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Status: You are viewing the version of the handbook as on 2016-06-30.

SUP 15.11 Notification of COCON breaches and disciplinary action1

Reasons for making a notification to the FCA

SUP 15.11.1GRP

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 15.11.2GRP

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

SUP 15.11.3G

[deleted]2

SUP 15.11.4GRP

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 15.11.5GRP

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 15.11.6RRP

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 15.11.7GRP

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 15.11.8GRP

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 10C2.

SUP 15.11.9GRP

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 15.11.11GRP

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 15.11.12GRP

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 15.11.13RRP

A firm must make any notifications required pursuant to2 section 64C of the Act relating to a certification employee or other conduct rules staff annually. That notification should be made in October each year and cover the year up to the first day of that month.

SUP 15.11.14RRP

A firm must make any notifications required pursuant to2 section 64C of the Act relating to a certification employee or other conduct rules staff on Form H (SUP 15 Annex 7R).

SUP 15.11.15RRP

A firm must make notifications pursuant to2 section 64C of the Act relating to a certification employee or other conduct rules staff in accordance with the rules and guidance in SUP 15.7.

General guidance on notifications of rule breaches and disciplinary action

SUP 15.11.16G

A firm is not required to submit nil return notifications pursuant to section 64C of the Act2.

SUP 15.11.17GRP

The obligation to notify pursuant to2 section 64C of the Act does not replace or limit a firm’s obligation to comply with Principle 11.

SUP 15.11.18GRP

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 15.11.19GRP

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 15.11.20GRP

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