Related provisions for MCOB 9.4.149

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CREDS 10.1.3GRP

Module

Relevance to Credit Unions

The Principles for Businesses (PRIN)

The Principles for Businesses (PRIN) set out 3high-level requirements 3imposed by the FCA3. They provide a general statement of regulatory requirements. The Principles apply to all12credit unions. In applying the Principles to credit unions, the FCA3 will be mindful of proportionality. In practice, the implications are likely to vary according to the size and complexity 3of the credit union.

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Senior Management Arrangements, Systems and Controls (SYSC)

SYSC 1,3SYSC 4 to 10 and SYSC 213 apply to all credit unions in respect of the carrying on of their regulated activities and unregulated activities in a prudential context. SYSC 23 (Senior managers and certification regime: Introduction and classification), SYSC 24 (Senior managers and certification regime: Allocation of prescribed responsibilities), SYSC 25 (Senior managers and certification regime: Management responsibilities maps and handover procedures and material), SYSC 26 (Senior managers and certification regime: Overall and local responsibility), SYSC 27 (Senior managers and certification regime: Certification regime)7 and SYSC 18 apply to all credit unions in respect of both their regulated activities and their unregulated activities.

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3Code of Conduct (COCON)

This contains rules and guidance that are directly applicable to a credit union’sSMF managers, certification employees and (from 2017) other conduct rules staff. There is also guidance for credit unions on giving their staff training about COCON.

Threshold Conditions (COND)

In order to become authorised under the Act all firms must meet the threshold conditions. The threshold conditions must be met on a continuing basis by credit unions. Failure to meet one of the conditions is sufficient grounds for the exercise by the FCA3 of its powers.

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The Fit and Proper test for Employees and Senior Personnel7 (FIT)

The purpose of FIT is to set out and describe the criteria that a firm should3 consider when assessing the fitness and propriety of a person (1)3 in respect of whom an application is being made for approval to undertake a controlled function under the senior managers7 regime, (2)3 who has already been approved, (3) who is a certification employee or (4) whom a firm is considering appointing to be a certification employee3.

It also sets out and describes criteria that the FCA will consider when assessing the fitness and propriety of a candidate for a controlled function position and that it may consider when assessing the continuing fitness and propriety of approved persons.3

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General Provisions (GEN)

GEN contains rules and guidance on general matters, including interpreting the Handbook, statutory status disclosure, the FCA's3 logo and insurance against financial penalties.

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Fees manual (FEES)

This manual sets out the fees applying to credit unions.

3Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU)

MIPRU applies to any credit union carrying out insurance distribution activity5 or home finance mediation activity, or using these services. In particular, it sets out requirements for allocation of responsibility for the credit union’sinsurance distribution activity5 (MIPRU 2), for the use of home finance intermediaries (MIPRU 5) and for professional indemnity insurance (MIPRU 3).

Conduct of Business sourcebook (COBS)

A credit union which acts as a CTF provider or provides a cash-deposit ISA will need to be aware of the relevant requirements in COBS. COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R (Direct offer financial promotions), COBS 4.10 (Approving and confirming compliance of10 financial promotions), COBS 13 (Preparing product information) and COBS 14 (Providing product information to clients) apply with respect to accepting deposits as set out in those provisions, COBS 4.1 and BCOBS. A credit union that communicates with clients, including in a financial promotion, in relation to the promotion of deferred shares and credit union subordinated debt will need to be aware of the requirements of COBS 4.2 (Fair, clear and not misleading communications) and COBS 4.5 (Communicating with retail clients).4

3Insurance: Conduct of Business sourcebook (ICOBS)

ICOBS applies to any credit union carrying on non-investment insurance distribution5 activities, such as arranging or advising on general insurance contracts to be taken out by members. But ICOBS does not apply to a credit union taking out an insurance policy5 for itself, such as a policy5 against default by members on their loans where the credit union is the beneficiary of the policy5, since in this circumstance the credit union would not be acting as an insurance intermediary, but would itself be the customer. Credit unions are reminded that they are subject to the requirements of the appropriate legislation, including the Credit Unions Act 1979, relating to activities a credit union may carry on.

3Mortgages and Home Finance: Conduct of Business sourcebook (MCOB)

MCOB applies to any credit union that engages in any home finance activity. MCOB rules cover advising and selling standards, responsible lending (including affordability assessment), charges, and the fair treatment of customers in payment difficulties.

Banking: Conduct of Business sourcebook (BCOBS)

BCOBS sets out rules and guidance for credit unions on how they should conduct their business with their customers. In particular there are rules and guidance relating to communications with banking customers3and financial promotions (BCOBS 2), distance communications (BCOBS 3), information to be communicated to banking customers3(BCOBS 4), post sale requirements (BCOBS 5), and cancellation (BCOBS 6). 3The rules in BCOBS 3.1 that relate to distance contracts may apply 3to a credit union. This is because BCOBS 3 contains requirements which implemented9 the Distance Marketing Directive39where there is "an organised distance sales or service-provision scheme run by the supplier" (Article 2(a)) of the Distance Marketing Directive)9, i.e. if the credit union routinely sells any of its services by post, telephone, fax or the internet3.

Supervision manual (SUP)

The following provisions of SUP are relevant to credit unions: 13SUP 1A13 (The FCA’s 3 approach to supervision), SUP 2 (Information gathering by the FCA or PRA 3 on its own initiative), SUP 3.1 to SUP 3.8 (Auditors), SUP 5 (Skilled persons), SUP 6 (Applications to vary or cancel Part 4A12permission), SUP 7 (Individual requirements), SUP 8 (Waiver and modification of rules), SUP 9 (Individual guidance), 13SUP 10C (FCA senior managers7 regime for approved persons in SMCR firms7), SUP 11 (Controllers and Close links), SUP 15 (Notifications to the FCA or PRA 3) and SUP 16 (Reporting Requirements).

Credit unions are reminded that they are subject to the requirements of the Act and SUP 11 on close links, and are bound to notify the FCA3 of changes. It may be unlikely, in practice, that credit unions will develop such relationships. It is possible, however, that a person may acquire close links with a 3credit union3 within the meaning of the Act by reason of holding the prescribed proportion of deferred shares in the credit union.

In relation to SUP 16, credit unions are exempted from the requirement to submit annual reports of 3close links.

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3Consumer Credit sourcebook (CONC)

CONC contains rules that apply to firms carrying on credit-related regulated activities. PERG 2.7.19IG provides guidance on relevant exemptions. Most credit union lending is therefore outside the scope of CONC. However, subject to the constraints in the Credit Unions Act 1979 or the Credit Unions (Northern Ireland) Order 1985 (as relevant), credit unions may undertake credit-related regulated activities to which CONC does apply if the activity is carried out by way of business. This could include lending under a borrower-lender-supplier agreement, or debt adjusting or debt counselling where the credit union is not the lender. A credit union carrying on such activities should consider whether it requires permission to do so. Further information can be found on the FCA’s website.

Decision, Procedure and Penalties manual (DEPP)

DEPP is relevant to credit unions because it sets out:

(1) the FCA's12 decision-making procedure for giving statutory notices. These are warning notices, decision notices and supervisory notices (DEPP 1.2 to DEPP 5); and

(2) the FCA's12 policy with respect to the imposition and amount of penalties under the Act (see DEPP 6).

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Dispute Resolution: Complaints (DISP)

DISP sets out rules and guidance in relation to treating complainants fairly and the Financial Ombudsman Service.

Compensation (COMP)

COMP sets out rules relating to the scheme for compensating consumers when authorised firms are unable, or likely to be unable, to satisfy claims against them.12

6General guidance on Benchmark Administration, Contribution and Use (BENCH)

BENCH provides guidance about which parts of the Handbook are relevant to a firm when carrying out benchmark activities and when using a benchmark. It also provides guidance about the benchmarks regulation.

The Enforcement Guide (EG)

The Enforcement Guide (EG) describes the FCA's12 approach to exercising the main enforcement powers given to it by the Act and by other legislation.2

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Financial Crime Guide: A firm’s guide to countering financial crime risks (FCG) and Financial Crime Thematic Reviews (FCTR)8

FCG and FCTR provide8guidance on steps that a firm can take to reduce the risk that it might be used to further financial crime.

DISP 1.10B.7DRP
DISP 1 Annex 1AD requires, for the relevant reporting period and in respect of particular categories of products:(1) in Table 1, information about the total number of complaints received by the respondent and the cause of the complaint;(2) in Table 2, information about the number of complaints that were:(a) closed or upheld within different periods of time; and(b) the total amount of redress paid by the respondent in relation to complaints upheld and not upheld in the relevant
MCOB 4.8A.6GRP
Firms are not prohibited from entering into or arrangingexecution-only sales for regulated mortgage contracts for customers to whom they have provided product information (where otherwise permitted under this section), but MCOB 2.5A.1 R and MCOB 4.8A.5 R (The customer’s best interests) mean the information they provide should not steer the customer to elect to enter into an execution-only sale.
REC 2A.3.2GRP

4The guidance in relation to the recognition requirements in the sections of REC 2 listed in Column A of the table below applies to a RAP in relation to the equivalent RAP recognition requirements listed in Column C and (if shown) with the modifications in Column B.

Table: Guidance on RAP recognition requirements

Column A

REC 2 guidance which applies to a RAP

Column B

Modification to REC 2 guidance for a RAP

Column C

Relevant RAP recognition requirement

REC 2.2.2G to REC 2.2.7G (Relevant circumstances and Outsourcing)

Reg 13

REC 2.3.3G to REC 2.3.9G (Financial resources)

Reg 14

REC 2.4.3G to REC 2.4.6G (Suitability)

In addition to the matters set out in REC 2.4.3G to REC 2.4.6G, the FCA will have regard to whether a key individual has been allocated responsibility for overseeing the auction platform of the UK recognised body.

Reg 15

REC 2.5.3G to REC 2.5.20G (Systems and controls and conflicts) and REC 2.5A (Guidance on Public Interest Disclosure Act: Whistleblowing)

Reg 16 and 17(2)(f)

REC 2.6.26G to REC 2.6.34G (Safeguards for investors)

Reg 17

REC 2.7.3G to REC 2.7.4G (Access to facilities)

The FCA shall have regard to whether a RAP provides access to bid at auctions only to those persons eligible to apply for admission to bid under regulation 16 of the UK auctioning regulations.

Reg 17(2)(a) and 20

REC 2.8.3G to REC 2.8.4G (Settlement and clearing services)

Reg 17(2)(d) and 21

REC 2.9.3G to REC 2.9.4G (Transaction recording)

Reg 17(2)(e)

REC 2.10.3G to REC 2.10.4G (Financial crime and market abuse)

Reg 17(2)(g)

REC 2.11.3G to REC 2.11.4G (Custody)

REC 2.11.4G is replaced with the following for a RAP:

Where a RAP arranges for other persons to provide services for the safeguarding and administration services of assets belonging to users of its facilities, it will also need to satisfy the RAP recognition requirement in regulation 17(2)(h) of the RAP regulations (see REC 2A.2.1UK).

Reg 17(2)(h)

REC 2.12.1G to REC 2.12.2G (Availability of relevant information)

REC 2.12.1G to REC 2.12.2G are replaced with the following for a RAP:

In determining whether appropriate arrangements have been made to make relevant information available to persons engaged in dealing in emissions auction products the FCA may have regard to:

(1) the extent to which auction bidders are able to obtain information in a timely fashion about the terms of those emissions auction products and the terms on which they will be auctioned, either through accepted channels for dissemination of information or through other regularly and widely accessible communication media;

(2) what restrictions, if any, there are on the dissemination of relevant information to auction bidders; and

(3) whether relevant information is, or can be, kept to restricted groups of persons in such a way as to facilitate or encourage market abuse.

REC 2.12.2G

A RAP does not need to maintain its own arrangements for providing information on the terms of emissions auction products to auction bidders where it has made adequate arrangements for other persons to do so on its behalf or there are other effective and reliable arrangements for this purpose.

Reg 17(2)(c)

REC 2.13.3G to REC 2.13.6G (Promotion and maintenance of standards)

Reg 18

REC 2.14.3G to REC 2.14.6G (Rules and consultation)

Reg 19

REC 2.15.3G to REC 2.15.6G (Discipline)

Reg 22

REC 2.16.3G to REC 2.16.4G (Complaints

Reg 23

COBS 14.2.1RRP
1A firm that sells, or (where relevant) gives effect to22:(1) a non-PRIIP packaged product17 to a retail client, must provide a key features document and a key features illustration2 to that client (unless the packaged product is a unit in a regulated collective investment scheme17);777(2) a life policy to a client, must provide:20131313(a) the Solvency II Directive information to that client;20(b) a client with objective and relevant information about the policy:20(i) in a comprehensible
COLL 9.3.4GRP
(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
MCOB 10.3.8RRP
(1) In relation to a lifetime mortgage2, where the APR is calculated for the purpose of a financial promotion3 it must be assumed that the credit is being provided for a period of 15 years beginning with the relevant date.23(2) In relation to a lifetime mortgage2, where the APR is calculated for the purpose of an illustration, the period for which the credit is to be provided must be calculated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R.2(2A) In relation to a retirement
COBS 5.2.2RRP
A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information society services it provides:(1) its name;(2) the geographic address at which it is established;(3) the details of the firm, including its e-mail address, which allow it to be contacted rapidly and communicated with in a direct and effective manner;(4) an appropriate statutory status disclosure statement (GEN 4 Annex 1 R or GEN 4 Annex 1A R as appropriate4),
MCOB 6.1.6GRP
Firms may diverge from the requirements in MCOB 5.6 (Content of illustrations) where necessary to reflect the fact that they are providing an illustration for a variation as part of an offer document.
COLL 11.3.2RRP
(1) The authorised fund manager of a UCITS scheme that is a feeder UCITS must enter into a master-feeder agreement which, at a minimum, complies with COLL 11 Annex 1 R.(2) Where a master UCITS and a feeder UCITS are managed by the same management company, the master-feeder agreement may be replaced by internal conduct of business rules which, at a minimum, comply with COLL 11 Annex 2 R.(3) The authorised fund manager of a feeder UCITS must not invest in units of the master UCITS
MCOB 7.7.1RRP
(1) Where, in relation to a regulated mortgage contract for a business purpose or a high net worth mortgage customer3 who is not a consumer under an MCD regulated mortgage contract4, a customer either:(a) seeks an immediate increase in the borrowing provided under the regulated mortgage contract; or(b) overdraws on the borrowing under the regulated mortgage contract;the further advance rules in MCOB 7.6.7 R to MCOB 7.6.17 R do not apply.(2) Where (1) applies, the firm must within
COLL 6.6B.20RRP
The depositary must provide a comprehensive inventory of all the assets comprising the schemeproperty of the UCITS scheme to the authorised fund manager on a regular basis. [Note: article 22(6) of the UCITS Directive]
MCOB 5.6.109RRP
(1) Under the sub-heading 'Linked current account', the illustration must include the following information:(a) whether a linked current account is a compulsory or optional product (if the current account is a compulsory product this must also be stated in Section 4 of the illustration in accordance with MCOB 5.6.25 R(6));(b) an explanation of the interest rates that apply under different circumstances to the linked current account, if different from the interest rate charged
PERG 8.12.24GRP
The Treasury, in making the Financial Promotion Order, noted that financial journalism has an important part to play in increasing consumer awareness of financial services and products. It further observed the need to strike the right balance between protecting consumers and ensuring that the level of regulation is as light as possible, while respecting the principle of the freedom of the press.