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SUP 15.3 General notification requirements

Matters having a serious regulatory impact

SUP 15.3.1R

A firm must notify the FCA11 immediately it becomes aware, or has information which reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

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  1. (1)

    the firm failing to satisfy one or more of the threshold conditions; or

  2. (2)

    any matter which could have a significant adverse impact on the firm's reputation; or

  3. (3)

    any matter which could affect the firm's ability to continue to provide adequate services to its customers and which could result in serious detriment to a customer of the firm; or

  4. (4)

    any matter in respect of the firm which could result in serious financial consequences to the UK financial system8 or to other firms.

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SUP 15.3.2G

The circumstances which may give rise to any of the events in SUP 15.3.1 R are wide-ranging and the probability of any matter resulting in such an outcome, and the severity of the outcome, may be difficult to determine. However, the FCA11 expects firms to consider properly all potential consequences of events.

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SUP 15.3.3G

In determining whether the FCA11 should be notified of24 an event that may occur in the foreseeable future, a firm should consider both the probability of the event happening and the severity of the outcome should it happen.

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SUP 15.3.4G

Guidance on satisfaction of the threshold conditions is given in COND.

SUP 15.3.5G

A firm making a notification in accordance with SUP 15.3.1 R should consider the guidance in SUP 15.7.2 G and notify the FCA11 by telephone if appropriate.

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Communication with the appropriate regulator in accordance with Principle 1124

SUP 15.3.7G

Principle 11 requires a firm to deal with its regulators in an open and cooperative way and to disclose to the FCA11 appropriately anything relating to the firm of which the FCA11 would reasonably expect notice. Principle 11 applies to unregulated activities as well as regulated activities and takes into account the activities of other members of a group.

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SUP 15.3.7AG

10Although PRIN does not apply to a firm in relation to its carrying on of auction regulation bidding, the FCA24expects to be given notice of events that are material to the FCA's24supervision of that business and so firms carrying on that business should have regard to the guidance in SUP 15.3.8 G to SUP 15.3.10 G.

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SUP 15.3.8G

Compliance with Principle 11 includes, but is not limited to, giving the FCA11 notice of:

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  1. (1)

    any proposed restructuring, reorganisation or business expansion which could have a significant impact on the firm's risk profile or resources, including, but not limited to:

    1. (a)

      setting up a new undertaking within a firm's group, or a new branch (whether in the United Kingdom or overseas); or

    2. (b)

      commencing the provision of cross border services into a new territory; or

    3. (c)

      commencing the provision of a new type of product or service (whether in the United Kingdom or overseas); or

    4. (d)

      ceasing to undertake a regulated activity or ancillary activity, or significantly reducing the scope of such activities; or

    5. (e)

      entering into, or significantly changing, a material outsourcing arrangement (a bank 1,7 a building society and a dormant account fund operator 7should also see 22

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      1 SYSC 83, and an insurer should also see SYSC 13.94 for further details); or

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    6. (f)

      a substantial change or a series of changes in the governing body of an overseas firm (other than an incoming firm); or

    7. (g)

      any change to the firm's prudential category or sub-category, as used in the Interim Prudential sourcebooks and SUP and on which guidance is given in SUP App 1; or2

    8. (h)

      any proposed change which limits the liability of any of the members or partners of a firm such as a general partner becoming a limited partner or re-registration as a limited liability company of a company incorporated with unlimited liability;2or7

    9. (i)

      in relation to a dormant account fund operator, notify the FCA11 when the operator intends to rely on a third party for the performance of operational functions which are critical or important for the performance of relevant services and activities in connection with operating a dormant account fund on a continuous and satisfactory basis;7

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  2. (2)

    any significant failure in the firm's systems or controls, including those reported to the firm by the firm's auditor;

  3. (3)

    any action which a firm proposes to take which would result in a material change in its capital adequacy or solvency, including, but not limited to:

    1. (a)

      any action which would result in a material change in the firm's financial resources or financial resources requirement; or

    2. (b)

      a material change resulting from the payment of a special or unusual dividend or the repayment of share capital or a subordinated loan; or

    3. (c)

      for firms which are subject to the rules on consolidated financial supervision, any proposal under which another group company may be considering such an action; or

    4. (d)

      significant trading or non-trading losses (whether recognised or unrecognised).

SUP 15.3.9G

The period of notice given to the FCA11 will depend on the event, although the FCA11 expects a firm to discuss relevant matters with it at an early stage, before making any internal or external commitments.

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SUP 15.3.10G

A notification under Principle 11 may be given orally or in writing (as set out in SUP 15.7.1 R and SUP 15.7.2 G), although the FCA11 may request written confirmation of a matter. However, it is the responsibility of a firm to ensure that matters are properly and clearly communicated to the FCA.11 A firm should provide a written notification if a matter either is complex or may be such as to make it necessary for the FCA11 to take action. A firm should also have regard to Principle 11 and the guidance in SUP 15.7.2 G in respect of providing important information promptly.

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Breaches of rules and other requirements in or under the Act or the CCA 14

SUP 15.3.11R
  1. (1)

    A firm must notify the FCA11 of:

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    1. (a)

      a significant breach of a rule (which includes a Principle, a Statement of Principle or a COCON rule)20; or

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    2. (aa)

      a significant breach of any requirement imposed by the CCA or by regulations or an order made under the CCA (except if the breach is an offence, in which case (c) applies), but any notification under (aa) is required to be made only to the FCA; or 14

    3. (b)

      a breach of any requirement imposed by the Act or by regulations or an order made under the Act by the Treasury (except if the breach is an offence, in which case (c) applies); or

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    4. (c)

      the bringing of a prosecution for, or a conviction of, any offence under the Act or the CCA14; or

    5. (d)

      a breach of a directly applicable provision in the MiFID Regulation; or6

    6. (da)

      a breach of a directly applicable provision in the EU CRR or any directly applicable regulations made under CRD or the EU CRR; or12

    7. (e)

      a breach of any requirement in regulation 4C(3) (or any successor provision) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007;6 or9

    8. (ea)

      a breach of a directly applicable provision in the auction regulation; or10

    9. (f)

      it exceeding (or becoming aware that it will exceed) the limit in BIPRU 10.5.6 R;9 or13

    10. (g)

      a breach of the AIFMD UK regulation; or13

    11. (h)

      a breach of any directly applicable EU regulation made under AIFMD;13

    by (or as regards (c) against) the firm or any of its directors, officers, employees, approved persons, or appointed representativesor, where applicable, tied agents.6

  2. (2)

    A firm must make the notification in (1) immediately it becomes aware, or has information which reasonably suggests, that any of the matters in (1) has occurred, may have occurred or may occur in the foreseeable future.

SUP 15.3.11AG

6SUP 15.3.11 R (1)(e) relates to the standard requirement in the permission of those firms which fall outside MiFID because of the Treasury's implementation of Article 3 of MiFID. Guidance on how the Treasury has exercised the Article 3 exemption for the United Kingdom is given in Q48 and the following questions and answers in PERG 13.5 (Exemptions from MiFID).

SUP 15.3.12G

In SUP 15.3.11 R(1)(a) or (1)(aa)18, significance should be determined having regard to potential financial losses to customers or to the firm, frequency of the breach, implications for the firm's systems and controls and if there were delays in identifying or rectifying the breach.

SUP 15.3.13G

In assessing whether an event that may occur in the foreseeable future should be notified to the FCA11 a firm should consider the guidance in SUP 15.3.3 G.

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SUP 15.3.14G

A notification under SUP 15.3.11 R should include:

  1. (1)

    information about any circumstances relevant to the breach or offence;

  2. (2)

    identification of the rule or requirement or offence; and

  3. (3)

    information about any steps which a firm or other person has taken or intends to take to rectify or remedy the breach or prevent any future potential occurrence.

SUP 15.3.14AG
  1. (1)

    20Some matters that need to be notified under SUP 15.3.11R may also have to be notified under SUP 10A.14 (Changes to an FCA-approved person's details).

  2. (2)

    However, there is no need to make the same notification twice.

  3. (3)

    Any notification required under both SUP 10C.14 and SUP 15.3.11R should be made in accordance with SUP 10C.14, which requires notification using Forms C or D.

  4. (4)

    SUP 10C.14 only applies to relevant authorised persons. SUP 10A.14 applies similar, but less extensive, obligations to firms that are not relevant authorised persons. Paragraphs (2) and (3) apply to those notifications as well. Such notifications should however be made under SUP 10A.14.

SUP 15.3.14B
20
  1. (1)

    Some matters that need to be notified under SUP 15.3.11R may also have to be notified under SUP 15.11 (Notification of COCON breaches and disciplinary action).

  2. (2)

    If the same thing has to be notified under SUP 15.11 and SUP 15.3.11R, a firm should make separate notifications under both. This is because:23

    1. (a)

      notification under SUP 15.11 is annual and notification under SUP 15.3.11R is immediate; and23

    2. (b)

      the details of what has to be notified under those requirements are different.23

Civil, criminal or disciplinary proceedings against a firm

SUP 15.3.15R

A firm must notify the FCA11 immediately if:

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  1. (1)

    civil proceedings are brought against the firm and the amount of the claim is significant in relation to the firm's financial resources or its reputation; or

  2. (2)

    any action is brought against the firm under section 71 of the Act (Actions for damages) or section 150 (Actions for damages); or

  3. (3)

    disciplinary measures or sanctions have been imposed on the firm by any statutory or regulatory authority, competition authority, 21professional organisation or trade body (other than the FCA11 or the firm becomes aware that one of those bodies has started an investigation into its affairs; or

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  4. (4)

    the firm is prosecuted for, or convicted of, any offence involving fraud or dishonesty, or any penalties are imposed on it for tax evasion; or

  5. (5)

    it is an OPS firm, which is a trustee, and is removed as trustee by a court order.

SUP 15.3.16G

A notification under SUP 15.3.15 R should include details of the matter and an estimate of the likely financial consequences, if any.

Fraud, errors and other irregularities

SUP 15.3.17R

A firm must notify the FCA11 immediately if one of the following events arises and the event is significant:

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  1. (1)

    it becomes aware that an employee may have committed a fraud against one of its customers; or

  2. (2)

    it becomes aware that a person, whether or not employed by it, may have committed a fraud against it; or

  3. (3)

    it considers that any person, whether or not employed by it, is acting with intent to commit a fraud against it; or

  4. (4)

    it identifies irregularities in its accounting or other records, whether or not there is evidence of fraud; or

  5. (5)

    it suspects that one of its employees may be guilty of serious misconduct concerning his honesty or integrity and which is connected with the firm's regulated activities or ancillary activities.

SUP 15.3.18G

In determining whether a matter is significant, a firm should have regard to:

  1. (1)

    the size of any monetary loss or potential monetary loss to itself or its customers (either in terms of a single incident or group of similar or related incidents);

  2. (2)

    the risk of reputational loss to the firm; and

  3. (3)

    whether the incident or a pattern of incidents reflects weaknesses in the firm's internal controls.

SUP 15.3.19G

The notifications under SUP 15.3.17 R are required as the FCA11 needs to be aware of the types of fraudulent and irregular activity which are being attempted or undertaken, and to act, if necessary, to prevent effects on consumers or other firms. A notification under SUP 15.7.3 G should provide all relevant and significant details of the incident or suspected incident of which the firm is aware.

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SUP 15.3.20G

In addition, the firm may have suffered significant financial losses as a result of the incident, or may suffer reputational loss, and the FCA11 will wish to consider this and whether the incident suggests weaknesses in the firm's internal controls.

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Insolvency, bankruptcy and winding up

SUP 15.3.21R

A firm must notify the FCA11 immediately of any of the following events:

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  1. (1)

    the calling of a meeting to consider a resolution for winding up the firm; or

  2. (2)

    an application to dissolve the firm or to strike it off the Register of Companies; or

  3. (3)

    the presentation of a petition for the winding up of the firm; or

  4. (4)

    the making of, or any proposals for the making of, a composition or arrangement with any one or more of its creditors; or

  5. (5)

    an application for the appointment of an administrator or trustee in bankruptcy to the firm; or

  6. (6)

    the appointment of a receiver to the firm (whether an administrative receiver or a receiver appointed over particular property); or

  7. (7)

    an application for an interim order against the firm under section 252 of the Insolvency Act 1986 (or, in Northern Ireland, section 227 of the Insolvency (Northern Ireland) Order 1989); or

  8. (8)

    if the firm is a sole trader:

    1. (a)

      an application for a sequestration order on the firm; or

    2. (b)

      the presentation of a petition for bankruptcy; or

  9. (9)

    anything equivalent to (1) to (8) above occurring in respect of the firm in a jurisdiction outside the United Kingdom.

Lloyd's of London

SUP 15.3.22D

3SUP 15.3.23 D to SUP 15.3.25 D are given in relation to the exercise of the powers of the Society and of the Council generally, with a view to achieving the objective of enabling the FCA11 to:

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  1. (1)

    comply with its general duty under section 314 of the Act (Regulators’24 general duty);

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  2. (2)

    determine whether underwriting agents, or approved persons acting for them or on their behalf, are complying with the requirements imposed on them by or under the Act;

  3. (3)

    enforce the provisions of the Act, or requirements made under the Act, by enabling the FCA11 to consider, where appropriate, whether it should use its powers, for example, to:

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    1. (a)

      vary or cancel the permission of an underwriting agent, under section 55J24 of the Act (Variation or cancellation on 24initiative of regulator24);

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    2. (b)

      withdraw approval from an approved person acting for or on behalf of an underwriting agent, under section 63 of the Act (Withdrawal of approval) (see EG 95);

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    3. (c)

      prohibit an individual acting for or on behalf of an underwriting agent from involvement in regulated activities, under section 56 of the Act (Prohibition orders) (see EG 95);

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    4. (d)

      require an underwriting agent to make restitution, under section 384 of the Act (Power of FCA or PRA 24 to require restitution) (see EG 115);

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    5. (e)

      discipline an underwriting agent, or an approved person acting for it or on its behalf, for a breach of a requirement made under the Act, including the Principles, Statements of Principle and rules (see DEPP 6 and EG 75);

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    6. (f)

      apply to court for an injunction, restitution order or insolvency order (see EG 10, EG 11 and EG 135); and

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    7. (g)

      prosecute any criminal offence that the FCA11 has power to prosecute under the Act (see EG 125).

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SUP 15.3.23D

3The Society must immediately inform the FCA11 in writing if it becomes aware that any matter likely to be of material concern to the FCA11 may have arisen in relation to:

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  1. (1)

    the regulated activities for which the Society has permission; or

  2. (2)

    underwriting agents; or

  3. (3)

    approved persons or individuals acting for or on behalf of underwriting agents.

SUP 15.3.24D

3The Society must inform the FCA11 if it commences investigations or disciplinary proceedings relating to apparent breaches:

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  1. (1)

    of the Act or requirements made under the Act, including the threshold conditions or the Principles or other rules, by an underwriting agent; or

  2. (2)

    of the Statements of Principle by an individual or other person who carries out controlled functions for or on behalf of an underwriting agent.

SUP 15.3.25D

3The Society must inform the FCA11 if it commences investigations or disciplinary proceedings which do not fall within the scope of SUP 15.3.24 D but which:

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  1. (1)

    involve an underwriting agent, or an approved person who carries out controlled functions for it or on its behalf; or

  2. (2)

    may indicate that an individual acting for or on behalf of an underwriting agent may not be a fit and proper person to perform functions in relation to regulated activities.

UK AIFMs15

SUP 15.3.26R

15A full-scope UK AIFM must notify the FCA before implementing any material changes to the conditions under which it was granted permission to manage an AIF, in particular to the information it provided in its application for that permission.

[Note: article 10(1) of AIFMD]

SUP 15.3.27G

15Changes that the FCA would expect to be notified of under SUP 15.3.26 R include:

  1. (1)

    an AIFM being appointed to manage another AIF;

  2. (2)

    the appointment of a different depositary for an AIF the AIFM manages; and

  3. (3)

    the appointment of any new senior personnel if the AIFM is not required to apply for the FCA's approval for that appointment under section 59 of the Act.

SUP 15.3.27AR

19A full-scope UK AIFM must notify the FCA of material changes under SUP 15.3.26 R in the following manner:

  1. (1)

    for the management of a new AIF or a new investment compartment of an AIF, by using the form in SUP 15 Annex 6A R;

  2. (2)

    for changes of senior personnel whose appointment is not required to be approved by the FCA under section 59 of the Act, by using the form in SUP 15 Annex 6B R; and

  3. (3)

    for all other material changes, by using the form in SUP 15 Annex 6C R .

SUP 15.3.28R

15Where a small authorised UK AIFM no longer meets the conditions in regulation 917 (meaning of “small AIFM”)19 of the AIFMD UK regulation it must:

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  1. (1)

    immediately notify the FCA using the form in SUP 15 Annex 6D R;19 and

  2. (2)

    within 30 calendar days, apply to the FCA for a variation of its permission to become a full-scope UK AIFM.

[Note: article 3(3) second and third paragraphs of AIFMD]

SUP 15.3.29R
  1. (1)

    19A small authorised UK AIFM must notify the FCA before it starts to manage a new AIF or a new investment compartment of an AIF using the form in SUP 15 Annex 6A R.

  2. (2)

    (1) does not apply where:

    1. (a)

      the management of the new AIF or investment compartment would result in the AIFM exceeding the relevant threshold of assets under management so that it will no longer meet the conditions in regulation 9 (meaning of "small AIFM") of the AIFMD UK regulation (see SUP 15.3.28 R); or

    2. (b)

      the AIF is a EuSEF or EuVECA (see SUP 15.3.31 G).

SUP 15.3.30D

  1. (1)

    19A small registered UK AIFM must notify the FCA of changes in the following manner:

    1. (a)

      for the management of a new AIF or a new investment compartment of an AIF, by using the form in SUP 15 Annex 6A R;

    2. (b)

      (a) does not apply where:

      1. (i)

        the management of the new AIF or investment compartment would result in the AIFM exceeding the relevant threshold of assets under management so that it will no longer meet the conditions in regulation 9 (meaning of "small AIFM") of the AIFMD UK regulation (see (2)); or

      2. (ii)

        the AIF is a EuSEF or EuVECA (see SUP 15.3.31 G);

  2. (2)

    if it no longer meets the conditions in regulation 9 (meaning of “small AIFM”) of the AIFMD UK regulation, by using the form in SUP 15 Annex 6D R; and

  3. (3)

    if it ceases to meet the conditions for registration in regulation 15(1) (small registered AIFMs ceasing to meet the requirements for registration), by using the form in SUP 15 Annex 6E D.

SUP 15.3.31G

19A EuSEF manager or a EuVECA manager should notify the FCA of the following changes in the following manner:

  1. (1)

    for changes to senior personnel, by using the form in SUP 15 Annex 6B R; and

  2. (2)

    for changes to the jurisdiction in which its EuSEF or EuVECA is marketed or to market a new EuSEF or EuVECA, by using the form in SUP 15 Annex 6F G

21Competition law infringements

SUP 15.3.32R
  1. (1)

    21A firm must notify the FCA if it has or may have committed a significant infringement of any applicable competition law.

  2. (2)

    A firm must make the notification as soon as it becomes aware, or has information which reasonably suggests, that a significant infringement has, or may have, occurred.

  3. (3)
    1. (a)

      A firm must make the notification in writing unless (3)(b) applies.

    2. (b)

      A firm may make the notification orally where it has made or will make an oral application for leniency or immunity covering the same subject matter to any competition authority.

SUP 15.3.33G

21A notification under SUP 15.3.32R should include:

  1. (1)

    information about any circumstances relevant to the infringement or possible infringement;

  2. (2)

    identification of the relevant law; and

  3. (3)

    information about any steps which the firm or other person has taken or intends to take to rectify or remedy the infringement or prevent any future potential occurrence.

SUP 15.3.34G

21In determining whether a matter is significant, a firm should have regard to the actual or potential effect on competition, any customer detriment, and the duration of any infringement and implications for the firm's systems and controls.

SUP 15.3.35G
  1. (1)

    21Where a firm notifies the FCA under SUP 15.3.32R, the firm should not infer or assume that any lack of (or delay in) a response, objection or enforcement activity by the FCA or any other competition authority means that the agreement or conduct:

    1. (a)

      does not infringe competition law; or

    2. (b)

      is, or will be, immune from enforcement.

  2. (2)

    Notification under SUP 15.3.32R is not sufficient to constitute an application for leniency or immunity from penalty in any subsequent investigation under Chapter 1 of the Competition Act 1998 or article 101 of the Treaty.