penalty if a firm will suffer serious financial hardship as a result of having to pay the entire penalty. In deciding whether it is appropriate to reduce the penalty, the FCA3 will take into consideration the firm’s financial circumstances, including whether the penalty would render the firm insolvent or threaten the firm’s solvency. The FCA3 will also take into account its statutory objectives3, for example in situations where
2The FCA3 may withdraw a firm’s authorisation under section 33 of the Act, as well as impose a financial penalty. Such action by the FCA3 does not affect the FCA's3 assessment of the appropriate financial penalty in relation to a breach. However, the fact that the FCA3 has withdrawn a firm’s authorisation, as a result of which the firm may have less earning potential, may be relevant in assessing whether the penalty will cause the firm serious financial hardship.3333
Where the FCA3 considers that, following commencement of an FCA3 investigation, an individual or firm has reduced their solvency in order to reduce the amount of any disgorgement or financial penalty payable, for example by transferring assets to third parties, the FCA3 will normally take account of those assets when determining whether the individual or firm would suffer serious financial hardship as a result of the disgorgement and financial penalty.333
1The FCA has investigation and sanctioning powers in relation to both criminal and civil breaches of the Money Laundering Regulations. The Money Laundering Regulations impose requirements including, amongst other things, obligations to apply customer due diligence measures and conduct ongoing monitoring of business relationships on designated types of business.
1The FCA is responsible for monitoring and enforcing compliance with the Money Laundering Regulations2 not only by authorised firms who are within the Money Laundering Regulations’ scope, but also by what the Regulations describe as “Annex I financial institutions”, and cryptoasset exchange providers and custodian wallet providers4. These are businesses which are not otherwise authorised by us but which carry out certain of the activities which were3 listed in Annex I of the Banking
2The FCA is also responsible for monitoring and enforcing compliance with the Funds Transfer Regulation by payment service providers specified under regulation 62(1) of the Money Laundering Regulations.[Note: Regulation (EU) No 2015/847 on information accompanying transfer of funds as amended by the Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018 (SI 2019/253)]3
1The Money Laundering Regulations add to the range of options available to the FCA for dealing with anti-money laundering and anti-terrorist financing 2 failures. These options include2:• to prosecute a relevant person, including but not limited to an 2authorised firm or3an 2Annex I financial institution3or an auction platform5, a cryptoasset exchange provider or a custodian wallet provider,4as well as any responsible officer2;2• to fine or censure a relevant person, including
1This means that there will be situations in which the FCA has powers to investigate and take action under both the Act and the Money Laundering Regulations. The FCA will consider all the circumstances of the case when deciding what action to take and, if it is appropriate to notify the subject about the investigation, will in doing so inform them about the basis upon which the investigation is being conducted and what powers it is using. The FCA will adopt the approach outlined
1The Money Laundering Regulations also provide investigation powers that the FCA can use when investigating whether breaches2 have taken place. These powers include: • the power to require information from, and attendance of, relevant persons, payment service providers2and connected persons (regulation 662); and• powers of entry and inspection without or under warrant (regulations 69 and 702).The use of these powers will be limited to those cases in which the FCA is exercising
1The FCA will adopt a risk-based approach to its enforcement under2 the Money Laundering Regulations. Failures in anti-money laundering or counter-terrorist financing2 controls will not automatically result in disciplinary sanctions, although enforcement action is more likely where a firm has not taken adequate steps to identify its2 risks or put in place appropriate controls to mitigate those risks, and failed to take steps to ensure that controls are being effectively implemented.
1However, the Money Laundering Regulations say little about the way in which investigation and sanctioning powers should be used, so the FCA has decided to adopt enforcement and decision making procedures which are broadly akin to those under the Act. Key features of the FCA's approach are described in EG 19.152.
(1) 8The resources of A must be appropriate in relation to the regulated activities that A carries on or seeks to carry on.(2) The matters which are relevant in determining whether A has appropriate resources include-(a) the nature and scale of the business carried on, or to be carried on, by A;(b) the risks to the continuity of the services provided by, or to be provided by, A; and(c) A’s membership of a group and any effect which that membership may have.(3) Except in a case
(1) The non-financial resources of B must be appropriate in relation to the regulated activities that B carries on or seeks to carry on, having regard to the operational objectives of the FCA.(2) The matters which are relevant in determining whether the condition in sub-paragraph (1) is met include-(a) the nature and scale of the business carried on, or to be carried on, by B;(b) the risks to the continuity of the services provided by, or to be provided by, B;(c) B’s a member
8Paragraph 3C of Schedule 6 to the Act sets out the appropriate non-financial resources threshold condition which is relevant to the discharge by the FCA of its functions under the Act in relation to firms carrying on, or seeking to carry on, regulated activities which include a PRA-regulated activity.
8The guidance in COND 2.4 should be read as applying to both paragraph 2D of Schedule 6 of the Act and, as far as relevant to the discharge by the FCA of its functions in respect of firms carrying on, or seeking to carry on, a PRA-regulated activity under the Act, paragraph 3C of Schedule 6 of the Act.
(1) [deleted]88(2) In this context, the FCA will interpret the term 'appropriate88' as meaning sufficient in terms of quantity, quality and availability, and 'resources' as including all financial resources (though only in the case of firms not carrying on, or seeking to carry on, a PRA-regulated activity)8, non-financial resources and means of managing its resources; for example, capital, provisions against liabilities, holdings of or access to cash and other liquid assets, human
(1) [deleted]88(2) Although8 it is the firm that is being assessed, the FCA8 may take into consideration the impact of other members of the firm's group on the adequacy of its resources8, where relevant to the discharge of the FCA's functions8. For example, in relation to a firm other than a firm carrying on, or seeking to carry on, a PRA-regulated activity, the FCA8 may assess the consolidated solvency of the group. The FCA's8 approach to the consolidated supervision of such
(1) [deleted]88(2) Relevant matters to which the FCA may have regard when assessing whether a firm will satisfy, and continue to satisfy, this threshold condition8may include but are not limited to:(a) (in relation to a firm other than a firm carrying on, or seeking to carry on, a PRA-regulated activity),8 whether there are any indications that the firm may have difficulties if the application is granted, at the time of the grant or in the future, in complying with any of the
There is a general concern that the practice of companies issuing statements and giving briefings may involve a financial promotion. These arise sometimes as a result of requirements imposed by a listing authority or an exchange or market, PERG 8.4.14 G offers guidance on when such statements or briefings may amount to or involve an inducement to engage in investment activity. It indicates that whilst statements of fact alone will not be inducements, there may be circumstances
PERG 8.21.4 G to PERG 8.21.21 G set out the FCA's views on the potential relevance of certain exemptions to company statements and briefings. The exemptions are referred to in the same order as the Financial Promotion Order. In the FCA's view, these exemptions (whether alone or, where applicable, in combination) should enable most statements and briefings which involve financial promotions to be made by the company concerned without the need for approval. In particular, the FCA
Article 59 is capable of applying to financial promotions in company statements and briefings where they are accompanied by:(1) the whole or any part of the annual accounts of the company (provided it is not an open-ended investment company); or(2) any report prepared and approved by the directors of such a company under sections 414A and 414D of the Companies Act 2006 (strategic reports) or sections 415 and 419 of that Act (directors’ reports).644In this respect, the FCA considers
The reference to financial promotions which are permitted to be communicated relates, in the FCA's opinion, to something which is expressly permitted rather than simply not expressly prohibited. Article 67 itself does not specify any particular medium for communicating required or permitted material. So, it will be enough for the financial promotion to be part of a document which is itself required or permitted to be communicated (such as reports or financial statements). Market
Article 67 refers to an investment which is permitted to be traded or dealt in on a relevant market. In the FCA's opinion, this includes a situation where a class of securities is traded on a relevant market but the financial promotion relates to new securities of that class which have not yet themselves been issued or started trading. Where securities of that class have not yet been admitted to trading on a relevant market, article 68 may apply – see PERG 8.21.16 G.
In the FCA's opinion, companies whose securities are permitted to be traded or dealt in on a relevant market should be able to make good use of the article 69 exemption. But such companies will need to ensure that they meet the specific requirements in article 69(3). In very general terms, a financial promotion will comply with these requirements if:1(1) the only reason it is a financial promotion is that it contains or is accompanied by1 an inducement about certain investments
A requirement common to the exemptions in articles 59, 67 and 69 is that the financial promotions must not relate to investments other than those issued, or to be issued,1 by the company or a member of its group. The FCA is aware that there is concern about comments made in company statements or briefings. This is that they may be held to be inducements to acquire or dispose of, or exercise rights conferred by, an investment issued by a third party. For example, traded options
If a person's job for a firm involves performing: (1) an FCA-designated senior management function, the firm should apply to the FCA for approval;(2) a PRA-designated senior management function, the firm should apply to the PRA for approval;(3) both an FCA-designated senior management function and a PRA-designated senior management function, the firm should apply to both the FCA and the PRA for approval (the purpose of SUP 10C.9 is to cut down the need for this sort of dual a
The FCA is under a duty, under section 59A of the Act (Specifying functions as controlled functions: supplementary), to exercise the power to specify any senior management function as an FCA controlled function in a way that it considers will minimise the likelihood that approvals need to be given by both the FCA and the PRA for the performance by a person of senior management functions in relation to the same PRA-authorised person.
A person (referred to as ‘A’ in this rule) is not performing an FCA governing function (referred to as the ‘particular’ FCA governing function in this rule) in relation to a PRA-authorised person (referred to as ‘B’ in this rule), at a particular time, if:(1) A has been approved by the PRA to perform any PRA-designated senior management function in relation to B;(2) throughout the whole of the period between the time of the PRA approval in (1) and the time in question, A has been
Table: Examples of how the need for dual FCA and PRA approval in relation to PRA-authorised persons is reduced
1Example |
Whether FCA approval required |
Whether PRA approval required |
Comments |
(1) A is appointed as chief risk officer and an executive director. |
No. A4 is not treated as performing the executive director function.4 |
Yes |
Chief risk officer is a PRA-designated senior management function. A’s functions as a director will be included in the PRA-designated senior management function. To avoid the need for FCA approval, A’s appointment as director should not take effect before PRA approval for the chief risk officer role. |
(2) Same as example (1), except that A will take up the role as an executive director slightly later because 4approval is needed from the firm's shareholders or governing body. |
No |
Yes |
The answer for (1) applies. The arrangements in this section apply if the application to the PRA says that A will start to perform the potential FCA governing function around the time of the PRA approval as well as at that time. |
(3) Same as example (1) but the application to the PRA does not mention that it is also intended that A is to be an executive director. |
Yes, to perform the executive director function.4 |
Yes |
SUP 10C.9.8R does not apply if the application for PRA approval does not say that A will also be performing what would otherwise be an FCA governing function. |
(4) A is to be appointed as chief executive and an executive director. |
No. A is not treated as performing the executive director function.4 |
Yes |
Being a chief executive is a PRA-designated senior management function. A’s functions as a director will be included in the PRA controlled function. |
(5) A is appointed as chief risk officer. Later, A is appointed as an executive director while carrying on as chief risk officer. |
Yes, when A takes up the director role. The executive director function4 applies. |
Yes, when A takes up the chief risk officer role. |
SUP 10C.9.8R does not apply because, when the firm applied for approval for A to perform the PRA chief risk officer designated senior management function, there was no plan for A also to perform the executive director function4. |
(6) A is appointed as an executive director. Later, A takes on the chief risk officer function and remains as an executive director. |
Yes, when A is appointed as director. The executive director function4 applies. |
Yes, when A takes up the chief risk officer role. |
When A is appointed as chief risk officer, A is still treated as carrying on the executive director function4. A retains the status of an FCA-approved person. |
(7) A is appointed as chief risk officer. A then stops performing that role and for a while does not perform any controlled function for that firm. Later, A is appointed as an executive director with the same firm. |
Yes, when A is appointed as an executive director. The executive director function4 applies. |
Yes, when A takes up the chief risk officer role. |
SUP 10C.9.8R does not apply because there is no current PRA approval when A is being appointed as a director. |
(8) A is appointed as an executive director and chief risk officer at the same time. Later, A gives up the role as chief risk officer but remains as an executive director. |
No, on A’s first appointment (see example (1)). But when A gives up the role as chief risk officer, FCA approval is needed to perform the executive director function4. Form E should be used. The application should state that it is being made as a result of A ceasing to perform a PRA-designated senior management function. Form A should be used if there have been changes in A’s fitness (SUP 10C.10.9D(4)) |
Yes, on A’s first appointment. |
When A stops being a chief risk officer, A stops performing a PRA-designated senior management function. However, being an executive director requires FCA approval. A does not have that approval because A did not need it when A was first appointed. The combined effect of SUP 10C.9.8R and the relevant PRA rules is that the firm has three months to secure approval by the FCA. During that interim period, A keeps the status of a PRA approved person performing the director element of the PRA chief risk designated senior management function - which is included in that function under relevant PRA rules. The relevant PRA rules say that, during this transitional period, A is still treated as performing the PRA chief risk designated senior management function and SUP 10C.9.8R says that, for as long as A is performing a PRA-designated senior management function, A does not perform the executive director function4. |
(9) A is appointed as the chief finance officer and an executive director at the same time. Later, A switches to being chief risk officer while remaining as an executive director. |
No |
Yes |
The arrangements in SUP 10C.9.8R continue to apply, even though A switches between PRA-designated senior management functions4 after the PRA's first approval. |
(10) A is appointed chief risk officer and an executive director. A goes on temporary sick leave. A takes up their old job when A4 comes back. |
No, neither on A’s first appointment nor when A comes back from sick leave. |
Yes, on A’s first appointment.6 |
SUP 10C.9.8R still applies on A’s return because A does not cease to have approval for6 the PRA's chief risk function or permanently cease to perform6 what would otherwise have been the executive director function4 just because A goes on temporary sick leave. |
(11) A is appointed to be chair4 of the governing body and chair4 of the nomination committee at the same time. |
No. A does not need approval to perform the chair of the nomination committee function. |
Yes, on first appointment. |
Being chair4 of the governing body is a PRA-designated senior management function. Therefore, the answer for example (1) applies. |
2(12) ‘A’ is to be appointed to perform the Head of Overseas Branch PRA-designated senior management function (SMF19) for a an overseas SMCR firm that is not an EEA SMCR firm.4 A is also an executive director of that firm’sUKbranch. |
No. A is not treated as performing the executive director function4. 3 |
Yes |
A’s functions as a director will be included in the PRA controlled function. |
Note 1: The relevant PRA rules can be found in the parts of the PRA Rulebook listed in SUP 10C.9.6G.4 |
|||
Note 2: Where one of the examples in this table includes someone being chief risk or finance officer or chair of the governing body, the example assumes that the firm is of a type for which that function is a PRA-designated senior management function.4 |
|||
24Under section 55H(3) of the Act (Variation by FCA at request of authorised person), if an FCA-authorised person applies to the FCA, the FCA may cancel its Part 4A permission. Cancellation applies to a firm's entire Part 4A permission, that is to every activity and every specified investment and not to the individual elements such as specified investments. Changes to the individual elements of a permission would require a variation.
(1) Subject to (1A), a 11firm other than a credit union wishing to cancel its Part 4A permission, must apply online at the appropriate regulator website using the form specified on the online notification and application system16.9112412129(1A) An FCA-authorised person wishing to cancel its Part 4A permission which covers only credit-related regulated activities must submit any form, notice or application by using the form in SUP 6 Annex 6 and submitting it in the way set out
(1) In addition to applying for cancellation of Part 4A permission24 in accordance with SUP 6.4.5 D, a firm may discuss prospective cancellations with its supervisory contact at the appropriate regulator.244 Alternatively a firm can contact the Supervision Hub22 on 0300 500 0597.1424424241414(2) To contact the Cancellations Team: 424(a) write to: Cancellations Team, The Financial Conduct24Authority, 12 Endeavour Square, London, E20 1JN19; or24; or2424(b) email cancellation.team@fca.org.uk24(3)
(1) If a firm is subject to the complaints rules in DISP, the FCA24 may request confirmation from the firm that there are no unresolved, unsatisfied or undischarged complaints against the firm from a customer of the firm.24(2) If there are unresolved or undischarged complaints against a firm from a customer of the firm, the FCA24 may request confirmation, as appropriate, of the steps (if any) which have been taken under the firm's complaints procedures and the amount of compensation
Consequently, the relevant regulator24 considers that it will have good reason not to grant a firm's application for cancellation of permission where:24(1) the FCA and/or the PRA24 proposes to exercise any of the powers described in SUP 6.4.24 G; or24(2) the FCA and/or the PRA24 has already begun disciplinary and/or24 restitution proceedings against the firm by exercising either or both of these powers against the firm.24
When considering the use of this power to deal with a particular concern, the FCA will have regard to the range of regulatory tools that are available. The FCA will consider dealing with any concerns informally through discussion and agreement with the firm and the SMF manager, instead of using the own-initiative variation of approval power.
The power to impose a conditional or time-limited approval does not depend on the SMF manager being unfit without that condition or time limitation. The FCA can impose a condition or time limitation even if the candidate would still be fit and proper without it. Conversely, where an SMF manager is not fit and proper but might be if a condition or time limitation is imposed, the FCA is not obliged to impose a condition or time limitation, and may take the view that a prohibition
The circumstances which will lead to a condition or time limitation being imposed on a candidate for an SMF manager role will, where appropriate, also lead to an existing SMF manager’s approval being varied. SUP 10C is therefore relevant to the FCA’s use of the own-initiative variation of approval power.
Requests for individual guidance may be made in writing or orally. Requests for individual guidance in relation to the Part 6 rules should be made in writing other than in circumstances of exceptional urgency or in the case of a request from a sponsor in relation to the provision of a sponsor service. 2If oral queries raise complex or significant issues, the FCA will normally expect the details of the request to be confirmed in writing. Simple requests for guidance may often be
A firm and its professional advisers should address requests for individual guidance to the firm's usual supervisory contact at the FCA4, with the exception of requests for guidance on3MAR 13 which should be addressed to the specialist team within the Enforcement3 and Markets Oversight3 Division. A firm may wish to discuss a request for guidance with the relevant contact before making a written request. 44
The FCA will aim to respond quickly and fully to reasonable requests. The FCA will give high priority to enquiries about areas of genuine uncertainty or about difficulties in relating established requirements to innovative practices or products. What constitutes a 'reasonable request' is a matter for the FCA. It will depend on the nature of the request and on the resources of the firm or other person making it. The FCA will expect the person to have taken reasonable steps to research
The FCA will always need sufficient information and time before it can properly evaluate the situation and respond to a request. If a request is time-critical, the person or its professional adviser should make this clear. The more notice a person can give the FCA, the more likely it is that the FCA will be able to meet the person's timetable. However, the time taken to respond will necessarily depend upon the complexity and novelty of the issues involved. In making a request,
1Where a person intends to rely on article 4(2), 4a(2),4 10(2) or 89(2) of EMIR for an exemption from the clearing obligation set out in article 4(1) or 10(1) of EMIR, the person should make their application or notification to the FCA in such manner, and by providing such information, as the FCA directs or requires.
Where a person notifies the FCA in respect of the obligation set out in EMIR in:4(1) point (a) of the second subparagraph of article 4a(1);4(2) the fourth subparagraph of article 9(1); or4(3) point (a) of the second subparagraph of article 10(1),4the notification should be made4 in such manner, and by providing such information, as the FCA directs or requires.
Where a person intends to rely on article 11(8) or (9)3 for an exemption from the obligation to implement risk management procedures set out in article 11(3) of EMIR, the person should make their application or notification to the FCA in accordance with EMIR requirements, including (where relevant) those set out in the EMIR technical standards on OTC derivatives and Part 5 (Transitional Provisions: Intragroup Transactions) of the Trade Repositories (EU Exit) Regulations3.2
At any time after receiving an application or notification for exemption from, or a notification in respect of, EMIR requirements, the FCA may require the person concerned to provide it with such further information as it reasonably considers necessary to enable it to determine the application or consider the notification.
The Companies Act 1989 also gives the FCA1 powers to supervise the taking of action under default rules. Under section 166 of the Companies Act 1989 (Powers of the appropriate regulator1 to give directions) (see REC 4.5.4 G), the FCA1 may direct a UK RIE1to take, or not to take, action under its default rules. Before exercising these powers the FCA1 must consult the UK RIE.1 The FCA1 may also exercise these powers if a relevant office-holder applies to it under section 167 of
The Companies Act 1989: section 166
The FCA1 may issue a "positive" direction (to take action) under section 166(2)(a) of the Companies Act 1989: 1 |
|
Where in any case a [UK RIE] has not taken action under its default rules- if it appears to [the FCA] that it could take action, [the FCA may direct it to do so,1 1 |
|
but under section 166(3)(a) of the Companies Act 1989: |
|
Before giving such a direction the [FCA] shall consult the [UK RIE] in question; and [the FCA] shall not give a direction unless [the FCA] is satisfied, in the light of that consultation that failure to take action would involve undue risk to investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the United Kingdom, or that the direction is necessary to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 or in connection with a particular exercise of a power under that Part.1 1 |
|
The FCA1 may issue a "negative" direction (not to take action) under section 166(2)(b) of the Companies Act 1989: 1 |
|
Where in any case a [UK RIE] has not taken action under its default rules - if it appears to the [FCA] that it is proposing to take or may take action, [the FCA] may direct it not to do so.1 1 |
|
but under section 166(3)(b) of the Companies Act 1989: |
|
Before giving such a direction the [FCA] shall consult the [UK RIE] in question; and the [FCA] shall not give a direction unless [the FCA] is satisfied, in the light of that consultation that the taking of action would be premature or otherwise undesirable in the interests of investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the United Kingdom, or that the direction is necessary to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 or in connection with a particular exercise of a power under that Part.1 1 |
|
Under section 166(7) of the Companies Act 1989, where a UK RIE has taken action either of its own accord or in response to a direction, the FCA may direct it to do or not to do specific things subject to these being within the powers of the UK RIE under its default rules. However,11(1) 1where the UK RIE is acting in accordance with a direction given by the FCA to take action under section 166(2)(a) of the Act on the basis that failure to take action would involve undue risk to
Where, in relation to a member (or designated non-member) of a UK RIE :1(1) a bankruptcy order; or(2) an award of sequestration of his estate; or(3) an order appointing an interim receiver of his property; or(4) an administration or winding-up order; or(5) a resolution for a voluntary winding-up; or(6) an order appointing a provisional liquidator; has been made or passed and the UK RIE1 has not taken action under its default rules as a result of this event or of the matters giving
The procedure is that the FCA1 must notify the UK recognised body of the application and, unless within three business days after receipt of that notice, the UK recognised body: 1(1) takes action under its default rules; or(2) notifies the FCA1 that it proposes to take action forthwith; or1(3) is directed to take action by the FCA1 under section 166(2)(a) of the Companies Act 1989; 1the provisions of sections 158 to 165 of the Companies Act 1989 do not apply in relation to market
The activity in article 25(1) is carried on only if the arrangements bring about, or would bring about, the transaction to which the arrangement relates. This is because of the exclusion in article 26 of the Regulated Activities Order (Arrangements not causing a deal). Article 26 excludes from article 25(1) arrangements which do not bring about or would not bring about the transaction to which the arrangements relate. In the FCA's view, a person would bring about a contract of
Article 25(2) may, for instance, include activities of persons who help potential policyholders fill in or check application forms in the context of ongoing arrangements between these persons and insurance undertakings. A further example of this activity would be a person introducing customers to an intermediary either for advice or to help arrange an insurance policy. The introduction might be oral or written. By contrast, the FCA considers that a mere passive display of literature
In the FCA's view, 'incidental' in this context means that the activity must arise out of, be complementary to or otherwise be sufficiently closely connected with the profession or business. In other words, there must be an inherent link between the activity and the firm's main business. For example, introducing dental insurance may be incidental to a dentist's activities; introducing pet insurance would not be incidental to his activities. In addition, to be considered 'incidental',
This exclusion applies to a person whose profession or business does not otherwise consist of regulated activities. In the FCA's view, the fact that a person may carry on regulated activities in the course of the carrying on of a profession or business does not, of itself, mean that the profession or business consists of regulated activities. This is provided that the main focus of the profession or business does not involve regulated activities and that the regulated activities
In the FCA's view, the crucial element of the exclusion in article 27 is the inclusion of the word 'merely'. When a publisher, broadcaster or internet website operator goes beyond what is necessary for him1 to provide its1 service of publishing, broadcasting or otherwise facilitating the issue of promotions, it may well bring itself1 within the scope of article 25(2). Further detailed guidance relating to the scope of the exclusion in article 27 is contained in PERG 2.8.6G (2)
The restriction in the scope of article 28 raises an issue where there is a trust with co-trustees, where each trustee will be a policyholder with equal rights and obligations. If the activities of one of the trustees include arranging in respect of contracts of insurance, that trustee could be viewed as arranging on behalf of his co-trustees who will also be policyholders. Similar issues also arise in respect of trustees assisting in the administration and performance of a contract
The effect of PERG 5.6.17G (4) is that some persons who, in making introductions, are making arrangements with a view to transactions in investments under article 25(2) of the Regulated Activities Order, cannot use the introducing exclusion. This is usually the case if1 the arrangements for making introductions relate to contracts of insurance (PERG 5.6.19 G has further guidance on when arrangements for introductions may be regarded as relating to contracts of insurance). However,
Where a person is making arrangements with a view to transactions in investments by way of making introductions, and he is not completely indifferent to whether or not transactions may result, it may still be the case that the exclusion in article 33 will apply. In the FCA's view, this is where:(1) the introduction is for independent advice on investments generally; and(2) the introducer is indifferent as to whether or not a contract of insurance may ultimately be bought (or
1Section 301A(1) of chapter3 1A of Part XVIII of the Act places an obligation on a person who decides to acquire or increase control (see sections 301D and 301E of the Act) over a UK RIE3to notify the FCA5, before making the acquisition3. Furthermore, those persons are required to obtain the FCA's5 approval before acquiring control 3or increasing the level of control held.3353533
The FCA5 will approve an acquisition or an increase in 3control if it is satisfied that the acquisition by the person seeking approval does not pose a threat to the sound and prudent management of any financial market operated by the UK RIE (see section 301F(4) of the Act). The reference to any financial market is to be read as including a reference to any auction platform as a result of the RAP regulations.76353334
The FCA will not relieve or refund a PSR fee if after the start of that fee year:42(1) 4a payment system ceases to be a regulated payment system; or4(2) 4an IFR card payment system ceases to be subject to the IFR;4 or(3) 4a person4 ceases to be a direct payment service provider of a regulated payment system or an IFR card payment system4.
If a PSR fee payer8 does not pay the total amount of its PSR fees before the end of the date on which it is due, it must pay to the FCA2: 24(1) an administrative fee of £250; plus(2) interest on any unpaid part of the fee at an annual rate of 5% above the Official Bank Rate from time to time in force, accruing daily from the date on which the amount concerned became due.
(1) 2The FCA may recover a PSR fee as a debt owed to it under paragraph 23 (8) of Schedule 1ZA of the Act.(2) The FCA will consider taking action for the recovery (including interest) through the civil courts.(3) In addition, the FCA or PSR may be entitled to take regulatory action in relation to the non-payment of PSR fees. What action, if any, that is taken by the FCA or PSR will be decided upon given the particular circumstances of the case.8
3The FCA does not have a set of enforcement priorities that are distinct from the priorities of the FCA as a whole. Rather, the FCA consciously uses the enforcement tool to deliver its overall strategic priorities. The areas and issues which the FCA as an organisation regards as priorities at any particular time are therefore key in determining at a strategic level how enforcement resource should be allocated. FCA priorities will influence the use of resources in its supervisory
3One way in which the FCA focuses on priority areas is through its thematic work. This work involves the FCA looking at a particular issue or set of issues across a sample of firms. Themes are, in general, selected to enable the FCA to improve its understanding of particular industry areas or to assess the validity of concerns the FCA has about risks those areas may present to the statutory objectives. Thematic work does not start with the presumption that it will ultimately lead
3This does not mean that the FCA will only take enforcement action in priority strategic areas. There will always be particularly serious cases where enforcement action is necessary, ad hoc cases of particular significance in a markets, consumer protection or financial crime context, or cases that the FCA thinks are necessary to achieve effective deterrence.
3The combination of the priority given to certain types of misconduct over others and the FCA's risk-based approach to enforcement means that certain cases will be subject to enforcement action and others not, even where they may be similar in nature or impact. The FCA's choice as to the use of the enforcement tool is therefore a question of how the FCA uses its resources effectively and efficiently and how it ensures that it is an effective regulator.
In all cases, before 4it proceeds with an investigation, the FCA will satisfy itself that there are grounds to investigate under the statutory provisions that give the FCA powers to appoint investigators. Another consideration will be whether the FCA has any agreements in place regarding taking5 action on behalf of, or otherwise providing5 assistance to, other authorities5. EG 2.5.14discusses the position where other authorities may have an interest in a case. If the statutory
4The FCA’s referral criteria are published on the Enforcement section of the FCA’s website: http://www.fca.org.uk/about/enforcement/referral-criteria. In considering whether an enforcement investigation is likely to further the FCA’s aims and objectives, the FCA will consider factors that address the following issues:(1) any available supporting evidence and the proportionality and impact of opening an investigation;(2) what purpose or goal would be served if the FCA were to end
Where an ROIE1 includes in its report made under section 295(1) of the Act (Notification: overseas investment exchanges and overseas clearing houses) a statement in compliance with section 295(2)(a) of the Act that an event has occurred in the period covered by that report which is likely to affect the FCA's1 assessment of whether it is satisfied as to the requirements set out in section 292(3) (Overseas investment exchanges and overseas clearing houses), it must include particulars
An ROIE1 must include in the first report submitted under section 295(1) of the Act after the recognition order in relation to that ROIE1 is made: 11(1) particulars of any events of the kind described in section 295(2) of the Act which occurred; (2) particulars of any change specified in REC 6.7.4 R (1) or disciplinary action specified in REC 6.7.4 R (2) which occurred; and(3) any annual report and accounts which covered a period ending; after the application for recognition
Where an ROIE1 proposes to change: (1) its address in the United Kingdom for the service of notices or other documents required or authorised to be served on it under the Act; or(2) the address of its head office;it must give notice to the FCA1 and inform it of the new address at least 14 days before the change is effected.1
Where an ROIE1 has notice that any licence, permission or authorisation which it requires to conduct any regulated activity in its home territory has been or is about to be:1(1) revoked; or(2) modified in any way which would materially restrict the ROIE1 in performing any regulated activity in its home territory or in the United Kingdom;1it must immediately notify the FCA1 of that fact and must give the FCA1 the information specified for the purposes of this rule in REC 6.7.9
618(1) Unless (2) applies, twice a year a firm must provide the FCA with a complete report concerning complaints received from eligible complainants.10618(2) If a firm:13(a) has permission to carry on only credit-related regulated activities or operating an electronic system in relation to lending and has revenue arising from those activities that is less than or equal to £5,000,000 a year; or13(b) has permission to carry on only:1413(i) 14regulated claims management activities;
A firm with only a limited permission to whom DISP 1.10.1R(1) and (2) do not apply is required to submit information to the FCA about the number of complaints it has received in relation to credit-related activities under the reporting requirements in SUP 16.12 (see, in particular, data item CCR007 in SUP 16.12.29CR). A firm with limited permission to whom DISP 1.10.1R (1) and (2) do not apply is also subject to the complaints data publication rules in DISP 1.10A.10618
Firms that are part of a group may submit a joint report to the FCA. The joint report must contain the information required from all firms concerned and clearly indicate the firms on whose behalf the report is submitted. The requirement to provide a report, and the responsibility for the report, remains with each firm in the group.101
(1) Twice a year a firm must provide the FCA with a complete report concerning complaints received from eligible complainants about matters relating to activities carried out by its employees when acting as retail investment advisers. The report must be set out in the format in DISP 1 Annex 1C R.104777(2) DISP 1 Annex 1C R requires (for the relevant reporting period) information about:10(a) the total number of complaints received by the firm about matters relating to activities
(1) 5If a firm does not submit a complete report by the date on which it is due, in accordance with DISP 1.10.5 R, the firm must pay an administrative fee of £250.10(2) The administrative fee in (1) does not apply if the firm has notified the
FCA
of a systems failure in accordance with DISP 1.10.6 R.10
For the purpose of inclusion in the public record maintained by the FCA, a firm must:10(1) provide the FCA, at the time of its authorisation, with details of a single contact point within the firm for complainants; and10(2) notify the
FCA
of any subsequent change in those details when convenient and, at the latest, in the firm's next report under the complaints reporting rules.10
In the FCA's view, the matters identified in PERG 8.10.2 G mean that:(1) for a communication to be real time it must be made in course of an interactive dialogue; but that(2) if the interactive dialogue takes place by means of the exchange of letters or e-mails or in a publication, the communication will be deemed to be non-real time. In this case, publications include newspapers, journals, magazines or other periodical publications, websites or similar systems for the electronic
The words ‘personal visit, telephone conversation or other interactive dialogue’ clearly imply that the first two are types of the third. In the FCA's view, it is difficult to envisage circumstances in which a personal visit or telephone conversation would not be interactive. The very fact of a conversation taking place would mean two or more persons were interacting with each other. A telephone call is not the same thing as a conversation. It may be made to, or even by, an intelligent
In the FCA's view, the fact that scope for interaction is essential if a financial promotion is to be real time leads to the following conclusions.(1) Most communications made in written or pictorial form will not offer scope for interaction. The most likely exception to this is where persons are expected to respond immediately. This situation may arise, for example, where the equivalent of a telephone conversation is conducted by e-mail. This is the basis of the exemption in
In the FCA's view, a communication which may exist in enduring form will be a non-real time communication. Examples of this include videos, audio cassettes, bulletin boards, websites and recorded telephone messages. Messages placed on Internet chat-rooms will also be non-real time. Radio or television programmes or teletext services may contain communications that involve an interactive dialogue. For example, a communication made by the broadcaster and addressed to an interviewee
PERG 8.6.9 G explains that article 6 of the Financial Promotion Order has the broad effect that a communication is made to another person where it is addressed to a particular person or persons. It also states that a ‘recipient’ of a communication is the person or persons to who it is made (that is to whom it is addressed). This takes on importance where certain exemptions which apply to real time financial promotions made to a person are concerned. It appears to the FCA that,
In the FCA's view, persons who may be engaging in investment activity or engaging in claims management activity1 jointly include:(1) a married couple;(2) two or more persons, who will invest jointly in a product (for example, a cohabiting couple who are not married or members of a family);(3) the directors of a company or partners in a firm;(4) members of a group of companies;(5) the participants in a joint commercial enterprise;(6) the members of an investment club; and(7) the
In the FCA's view, the mere fact of a person accepting an invitation to attend a meeting does not automatically mean that he has initiated any dialogue which may take place during the meeting and which may amount to a financial promotion. This will depend on the facts of each case and such matters as the manner in which the invitations are made, the arrangements for acceptance and how the meeting is conducted. For example, the fact that investments or investment services will