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SUP 7.3 Criteria for varying a firm's permission or imposing, varying or cancelling requirements on the FCA's own initiative5

SUP 7.3.1G

The FCA5 expects to maintain a close working relationship with certain types of firm and expects that routine supervisory matters arising can be resolved during the normal course of this relationship by, for example, issuing individual guidance where appropriate (see SUP 9.3). However, where the FCA deems it appropriate, it will exercise its own-initiative powers:5

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  1. (1)

    in circumstances where it considers it appropriate for the firm to be subject to a formal requirement, breach of which could attract enforcement action; or

  2. (2)

    if a variation is needed to enable the firm to comply with the requirement, due to agreements the firm may have with third parties. (For example a firm may be under a contractual obligation to do something, but only if it can do so lawfully. In this case, if the FCA5considers the firm must not do it, then the FCA5 would need to prevent it doing so through a variation in its Part 4A permission5 to enable the firm to avoid breaching the contractual obligation.)

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SUP 7.3.2G

The FCA5may also5 seek to exercise its own-initiative powers in certain situations,5 including the following:

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  1. (1)

    If the FCA5 determines that a firm's management, business or internal controls give rise to material risks that are not fully addressed by existing requirements, the FCA5may seek to use its own-initiative powers.

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  2. (2)

    If a firm becomes or is to become involved with new products or selling practices which present risks not adequately addressed by existing requirements, the FCA5may seek to vary the firm's Part 4A permission5 in respect of those risks.

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  3. (3)

    If there has been a change in a firm's structure, controllers, activities or strategy which generate material uncertainty or create unusual or exceptional risks, then the FCA5 may seek to use its own-initiative powers.5 (See also SUP 11.74 for a description of the FCA's5ability to impose a requirement5 on the acquisition of5 control of a firm under section 55O5 of the Act.)

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  4. (4)

    At the request of, or to assist an overseas regulator as set out in section 55Q of the Act.5

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SUP 7.3.3G

Pursuant to sections 55L, 55N, 55O, 55P and 55Q of the Act, within the scope of its functions and powers, the FCA 5may seek to impose requirements which include but are not restricted to:

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  1. (1)

    requiring a firm to submit regular reports covering, for example, trading results, management accounts, customer complaints, connected party transactions;

  2. (2)

    where appropriate, 5requiring a firm to maintain prudential limits, for example on large exposures, foreign currency exposures or liquidity gaps;

  3. (3)

    requiring a firm to submit a business plan;5

  4. (4)

    limiting the firm's activities;

  5. (5)

    requiring an FCA-authorised person5 to maintain a particular amount or type of financial resources.

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SUP 7.3.4G

The FCA5 will seek to give a firm reasonable notice of an intent to vary its permission or impose a requirement5 and to agree with the firm an appropriate timescale. However, if the FCA5 considers that a delay may create a risk to any of the FCA's statutory objectives5,3 the FCA5 may need to act immediately using its powers under section 55J and/or 55L5 of the Act5 with immediate effect.

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