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SUP 15.11 Notification of COCON breaches and disciplinary action1

Reasons for making a notification to the FCA

SUP 15.11.1G

1Under section 64A of the Act, the FCA may make rules about the conduct of approved persons and persons who are employees of relevant authorised persons.

SUP 15.11.2G

COCON sets out rules and guidance about the conduct of conduct rules staff.

SUP 15.11.3G

[deleted]2

SUP 15.11.4G

Under section 64C of the Act, a firm must notify the FCA if it takes disciplinary action against any conduct rules staff and the reason for this action is a reason specified in rules made by the FCA in SUP 15.11.6R.

SUP 15.11.5G

Disciplinary action is defined in section 64C of the Act as the issuing of a formal written warning, the suspension or dismissal of a person who is a member of a relevant authorised person's conduct rules staff or the reduction or recovery of any of such person's remuneration.

SUP 15.11.6R

If a reason for taking the disciplinary action is any action, failure to act or circumstance that amounts to a breach of COCON, then the firm is required to notify the FCA of the disciplinary action.

SUP 15.11.7G

A firm should make a separate notification about a person under section 64C of the Act where:

  1. (1)

    it has made a notification to the FCA about a person pursuant to SUP 15.3.11R(1)(a) because of a breach of COCON2; and

  2. (2)

    it subsequently takes disciplinary action against the person for the action, failure to act, or circumstance, that amounted to a breach of COCON.

SUP 15.11.8G

If, after a firm has made a notification for a person (A) pursuant to section 64C of the Act,2 it becomes aware of facts or matters which cause it to change its view that A has breached COCON, or cause it to determine that A has breached a provision of COCON other than the provision to which the notification related, the firm should inform the FCA of those facts and matters and its revised conclusion in line with a firm’s obligation to comply with Principle 11, SUP 15.6.4R and, if applicable, SUP 10C or SUP 15.11.13R(4)3.

2
SUP 15.11.9G

If a firm takes disciplinary action as a result of a conduct breach (see SUP 15.11.6R) against an employee but the employee has appealed or plans to appeal, the firm should still report the disciplinary action under section 64C of the Act but should include the appeal in the notification. The firm should update the FCA on the outcome of any appeal.2

SUP 15.11.10G

[deleted]2

SUP 15.11.11G

In relation to any conduct rules staff, the FCA does not expect a firm to notify it pursuant to2 section 64C of the Act if the2 breach of COCON occurred before the application of COCON to that firm.

Timing and form of notifications: SMF managers

SUP 15.11.12G

Where a firm is required to notify the FCA pursuant to2 section 64C of the Act and that notification relates to an SMF manager, SUP 10C sets out how and when the notification must be made, and the relevant notification rules in SUP 10C apply.

Timing and form of notifications: certification employees and other conduct rules staff

SUP 15.11.13R
  1. (1)

    A firm must make any notifications required pursuant to section 64C of the Act relating to a certification employee or other conduct rules staff in accordance with SUP 15.11.13R to SUP 15.11.15R.3

  2. (2)

    That notification must be made annually.3

  3. (3)

    Each notification must:3

    1. (a)

      cover the 12 month period ending on the last day of August; and3

    2. (b)

      be submitted to the FCA:3

      1. (i)

        within two months of the end of the reporting period; or3

      2. (ii)

        (if the end of the reporting period in (b)(i) falls on a day which is not a business day) so as to be received no later than the first business day after the end of that period.3

  4. (4)

    SUP 15.6.4R and SUP 15.6.5R (updates to a notification that is or has become incorrect) apply to a notification under this rule but the firm must include the update or correction in the next notification it is due to make under this rule rather than in the time and manner otherwise required for notifications under those rules.3

  5. (5)

    If a firm (other than a credit union) has nothing to report under section 64C of the Act and nothing to report under SUP 15.11.13R(4) for a particular reporting period, it must notify the FCA of that fact in accordance with SUP 15.11.13R to SUP 15.11.14R.3

2
SUP 15.11.13AG

3SUP 15.11.8G gives examples of when a notification should be updated under SUP 15.11.13R(4).

SUP 15.11.14R
  1. (1)

    A firm other than a credit union must make each notification pursuant to SUP 15.11.13R (notifications about section 64C of the Act relating to a certification employee or other conduct rules staff) by submitting it online through the FCA’s website using the electronic system made available by the FCA for this purpose.3

  2. (2)

    A firm must use the version of Form H made available on the electronic system referred to in (1), which is based on the version found in SUP 15 Annex 7R.3

  3. (3)

    If the information technology systems used by the FCA fail and online submission is unavailable for 24 hours or more, SUP 15.11.15R applies until such time as the facilities for online submission are restored.3

2
SUP 15.11.14AG
  1. (1)

    3If the information technology systems used by the FCA fail and online submission is unavailable for 24 hours or more, the FCA will endeavour to publish a notice on its website confirming that:

    1. (a)

      online submission is unavailable; and

    2. (b)

      the alternative methods of submission in SUP 15.11.15R apply.

  2. (2)

    Where SUP 15.11.14R(3) applies to a firm, GEN 1.3.2R (Emergency) does not apply.

SUP 15.11.15R

A credit union3 must make each notification pursuant to2 SUP 15.11.13R (notifications about3 section 64C of the Act relating to a certification employee or other conduct rules staff)3 in accordance with the rules and guidance in SUP 15.7, using Form H as set out in SUP 15 Annex 7R3.

General guidance on notifications of rule breaches and disciplinary action

SUP 15.11.16G

A firm is3 required to submit nil return notifications about3 section 64C of the Act in the case of certification employees and other conduct rules staff (see SUP 15.11.13R(5)). However, a credit union is not required to make a nil return3.

2
SUP 15.11.17G

The obligation to notify pursuant to2 section 64C of the Act or to update or correct a notification under SUP 15.11.13R(4)3 does not replace or limit a firm’s obligation to comply with Principle 11.

SUP 15.11.18G

When considering whether to make a notification pursuant to2 section 64C of the Act, a firm should also consider whether a notification should be made under any notification rules, including, without limitation, any notification rules that require a notification to be made to the PRA.

SUP 15.11.19G

The obligations to make a notification pursuant to2 section 64C of the Act apply notwithstanding any agreement (for example a 'COT 3' Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS)) or any other arrangements entered into by a firm and an employee upon termination of the employee's employment. A firm should not enter into any such arrangements or agreements that could conflict with its obligations under this section.

SUP 15.11.20G

Failing to disclose relevant information to the FCA may be a criminal offence under section 398 of the Act.