Related provisions for PERG 9.7.1
21 - 40 of 137 items.
6An AIFM must take all reasonable steps to identify conflicts of interest that arise, in the course of managing AIFs, between:(1) the AIFM, including its managers, employees or any person directly or indirectly linked to the AIFM by control, and an AIF managed by the AIFM or the investors in that AIF; or(2) an AIF or the investors in that AIF, and another AIF or the investors in that AIF; or(3) an AIF or the investors in that AIF, and another client of the AIFM; or(4) an AIF or
6An AIFM must take all reasonable steps to avoid conflicts of interest and, when they cannot be avoided, manage, monitor and (where applicable) disclose those conflicts of interest in order to prevent them from adversely affecting the interests of the AIFs and their investors, and to ensure that the AIFs it manages are fairly treated.[Note: article 12(1)d of AIFMD]
6An AIFM must:(1) maintain and operate effective organisational and administrative arrangements, with a view to taking all reasonable steps designed to identify, prevent, manage and monitor conflicts of interest in order to prevent them from adversely affecting the interests of the AIFs and their investors;(2) segregate, within its own operating environment, tasks and responsibilities which may be regarded as incompatible with each other or which may potentially generate systematic
6If the organisational arrangements made by the AIFM to identify, prevent, manage and monitor conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to investors' interests will be prevented, the AIFM must:(1) clearly disclose the general nature or sources of conflicts of interest to the investors before undertaking business on their behalf; and(2) develop appropriate policies and procedures.[Note: article 14(2) of AIFMD]
(1) This chapter assists in achieving the statutory objective of protecting consumers by providing an appropriate degree of protection in respect of authorised funds that are only intended for investors that are, in general, prepared to accept a higher degree of risk in their investments or have a higher degree of experience and expertise than investors in retail schemes.(2) This section ceases to apply where a qualified investor scheme has converted to be authorised as a UCITS
(1) Subject to (3), the3authorised fund manager of a qualified investor scheme must take reasonable care to ensure that ownership of units in that scheme is recorded in the register only2 for a person to whom such units may be promoted under COBS 4.12.4R2.32112(2) The authorised fund manager will be regarded as complying with (1) and (3)3 to the extent that it can show that it was reasonable for it to rely on relevant information provided by another person.(3) 3In addition to
(1) Qualified investor schemes are authorised funds which are intended only for professional clients and for retail clients who are2 sophisticated investors. For this reason, qualified investor schemes are subject to a restriction on promotion under COBS 4.12.3 R. See also COBS 4.12.13 G.22123211(1A) 3The authorised contractual scheme manager of a qualified investor scheme which is4 an ACS must take reasonable care to ensure that subscription in relation to the units of this type
1Sections 87A(2), (2A), 2(3) and (4) of the Act provide for the general contents of a prospectus:
(2) |
The necessary information is the information necessary to enable investors to make an informed assessment of – |
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(a) |
the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the transferable securities and of any guarantor; and |
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(b) |
the rights attaching to the transferable securities.2 |
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2(2A) |
If, in the case of transferable securities to which section 87 applies, the prospectus states that the guarantor is a specified EEA State, the prospectus is not required to include other information about the guarantor. |
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(3) |
The necessary information must be presented in a form which is comprehensible and easy to analyse. |
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(4) |
The necessary information must be prepared having regard to the particular nature of the transferable securities and their issuer.6 266 |
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Sections 87A(5) and (6) of the Act set out the requirement for a summary to be included in a prospectus:
(5) |
The prospectus must include a summary (unless the transferable securities in question are ones in relation to which prospectus rules provide that a summary is not required). |
(6) |
The summary must convey concisely, in non-technical language and in an appropriate structure, the key information relevant to the securities which are the subject of the prospectus and, when read with the rest of the prospectus, must be an aid to investors considering whether to invest in the securities2. 2 |
The summary must also contain a warning to the effect that:(1) it should be read as an introduction to the prospectus;(2) any decision to invest in the transferable securities should be based on consideration of the prospectus as a whole by the investor; (3) where a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might, under the national legislation of the EEA States, have to bear the costs of translating the prospectus
1Each of the exemptions listed below applies only if the retail client is of the type described for the exemption and provided any additional conditions for the exemption are met.
Title |
Type of retail client |
Additional conditions |
(a) An individual who meets the requirements set out in COBS 4.12.6R; or (b) an individual in an EEA State other than the UK who meets requirements which are broadly equivalent to those set out in COBS 4.12.6R; or (c) a person (or persons) legally empowered to make investment decisions on behalf of an individual who meets the earnings or net asset requirements in (a) or (b) above. |
The firm must consider that the mutual society share is likely to be suitable for that individual, based on a preliminary assessment of that individual’s profile and objectives (see COBS 4.12.5G(2)). |
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(a) An individual who meets the requirements set out in COBS 4.12.7R; or (b) an individual in an EEA State other than the UK who meets requirements which are broadly equivalent to those set out in COBS 4.12.7R; or (c) an individual who meets the requirements for either (a) or (b) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm's client. |
Not applicable. |
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(a) An individual who meets the requirements set out in COBS 4.12.8R; or (b) an individual in an EEA State other than the UK who meets requirements which are broadly equivalent to those set out in COBS 4.12.8R; or (c) an individual who meets the requirements for either (a) or (b) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm's client. |
Not applicable. |
(1) 1For the purposes of any assessments or certifications required by the exemptions in COBS 22.2.4R, any references in COBS 4.12 provisions to non-mainstream pooled investments must be read as though they are references to mutual society shares.(2) If the firm is relying on the exemptions for certified high net worth investors, certified sophisticated investors or self-certified sophisticated investors to comply with this section, the statement the investor must sign should
1A firm which carries on an activity which is subject to this section must comply with the following record-keeping requirements:(1) the person allocated the compliance oversight function in the firm must make a record at or near the time of the activity certifying it complies with the requirements set out in this section;(2) the making of the record required in (1) may be delegated to one or more employees of the firm who report to and are supervised by the person allocated the
(1) 5Unless permitted by COBS 4.7.8 R, a firm must not communicate or approve a direct-offer financial promotion relating to a non-readily realisable security to or for communication to a retail client without the conditions in (2) and (3) being satisfied.(2) The first condition is that the retail client recipient of the direct-offer financial promotion is one of the following:(a) certified as a ‘high net worth investor’ in accordance with COBS 4.7.9 R;(b) certified as a ‘sophisticated
5A certified high net worth investor, a certified sophisticated investor or a self-certified sophisticated investor is an individual who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the terms set out in the applicable rule listed below, substituting “non-readily realisable securities” for “non-mainstream pooled investments”:(1) certified high net worth investor: COBS 4.12.6 R;(2) certified sophisticated investor:
5A certified restricted investor is an individual who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the following terms:
“RESTRICTED INVESTOR STATEMENT I make this statement so that I can receive promotional communications relating to non-readily realisable securities as a restricted investor. I declare that I qualify as a restricted investor because: |
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(a) |
in the twelve months preceding the date below, I have not invested more than 10% of my net assets in non-readily realisable securities; and |
(b) |
I undertake that in the twelve months following the date below, I will not invest more than 10% of my net assets in non-readily realisable securities. |
Net assets for these purposes do not include: |
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(a) |
the property which is my primary residence or any money raised through a loan secured on that property; |
(b) |
any rights of mine under a qualifying contract of insurance; or |
(c) |
any benefits (in the form of pensions or otherwise) which are payable on the termination of my service or on my death or retirement and to which I am (or my dependants are), or may be entitled. |
I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me to seek advice from an authorised person who specialises in advising on non-readily realisable securities. Signature: Date:” |
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2The FCA will not admit shares of a company incorporated in a non-EEA State that are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless the FCA is satisfied that the absence of the listing is not due to the need to protect investors. [Note: Article 51 CARD]
1Although there is no restriction on an applicant taking a controlling stake in an investee company, to ensure a spread of investment risk an applicant should avoid:(1) cross-financing between the businesses forming part of its investment portfolio including, for example, through the provision of undertakings or security for borrowings by such businesses for the benefit of another; and(2) the operation of common treasury functions as between the applicant and investee compani
The information in the investment policy, including quantitative information concerning the exposures mentioned in LR 15.2.7 R, should be sufficiently precise and clear as to enable an investor to:(1) assess the investment opportunity;(2) identify how the objective of risk spreading is to be achieved; and(3) assess the significance of any proposed change of investment policy.
Activities which are purely profile raising and which do not identify and promote particular investments or investment services may not amount to either an invitation or inducement of any kind. Examples of this include where listed companies sponsor sporting events or simply put their name or logo on the side of a bus or on an umbrella. This is usually done with a view, among other things, to putting their names in the minds of potential investors or consumers. In other cases,
A person ('A') may enquire:(1) whether another person is certified as a high net worth individual or a sophisticated investor so that A may determine whether an exemption applies; or(2) whether a person has received material sent to him; or(3) how a person might propose to react to a take-over offer. Enquiries of this or a similar kind will not amount to inducements to engage in investment activity unless they involve persuasion or incitement to do so. The enquiry may be accompanied
The person who responds to the request for the material in the circumstances in PERG 8.4.29 G may make a financial promotion in the form of a covering letter or oral communication ('C'). This will not mean that the material accompanying C must itself be treated as an inducement. This will depend on the circumstances. The material itself would only become an inducement if it is turned into part of the financial promotion in C. For example, C may refer to the contents or part of
Things such as help-lines for persons who wish to make an investment will not usually involve invitations or inducements to engage in investment activity. This is where their purpose is merely to explain or offer guidance on how to invest or to accept an offer. In such cases, the investor will already have decided to invest and there will be no element of persuasion on the part of the person giving the explanation or guidance.
The activity of arranging (bringing about) deals in investments is aimed at arrangements that would have the direct effect that a particular transaction is concluded (that is, arrangements that bring it about). The activity of making arrangements with a view to transactions in investments is concerned with arrangements of an ongoing nature whose purpose is to facilitate the entering into of transactions by other parties. This activity has a potentially broad scope and typically
8It is of note, however, that the regulated activity of making arrangements with a view to transactions in investments is not limited to arrangements that are participated in by investors. It is also not necessary that both the buyer and the seller under the transaction that is being arranged should participate in the arrangements. So, arrangements may come within the activity if they are participated in only by product companies with a view to their issuing investments. A person
8It is also the FCA's view that certain arrangements may come within the activity even though the parties may have already committed to the transaction using other arrangements. This would typically apply to a clearing house whose clearing and settlement facilities may be seen to be made with a view to the members of the clearing house, as participants in its arrangements, entering into transactions (usually through an investment exchange) which must be cleared through the clearing
The advice must also be given to someone who holds specified investments or is a prospective investor (including trustees, nominees or discretionary fund managers). This requirement excludes advice given to a person who receives it in another capacity. An example of this might be a tax professional to whom advice is given to inform the practice of his profession or advice given to an employer for the purposes of setting up a group personal pension scheme. Further guidance on the
34In most cases where there is a loss, the endowment policy will be surrendered and put towards the cost of setting up a suitable repayment mortgage. Where this is the case, that part of the surrender value relating to the windfall augmentation should be paid as a cash lump sum to the investor or to the investor's order as part of the redress package. Only that part of the surrender value which does not relate to the windfall augmentation should be put towards the cost of setting
34Firms are entitled to mitigate losses by making use of the Traded Endowment Policy (TEP) market (see DISP App 1.3.8 G to DISP App 1.3.10 G). This allows firms to sell policies on the TEP market to meet the costs of redress, rather than using the surrender value. Where this method is adopted, firms should pay to the investor, as part of the redress package, a cash lump sum representing that proportion of the policy realised which would have related to the windfall augmentati
The risks arising from securitisation transactions in relation to which a firm is investor,3originator or sponsor, including reputational risks,3 must be evaluated and addressed through appropriate policies and procedures, to ensure in particular that the economic substance of the transaction is fully reflected in risk assessment and management decisions.[Note:BCD Annex V point 8]3
BIPRU 9 deals with:(1) requirements for investors,3originators and sponsors of securitisations of non-trading bookexposures;3(2) the calculation of risk weighted exposure amount for securitisation positions for the purposes of calculating either the credit risk capital component or the counterparty risk capital component; and3(3) the requirements that investors, originators and sponsors of securitisations in the trading book will have to meet (BIPRU 9.3.1AR, BIPRU 9.3.15R to BIPRU
An operator of a scheme recognised under section 272 of the Act must ensure the prospectus:(1) contains a statement that "Complaints about the operation of the scheme may be made to the FCA."; and(2) states whether or not investors in the scheme would be covered by the compensation scheme, and if so, it must state how they are covered and who they would need to contact for further information.
(1) The authorised fund manager of a UCITS scheme that is a merging UCITS or a receiving UCITS in a proposed UCITS merger must ensure that a document containing appropriate and accurate information on the merger is provided to the unitholders of that scheme so as to enable them to:(a) make an informed judgment about the impact of the proposal on their investment;(b) exercise their rights under regulation 12 (Right of redemption) of the UCITS Regulations 2011; and(c) where applicable,
(1) The information document that must be provided to unitholders under COLL 7.7.10 R (Information to be given to unitholders) by the authorised fund manager of a UCITS scheme must be written in a concise manner and in non-technical language.(2) In the case of a proposed cross-border UCITS merger, the authorised fund manager of the UCITS scheme, being either the merging UCITS or the receiving UCITS respectively, must explain in plain language any terms or procedures relating to
(1) Where a UCITS scheme is the receiving UCITS in a cross-border UCITS merger, its authorised fund manager must ensure that an up-to-date version of the key investor information document of the receiving UCITS is made available to the management company of the merging UCITS for the purpose of providing it to investors in that UCITS.(2) Where the key investor information document of the receiving UCITS has been amended for the purpose of (1), the authorised fund manager of the
(1) An authorised fund manager must, for each UCITS scheme which it manages, draw up a short document in English containing key investor information (a "key investor information document") for investors.(2) The words "key investor information" must be clearly stated in this document. (3) Key investor information must include appropriate information about the essential characteristics of the UCITS scheme which is to be provided to investors so that they are reasonably able to understand
(1) Section 90ZA of the Act (Liability for key investor information) provides that a person will not incur civil liability solely on the basis of the key investor information document, including any translation of it, unless it is misleading, inaccurate or inconsistent with the relevant parts of the prospectus.(2) Article 20 of the KII Regulation prescribes the wording of a warning to investors that must be included in the "practical information" section of the key investor information
The reasonable investor test requires
an issuer:(1) to take into account that the significance
of the information in question will vary widely from issuer to issuer, depending on a variety of factors
such as the issuer's size, recent
developments and the market sentiment about the issuer and
the sector in which it operates; and(2) to assume that a reasonable investor
will make investment decisions relating to the relevant financial
instrument to maximise his economic self in
It is not possible to prescribe
how the reasonable investor test will apply in all possible situations. Any
assessment should take into consideration the anticipated impact of the information
in light of the totality of the issuer's activities,
the reliability of the source of the information and other market variables
likely to affect the relevant financial instrument in
the given circumstances. However, information which is likely to be considered
relevant to a reasonable investor's
An advertisement relating to an offer or to an admission to trading must not be issued unless:(1) it states that a prospectus has been or will be published and indicates where investors are, or will be, able to obtain it;(2) it is clearly recognisable as an advertisement;(3) information in the advertisement is not inaccurate, or misleading; and(4) information in the advertisement is consistent with the information contained in the prospectus, if already published, or with the
To comply with PR 3.3.2 R, a written advertisement should also contain a bold and prominent statement to the effect that it is not a prospectus but an advertisement and investors should not subscribe for any transferable securities referred to in the advertisement except on the basis of information in the prospectus.
Where, in relation to an offer in the United Kingdom, no prospectus is required under the Act, the issuer and offeror must ensure that material information they provide to qualified investors or special categories of investors, including information disclosed in the context of meetings relating to offers, is disclosed to all qualified investors or special categories of investors to whom the offer is exclusively addressed. [Note: article 15.5 PD]
Where there is a clean-up call option, the following conditions must be satisfied:(1) the clean-up call option is exercisable at the discretion of the originator;(2) the clean-up call option may only be exercised when 10% or less of the original value of the exposuressecuritised remains unamortised; and(3) the clean-up call option is not structured to avoid allocating losses to credit enhancement positions or other positions held by investors and is not otherwise structured to
The securitisation documentation must not contain clauses that:(1) other than in the case of early amortisation provisions, require positions in the securitisation to be improved by the originator including but not limited to altering the underlying credit exposures or increasing the yield payable to investors in response to a deterioration in the credit quality of the securitised exposures; or(2) increase the yield payable to holders of positions in the securitisation in response
(1) This section deals with matters relating to the register of unitholders of units in an AUT or ACS1 including its establishment and contents. The authorised fund manager or depositary1 may be responsible for the register. In any event, the person responsible for the register must be stated in the trust deed or contractual scheme deed1 and this section details what his duties are. The provisions relating to documentsevidencingtitle to units, including the issue of bearer certificates
(1) 1Where transfer of units in an ACS is allowed by its contractual scheme deed and prospectus in accordance with the conditions specified by FCArules, the authorised contractual scheme manager of the ACS must take reasonable care to ensure that units are only transferred if the conditions specified by the FCA under (2) are met.(2) The FCA specifies that for the purposes of (1), and for the purposes of COLL 3.2.6 R(27G) (ACSs: UCITS and NURS transfer of units) and COLL 4.2.5
(1) When deciding whether to take enforcement
action under Part 7 of the RCB Regulations,
and what form that enforcement action should take, the FCA will consider all relevant factors,
including:(a) the relevant factors on decisions to take action set out in DEPP 6.2.1 G;(b) whether any contractual or other arrangements agreed between the
parties can be used effectively to address any perceived failure under the RCB Regulations; and(c) the interests of investors in the relevant
When considering whether to impose
a financial penalty, the amount of penalty, and whether to impose the penalty
on the issuer or the owner, the FCA will have regard, where relevant,1 to:(1) the statement on determining the appropriate level of a financial
penalty set out 1in DEPP 6.5 to DEPP 6.5D1;(2) the particular arrangements between the issuer and
the owner; (3) the likely impact of the penalty on the interests of investors
in a regulated covered bond;
and(4) the conduct