EG 15.4 1Disqualification under section 249 or section 261K

EG 15.4.1

1When deciding whether or not to disqualify an auditor under section 249(1) or section 261K(1) of the Act (concerning the power to disqualify an auditor for breach of trust scheme rules or contractual scheme rules), and in setting the disqualification, the FCA will take into account all the circumstances of the case. These may include, but are not limited to, the following circumstances:

  1. (1)

    the effect of the auditor's breach of a duty imposed by trust scheme rules or contractual scheme rules: the FCA will regard as particularly serious a breach of a duty imposed by trust scheme rules or contractual scheme rules (set out in COLL 4 (Investor relations) and COLL 7 (Suspension of dealings and termination of authorised funds)) which has resulted in, or is likely to result in, loss to consumers or damage to confidence in the financial system or an increased risk that a firm may be used for the purposes of financial crime;

  2. (2)

    action taken by the auditor to remedy its breach of a duty imposed by trust scheme rules or contractual scheme rules: this may include any steps taken by the auditor to bring the breach to the attention of the FCA promptly, the degree of co-operation with the FCA in relation to any subsequent investigation, and whether any steps have been taken to rectify the breach or prevent a similar breach;

  3. (3)

    action taken by a relevant professional body: The FCA will consider whether any disciplinary action has or will be taken against the auditor by a relevant professional body and whether such action adequately addresses the particular breach of a duty imposed by trust scheme rules or contractual scheme rules;

  4. (4)

    the previous compliance record of the auditor concerned: whether the FCA (or a previous regulator) or professional body has imposed any previous disciplinary sanctions on the firm or individual concerned.