Related provisions for INSPRU 7.1.5

TC App 6.1.1G25/06/2021

1Introduction
1.	An accredited body is a body appearing in the list of such bodies in the Glossary.1 1
2.	Information on accredited bodies, including guidance on the process for including an applicant body in the list, is set out below and the obligation to pay the application fee is set out in FEES 3.2.
3.	[deleted]1 1
Process for including a body in the list of accredited bodies
4.	In considering the compatibility of a proposed addition with the statutory objectives, the FCA will determine whether the applicant will, if accredited, contribute to securing an appropriate degree of protection for consumers having regard in particular to:
	(1)	the matters set out in paragraphs 10 to 20; and
	(2)	the rules and practices of the applicant.
5.	An application to the FCA to be added to the list of accredited bodies should set out how the applicant will satisfy the criteria in paragraphs 10 to 20. The application should be accompanied by a report from a suitable auditor which sets out its independent assessment of the applicant's ability to meet these criteria. An application form is available from the FCA upon request.
6.	When considering an application for accredited body status the FCA may:
	(1)	carry out any enquiries and request any further information that it considers appropriate, including consulting other regulators;
	(2)	ask the applicant or its specified representative to answer questions and explain any matter the FCA considers relevant to the application;
	(3)	take into account any information which the FCA considers appropriate to the application; and
	(4)	request that any information provided by the applicant or its specified representative is verified in such a manner as the FCA may specify.
7.	The FCA will confirm its decision in writing to the applicant.
8.	The FCA will enter into an agreement with the applicant or accredited body which will require the accredited body to meet, among other obligations, the criteria and expectations set out in this Appendix or other parts of the Handbook, as amended from time to time.5 Approval as an accredited body becomes effective only when the name of the applicant is added to the Glossary definition of accredited body.
9.	Paragraphs 10 to 20 set out the criteria which an applicant should meet to become an accredited body and which an accredited body should meet at all times.
Acting in the public interest and furthering the development of the profession
10.	The FCA will expect an accredited body to act in the public interest, to contribute to raising consumer confidence and professional standards in the retail investment advice market and to promoting the profession.
Carrying out effective verification services
11.	If independent verification of a retail investment adviser's professional standards has been carried out by an accredited body, the FCA will expect the accredited body to provide the retail investment adviser with evidence of that verification in a durable medium and in a form agreed by the FCA. This is referred to in this Appendix and TC 2.15 as a ‘statement of professional standing’.
12.	The FCA will expect an accredited body to have in place effective procedures for carrying out its verification activities. These should include:
	(1)	verifying that each retail investment adviser who is a member of or subscriber to the accredited body's verification service has made an annual declaration in writing that the retail investment adviser has, in the preceding 12 months, complied with APER or4 COCON 2(as applicable)4 and completed the continuing professional development required under TC 2.1.15 R;1
	(2)	verifying annually the continuing professional development records of no less than 10% of the retail investment advisers who have used its service in the previous 12 months to ensure that the records are accurate and the continuing professional development completed by the retail investment advisers is appropriate; and
	(3)	verifying that, if required by TC, the retail investment advisers who use its services have attained an appropriate qualification. This should include, where relevant, checking that appropriate qualification gap-fill records have been completed by the retail investment advisers.
13.	The FCA will not expect an accredited body to carry out the verification in paragraph 12(3) if a retail investment adviser provides the accredited body with evidence in a durable medium which demonstrates that another accredited body has previously verified the retail investment adviser's appropriate qualification, including, where relevant, appropriate qualification gap-fill.
14.	The FCA will expect an accredited body to make it a contractual condition of membership (where a retail investment adviser is a member of the accredited body) or of using its verification service (where a retail investment adviser is not a member of the accredited body) that, as a minimum, the accredited body will not continue to verify a retail investment adviser's standards and will3 withdraw its statement of professional standing if5: (1) it is provided with false information in relation to a retail investment adviser’s qualifications or continuing professional development;5 (2) it is provided with a false declaration in relation to a retail investment adviser’s compliance with APER or COCON (as applicable); or5 (3) the retail investment adviser becomes subject to a prohibition order.5 In this regard, an accredited body must have in place appropriate decision-making procedures with a suitable degree of independence and transparency. 2 2 2 3 2 3 4 3 3 4
Having appropriate systems and controls in place and providing evidence to the FCA of continuing effectiveness
15.	The FCA will expect an accredited body to ensure that it has adequate resources and systems and controls in place in relation to its role as an accredited body.
16.	The FCA will expect an accredited body to have effective procedures in place for the management of conflicts of interest and have a well-balanced governance structure that engages a broad set of qualities and competences,5 with at least one member who is independent of the sector.
17.	The FCA will expect an accredited body to have a code of ethics and to ensure that its code of ethics and verification service terms and conditions do not contain any provisions that conflict with APER or COCON (as applicable)4. 2
Ongoing cooperation with the FCA
18.	The FCA will expect an accredited body to provide the FCA with such documents and information as the FCA reasonably requires, and to cooperate with the FCA in an open and transparent manner.
19.	The FCA will expect an accredited body to share information as soon as reasonably practicable with the FCA (subject to any legal constraints, including those in data protection legislation)5 in relation to the professional standards of the retail investment advisers who use its service as appropriate. Examples might include conduct issues, complaints, dishonestly obtaining or falsifying qualifications or continuing professional development, a failure to complete appropriate continuing professional development, or the accredited body’s decision to withdraw or not renew a retail financial adviser’s statement of professional standing. 5The FCA will expect an accredited body to notify the firm if issues such as these arise.
20.	The FCA will expect an accredited body to submit to the FCA, every 2 years, a5 report by a suitable independent auditor which sets out that auditor’s assessment of the quality of the body’s satisfaction of the criteria in paragraphs 10 to 19 in the preceding 245 months and whether, in the auditor’s view, the body is capable of satisfying the criteria in the subsequent 245 months. The FCA will expect this report to be submitted to the FCA every 2 years, within 35 months of the anniversary of the date on which the accredited body was added to the Glossary definition of accredited body.
Withdrawal of accreditation
21.	If an accredited body fails or, in the FCA's view, is likely to fail to satisfy the criteria, the FCA will discuss this with the accredited body concerned. If, following a period of discussion, the accredited body has failed to take appropriate corrective action to ensure that it satisfies and will continue to satisfy the criteria, the FCA will withdraw the accredited body’s accreditation. Withdrawal of an accredited body’s accreditation will be reflected in the Handbook by amending the list published under the Glossary definition of accredited body 5. The FCA FCA will expect the body to notify each retail investment adviser holding a current statement of professional standing of the FCA's decision. A statement of professional standing issued by the accredited body before the withdrawal of accreditation will continue to be valid until its expiration.

REC 2.2.6G03/01/2018

In determining whether the UK recognised body meets the recognition requirement in Regulation 6(3), the FCA3 may have regard to whether that body has ensured that the person who performs that function on its behalf:3(1) has sufficient resources to be able to perform the function (after allowing for any other activities);(2) has adequate systems and controls to manage that function and to report on its performance to the UK recognised body;(3) is managed by persons of sufficient

IPRU-INV 5.9.1R13/09/2017

1Liquid Capital Requirement = Initial Capital Requirement + Capital Surcharge Calculation of Initial Capital Requirement ICR = (√AUA) x K1
Where
ICR	means Initial Capital Requirement
AUA	means Assets Under Administration calculated as the sum of the most recent annual valuations over the preceding 12 months of the personal pension schemes administered by the firm, and adjusted to include any revaluation of assets that may occur between the date of the most recent annual valuation and the date when the firm must calculate its AUA. A firm must calculate its AUA quarterly in line with the dates when it has to submit its regulatory capital reporting form in accordance with SUP 16.12 (Integrated Regulatory Reporting). Where it is not possible to value an asset (for example because there is no readily available market price), the most recent market valuation should be used. Where it would be reasonable to assume that the value of the asset has changed by more than 15% since the most recent market valuation, a firm should instead use a reasonable estimate. This is without prejudice to any requirement on a firm to provide a personal pension scheme member with accurate and timely valuations of their portfolios.
K1	is set subject to the firm’s AUA as specified in the below table:
	AUA	K1 constant to be applied
	<£100m	10
	£100-£200m	15
	>£200m	20
	When K1 changes due to an increase in AUA, in accordance with the thresholds in this table, the firm must apply the new K1 value within six months following the date on which its AUA exceeded the threshold of its previous K1 value.
	Calculation of Capital Surcharge
	CS =(√P) x K2 x ICR
Where
CS	means Capital Surcharge
P	means the fraction of personal pension schemes administered by the firm which contain one or more asset types which do not appear in the list of Standard Assets below, at the most recent quarter end. For example, if a quarter of personal pensions contained non-Standard Assets, this would be inputted in to the formula as 0.25.
K2	is set at 2.5.
ICR	means the Initial Capital Requirement calculated as above.
	Standard Assets The List of Standard Assets is as follows (subject to Note 1): Cash Cash funds Deposits Exchange traded commodities Government & local authority bonds and other fixed interest stocks Investment notes (structured products) Shares in Investment trusts Managed pension funds National Savings and Investment products Permanent interest bearing shares (PIBs) Physical gold bullion Real estate investment trusts (REITs) Securities 2 admitted to trading on a regulated venue UK commercial property Units in regulated collective investment schemes 2
NOTE 1:	A Standard Asset must be capable of being accurately and fairly valued on an ongoing basis and readily realised within 30 days, whenever required.
NOTE 2:	In addition to complying with the provisions of IPRU-INV 5.8, in accordance with IPRU-INV 5.3.2R, a firm must hold its liquid capital in financial resources as follows:
	ICR	realisable within 12 months; and
	CS	realisable within 30 days

SYSC 13.9.5G07/03/2016

In negotiating its contract with a service provider, a firm should have regard to:(1) reporting or notification requirements it may wish to impose on the service provider;(2) whether sufficient access will be available to its internal auditors, external auditors or actuaries (see section 341 of the Act) and to the FCA2 (see SUP 2.3.5 R (Access to premises) and SUP 2.3.7 R (Suppliers under material outsourcing arrangements);(3) information ownership rights, confidentiality

IPRU-INV 5.4.7G01/01/2021

[deleted]2

BIPRU 7.11.62G01/01/2007

BIPRU 7.11.5 R requires a firm to recognise any premiums payable or receivable under the contract as notional zero-specific-risk securities. These positions are then entered into the general market risk framework. As premium payments paid under such contracts are contingent on no credit event occurring, a credit event could significantly change the general market risk capital requirement. A firm should consider, under the overall Pillar 2 rule, whether this risk means that the

BIPRU 8.3.1R01/01/2021

(1) A BIPRU firm that is a subsidiary undertaking of a BIPRU firm or of a financial holding company or of a mixed financial holding company3 must apply the requirements laid down in GENPRU 1.2 (Adequacy of financial resources) and4 the main BIPRU firm Pillar 1 rules (but not the base capital resources requirement) on a sub-consolidated basis if the BIPRU firm, or the parent undertaking where it is a financial holding company or a mixed financial holding company3, have a third

PERG 9.11.1G01/04/2013

Table There are some frequently asked questions about the application of the definition of an open-ended investment company in the following table. This table belongs to PERG 9.2.4 G (Introduction).

Question	Answer
1	Can a body corporate be both open-ended and closed-ended at the same time?	In the FCA's view, the answer to this question is 'no'. The fact that the investment condition is applied to BC (rather than to particular shares in, or securities of, BC) means that a body corporate is either an open-ended investment company as defined in section 236 of the Act or it is not. Where BC is an open-ended investment company, all of its securities would be treated as units of a collective investment scheme for the purpose of the Act. A body corporate formed in another jurisdiction may, however, be regarded as open-ended under the laws of that jurisdiction but not come within the definition of an open-ended investment company in section 236 (and vice versa).
2	Can an open-ended investment company become closed-ended (or a closed-ended body become open-ended)?	In the FCA's view, the answer to this question is 'yes'. A body corporate may change from open-ended to closed-ended (and vice versa) if, taking an overall view, circumstances change so that a hypothetical reasonable investor would consider that the investment condition is no longer met (or vice versa). This might happen where, for example, an open-ended investment company stops its policy of redeeming shares or securities at regular intervals (so removing the expectation that a reasonable investor would be able to realise his investment within a period appearing to him to be reasonable). See also PERG 9.7.5 G.
3	Does the liquidation of a body corporate affect the assessment of whether or not the body is an open-ended investment company?	The FCA considers that the possibility that a body corporate that would otherwise be regarded as closed-ended may be wound up has no effect at all on the nature of the body corporate before the winding up. The fact that, on a winding up, the shares or securities of any investor in the body corporate may be converted into cash or money on the winding up (and so 'realised') would not, in the FCA's view, affect the outcome of applying the expectation test to the body corporate when looked at as a whole. The answer to Question 4 explains that investment in a closed-ended fixed term company shortly before its winding up does not, in the FCA view, change the closed-ended nature of the company. For companies with no fixed term, the theoretical possibility of a winding up at some uncertain future point is not, in the FCA's view, a matter that would generally carry weight with a reasonable investor in assessing whether he could expect to be able to realise his investment within a reasonable period.
4	Does a fixed term closed-ended investment company become an open-ended investment company simply because the fixed term will expire?	In the FCA's view, the answer to this is 'no'. The termination of the body corporate is an event that has always been contemplated (and it will appear in the company's constitution). Even as the date of the expiry of the fixed term approaches, there is nothing about the body corporate itself that changes so as to cause a fundamental reassessment of its nature as something other than closed-ended. Addressing this very point in parliamentary debate, the Economic Secretary to the Treasury stated that the "aim and effect [of the definition] is to cover companies that look, to a reasonable investor, like open-ended investment companies". The Minister added that "A reasonable investor's overall expectations of potential investment in a company when its status with respect to the definition is being judged will determine whether it meets the definition. The matter is therefore, definitional rather than one of proximity to liquidation". (Hansard HC, 5 June 2000 col 124).
5	In what circumstances will a body corporate that issues a mixture of redeemable and non-redeemable shares or securities be an open-ended investment company?	In the FCA's view, the existence of non-redeemable shares or securities will not, of itself, rule out the possibility of a body corporate falling within the definition of an open-ended investment company. All the relevant circumstances will need to be considered (see PERG 9.6.4 G, PERG 9.2.8.8G and PERG 9.8.9 G). So the following points need to be taken into account. The precise terms of the issue of all the shares or securities will be relevant to the question whether the investment condition is met, as will any arrangements that may exist to allow the investor to realise his investment by other means. The proportions of the different share classes will be relevant to the impression the reasonable investor forms of the body corporate. A body corporate that issues only a minimal amount of redeemable shares or securities will not, in theFCA's view, be an open-ended investment company. A body corporate that issues a minimal amount of non-redeemable shares or securities will be likely to be an open-ended investment company. A body corporate that falls within the definition of an open-ended investment company is likely to have (and to be marketed as having) mainly redeemable shares or securities. However, whether or not the body corporate does fall within the definition in any particular case will be subject to any contrary indications there may be in its constitutional documents or otherwise. Where shares or securities are only redeemable after the end of a stated period, this factor will make it more likely that the body corporate is open-ended than if the shares or securities are never redeemable.
6	Does "realised on a basis calculated wholly or mainly by reference to..." in section 236(3)(b) apply to an investor buying investment trust company shares traded on a recognised investment exchange because of usual market practice that the shares trade at a discount to asset value?	In the FCA's view, the answer is 'no' (for the reasons set out in PERG 9.9.4 G to PERG 9.9.6 G).
7	Does the practice of UK investment trust companies buying back shares result in them becoming open-ended investment companies?	In the FCA's view, it does not, because its actions will comply with company law: see section 236(4) of the Act and PERG 9.6.5 G.
8	Would a body corporate holding out redemption or repurchase of its shares or securities every six months be an open-ended investment company?	In the FCA's view a period of six months would generally be too long to be a reasonable period for a liquid securities fund. A shorter period affording more scope for an investor to take advantage of any profits caused by fluctuations in the market would be more likely to be a reasonable period for the purpose of the realisation of the investment (in the context of the 'expectation' test, see PERG 9.8 and, in particular, PERG 9.8.9 G which sets out the kind of factors that may need to be considered in applying the test).
9	Would an initial period during which it is not possible to realise investment in a body corporate mean that the body corporate could not satisfy the investment condition?	In the FCA's view, the answer to that question is 'no'. In applying the investment condition, the body corporate must be considered as a whole (see PERG 9.6.3 G). At the time that the shares or securities in a body corporate are issued, a reasonable investor may expect that he will be able to realise his investment within a reasonable period notwithstanding that there will first be a short-term delay before he can do so. Whether or not the 'expectation test' is satisfied will depend on all the circumstances (see PERG 9.8.9 G).

BIPRU 13.3.4R01/01/2007

Long settlement transaction means a transaction where a counterparty undertakes to deliver a security, a commodity, or a foreign currency amount against cash, other financial instruments, or commodities, or vice versa, at a settlement or delivery date that is contractually specified as more than the lower of the market standard for this particular transaction and five business days after the date on which the firm enters into the transaction.[Note: BCD Annex III Part 1 point

PRIN 1.2.6G01/11/2007

If the person with or for whom the firm is carrying on an activity is acting through an agent, the ability of the firm to treat the agent as its client under COBS 2.4.3 R3 (Agent as client) will not be available. For example, if a general insurer is effecting a general insurance contract through a general insurance broker who is acting as agent for a disclosed policyholder, the policyholder will be a client of the firm and the firm must comply with the Principles accordingly.

BIPRU 1.1.23R01/01/2021

(1) Dealing on own account means (for the purpose of GENPRU and BIPRU) the service of dealing in any financial instruments for own account as referred to in paragraphs 3 of Part 3 of Schedule 2 to the Regulated Activities Order11, subject to (2) and (3).99(2) A11CAD investment firm that executes investors' orders for financial instruments and holds such financial instruments for its own account does not for that reason deal on own account if all of the following conditions are

COND 1.3.5UK01/04/2013

1Paragraph 1A of Schedule 6 to the Act(1) "assets" includes contingent assets;"consolidated supervision" has the same meaning as in section 3M(a);"consumer" has the meaning given by section 425A(b);"financial crime" is to be read with section 1H(3)(c);"functions", in relation to either the FCA or the PRA, means the functions conferred on that regulator by or under this Act;"liabilities" includes contingent liabilities; "relevant directives" has the same meaning as in section 3M;

REC 2A.3.2G30/04/2021

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

PERG 8.37.5G22/07/2013

(1) The terms 'offering' or 'placement' are not defined in the AIFMD UK regulation but, in our view, an offering or placement takes place for the purposes of the AIFMD UK regulation when a person seeks to raise capital by making a unit of share of anAIF available for purchase by a potential investor. This includes situations which constitute a contractual offer that can be accepted by a potential investor in order to make the investment and form a binding contract, and situations

IPRU-INV 1.2.7R30/12/2015

(1) If a firm was, immediately before commencement permitted to treat "relevant funds" as part of its capital resources under the financial resource rules of a previous regulator applicable to the firm, it may treat those funds in an equivalent manner under the corresponding provisions of IPRU-INV, provided that the conditions in (3) are met.(2) For the purposes of this rule "relevant funds" are funds provided to the firm under the terms of(a) a subordinated loan agreement;

EG 8.2.601/03/2016

1Examples of circumstances in which the FCA will consider varying a firm'sPart 4A permission because it has serious concerns about a firm, or about the way its business is being or has been conducted include where: (1) in relation to the grounds for exercising the power under section 55J(1)(a) or section 55L(2)(a) of the Act, the firm appears to be failing, or appears likely to fail, to satisfy the threshold conditions relating to one or more, or all, of its regulated activities,

MIPRU 4.2F.23G26/04/2015

A firm may deal with the risk that insurance on properties taken as protection may be inadequate by taking out insurance at the level of the portfolio.

EG App 3.1.201/03/2016

3The FCA'sregulatory objectives as the competent authority under Part VI of the Act are: the protection of investors;access to capital; andinvestor confidence.

MIPRU 3.2.15R01/01/2007

The rule on the items which are eligible to contribute to the capital resources of a firm applies (see MIPRU 4.4.2 R.

Related provisions for INSPRU 7.1.5

Search Term(s)

Filter by Topics

Filter by Modules

Filter by Documents

Filter by Keywords

Effective Period

Similar To