Related provisions for IPRU-INV 4.2.2

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EG 19.23.3RP
1The FCA's approach to enforcing the Electronic Money Regulations will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the electronic money
EG 19.23.4RP
1The Electronic Money Regulations, for the most part, mirror the FCA's investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those it has under the Act. Key features of the FCA's approach are described below.
EG 19.23.5RP
1The Electronic Money Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Electronic Money Regulations.
EG 19.23.9RP
1The Electronic Money Regulations do not require the FCA to have published procedures to commence criminal prosecutions. However, in these situations the FCA expects that it will normally follow its decision-making procedures for the equivalent decisions under the Act.
EG 19.23.10RP
1The Electronic Money Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to material as set out in section 394 of the Act in certain cases.
EG 19.23.14RP
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the Electronic Money Regulations to assist it to exercise its functions under the Regulations in the most efficient and economic way. See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.
EG 19.23.15RP
1The Electronic Money Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the Electronic Money Regulations the FCA will follow the procedures described in DEPP 7.
SUP 4.5.1RRP
An actuary2 appointed under PRA rules made under section 340 of the Act, or for the purposes of PRA Rulebook: Solvency II firms: Conditions Governing Business, 6,6 must be objective in performing his duties.225
SUP 4.5.3RRP
An actuary appointed under firms PRA rules made under section 340 of the Act, or for the purposes of PRA Rulebook: Solvency II firms: Conditions Governing Business, 6,6 must take reasonable steps to satisfy himself that he is free from bias, or from any conflict of interest from which bias may reasonably be inferred. He must take appropriate action where this is not the case.225
SUP 4.5.7GRP
(1) Actuaries appointed under PRA rules made under section 340 of the Act, or for the purposes of PRA Rulebook: Solvency II firms: Conditions Governing Business, 6,6 are subject to regulations5 made by the Treasury under sections 342(5) and 343(5) of the Act (Information given by auditor or actuary to a regulator7). Section 343 and the regulations also apply to an actuary of an authorised person in his capacity as an actuary of a person with close links with the authorised person.47(2)
SUP 4.5.8GRP
SUP 4.5.9 R to SUP 4.5.11 G apply to a person who is or has been an actuary appointed under PRA rules made under section 340 of the Act, or for the purposes of PRA Rulebook: Solvency II firms: Conditions Governing Business, 66.225
SUP 4.5.9RRP
An actuary appointed under PRA rules made under section 340 of the Act, or for the purposes of PRA Rulebook: Solvency II firms: Conditions Governing Business, 66 must notify the appropriate regulator5 without delay if he:2255(1) is removed from office by a firm; or(2) resigns before his term of office expires; or(3) is not reappointed by a firm.
SUP 4.5.10RRP
An actuary2 who has ceased to be appointed under PRA rules made under section 340 of the Act, or for the purposes of PRA Rulebook: Solvency II firms: Conditions Governing Business, 66 or who has been formally notified that he will cease to be so 2appointed, must notify the appropriate regulator5 without delay:222525(1) of any matter connected with the cessation which he thinks ought to be drawn to the appropriate regulator's attention; or(2) that there is no such matter.
SUP 4.5.12GRP
2Section 341 of the Act (Access to books etc.) provides that an actuary appointed under or as a result of the Act:(1) has a right of access at all times to the firm's books, accounts and vouchers; and(2) is entitled to require from the firm's officers such information and explanation as he reasonably considers necessary to perform his duties as actuary.
SUP 4.5.13RRP
2When carrying out his duties, an actuary appointed under PRA rules made under section 340 of the Act, or for the purposes of PRA Rulebook: Solvency II firms: Conditions Governing Business, 6,6 must pay due regard to generally accepted actuarial practice.35
SUP 6.3.1AGRP
25Under section 55H of the Act, an FCA-authorised person may apply to the FCA to vary its Part 4A permission to:(1) allow it to carry on further regulated activities, other than a PRA-regulated activity; or(2) reduce the number of regulated activities it is permitted to carry on; or (3) vary the description of its regulated activities (including by the removal or variation of any limitations).
SUP 6.3.1BGRP
25Under section 55I of the Act, an FCA-authorised person may apply to the PRA to vary its Part 4A permission to add regulated activities which include a PRA-regulated activity.
SUP 6.3.2AGRP
25Under section 55L(5) of the Act a firm with a Part 4A permission may apply to the FCA for the imposition of a new requirement and/or the variation or cancellation of any requirement previously imposed by the FCA.
SUP 6.3.16GRP
(1) Section 55(U)(2)25 of the Act (Applications under this Part) requires that the application for variation of Part 4A permission25 must contain a statement:2525(a) of the desired variation; and(b) of the regulated activity or regulated activities which the firm proposes to carry on if its permission is varied.(1A) Section 55(U)(3) of the Act requires that an application for variation of a requirement imposed under section 55L or 55M or the imposition of a new requirement must
SUP 6.3.28GRP
(1) The relevant regulator25 is required by section 55B(3) of the Act to ensure that a firm applying to gain or vary a Part 4A permission or to impose or vary a requirement25 satisfies and will continue to satisfy the threshold conditions in relation to all the regulated activities for which the firm has or will have a Part 4A permission.2525251525(2) [deleted]25151525
SUP 6.3.28AGRP
25Where a firm applies to the PRA for the variation of its Part 4A permission, the FCA, in giving consent to such an application or imposing any requirements on the firm, is required by section 55B(3) of the Act to ensure that the firm satisfies and will continue to satisfy the threshold conditions for which the FCA is responsible in relation to all the regulated activities for which the firm has or will have Part 4A permission after the variation.
SUP 6.3.28BGRP
(1) 25The FCA's duty under section 55B(3) of the Act does not prevent it, having regard to that duty, from taking such steps as it considers necessary in relation to a particular firm, to meet any of its operational objectives. This may include granting or consenting to (as the case may be) a firm's application for variation of Part 4A permission when it wishes to wind down (run off) its business activities and cease to carry on new business as a result of no longer being able
SUP 6.3.31GRP
In considering whether to grant (or consent to, as the case may be)25 a firm's application to vary its Part 4A permission or impose or vary a requirement, the regulator concerned will also have regard, under section 55R(1)25 of the Act (Persons connected with an applicant), to any person6 appearing to be, or likely to be, in a relationship with the firm which is relevant. The Financial Groups Directive Regulations make special consultation provisions where the regulator is exercising
SUP 6.3.32AGRP
25The FCA's power to vary a Part 4A permission after it receives an application from a firm extends to including in the Part 4A permission as varied any provision that could be included as though a fresh permission was being given in response to an application under section 55A of the Act (Application for permission). Under section 55E of the Act (Giving permission: the FCA) the FCA may:(1) incorporate in the description of a regulated activity such limitations (for example, as
SUP 6.3.35GRP
Under section 55V(1)25 of the Act (Determination of applications), the relevant regulator25 has six months to consider a completed application from the date of receipt.2525
SUP 6.3.36GRP
If the relevant regulator25 receives an application which is incomplete (that is, if information or a document required as part of the application is not provided), section 55V(2)25 of the Act requires the relevant regulator25 to determine that incomplete application within 12 months of the initial receipt of the application.252525
SUP 6.3.36AGRP
25Where the application cannot be determined by the PRA without the consent of the FCA, section 55V(3) of the Act requires that the FCA's decision must also be made within the period required in SUP 6.3.35 G or SUP 6.3.36 G as appropriate.
SUP 6.3.42GRP
(1) Firms should be aware that the appropriate regulator may exercise its own-initiative variation power to vary or cancel their Part 4A permission if they do not (see section 55J of the Act (Variation or cancellation on initiative of regulator)):2525(a) commence a regulated activity for which they have Part 4A permission25 within a period of at least 12 months from the date of being given; or25(b) carry on a regulated activity for which they have Part 4A permission25 for a period
SUP 18.2.1AGRP
(1) 7Part VII of the Act prescribes certain statutory functions in relation to insurance business transfer schemes for both the PRA and the FCA. In accordance with the Act, the PRA and the FCA maintain a Memorandum of Understanding, which describes each regulator’s role in relation to the exercise of its functions under the Act relating to matters of common regulatory interest and how each regulator intends to ensure the coordinated exercise of such functions. Under the Memorandum
SUP 18.2.1BGRP
7In exercising its functions under the Act, each regulator will, so far as is reasonably possible, act in a way which is compatible with, and most appropriate for advancing, its statutory objectives as set out in the Act and will have regard to the regulatory principles in section 3B of the Act.
SUP 18.2.14GRP
Under section 109(2) of the Act a scheme report may only be made by a person:(1) appearing to the appropriate regulator7 to have the skills necessary to enable him to make a proper report; and7(2) nominated or approved for the purpose by the appropriate regulator7.7
SUP 18.2.20GRP
Under section 107(2) of the Act, the application to the court may be made by the transferor or the transferee or both. As soon as reasonably practical, the intended applicant should choose their nominee for independent expert in the light of any criteria advised by the appropriate regulator. The intended applicant(s) should then advise the appropriate regulator of their choice, unless the appropriate regulator7 wishes them to defer nomination or to make its own nomination. The
SUP 18.2.24GRP
The guidance set out in SUP 18.2.25 G to SUP 18.2.30 G derives from the requirements of the Solvency II Directive6 and the associated agreements between EEA regulators. Schedule 12 of the Act implements some of these requirements.6
SUP 18.2.31GRP
Under section 109 of the Act, a scheme report must accompany an application to the court to approve an insurance business transfer scheme. This report must be made in a form approved by the appropriate regulator. The appropriate regulator would generally expect a scheme report to contain at least the information specified in SUP 18.2.33 G before giving its approval.77
SUP 18.2.41GRP
A transfer may provide for benefits to be reduced for some or all of the policies being transferred. This might happen if the transferor is in financial difficulties. If there is such a proposal, the independent expert should report on what reductions he considers ought to be made, unless either:(1) the information required is not available and will not become available in time for his report, for instance it might depend on future events; or(2) otherwise, he is unable to report
SUP 18.2.54GRP
Either regulator7 may exercise its other powers under the Act, if it considers this a more effective method of advancing its statutory objectives7.77
SUP 18.2.57BGRP
7When assessing a proposed scheme under Part VII of the Act each regulator will, taking into account all relevant matters in each case, consider whether it should provide a report to the court. As it will lead the Part VII process for insurance business transfers, the PRA will usually provide such a report.
SUP 18.2.59CGRP
7The parties to the proposed transfer should, in each case, consider whether it would facilitate the effective running of the process to give copies to any other person, including any person who alleges that he would be adversely affected by the carrying out of the scheme and intends to be heard in accordance with section 110 of the Act. Where any such provision is to be made, any necessary consents should first be obtained in respect of confidential information.
SUP 18.2.59EGRP
7Where either regulator has indicated to the parties to the proposed transfer that it intends to appear at any hearing before the court in relation to a proposed scheme under Part VII of the Act a copy set of the bundle of documents filed with the court should be provided to it as soon as practicable.
SUP 18.2.61GRP
7Under section 114 of the Act the court must direct that notice of the transfer be published by the transferee in any EEA State other than the United Kingdom which is the state of the commitment or the state of the risk as regards any policy included in the transfer which evidences a contract of insurance (other than a contract of reinsurance). The regulators would expect the transferee to publish notice in at least one national newspaper in each relevant EEA State. Such publication
SUP 11.7.1GRP
The assessment process and the assessment criteria are set out in sections 185 to 191 of the Act4. 4
SUP 11.7.2GRP
Section 191A deals with the procedure the appropriate regulator5 must follow where the appropriate regulator reasonably believes that:5445(1) there has been a failure to give notice under section 178(1) of the Act in circumstances where notice was required;5(2) there has been a breach of a condition imposed under section 187 of the Act; or5(3) there are grounds for objecting to control on the basis of the matters in section 186 of the Act.5
SUP 11.7.3GRP
The appropriate regulator5 may serve restriction notices in certain circumstances in accordance with section 191B of the Act4.45
SUP 11.7.4GRP
The appropriate regulator5 may apply to the court for an order for the sale of shares in accordance with section 191C of the Act4.45
SUP 11.7.13GRP
Before making a determination under section 185 or4 giving a4warning notice under section 191A4, the appropriate regulator5 must comply with the 4 requirements as to consultation with EC41competent authorities set out in section 188 of the Act4and with the other regulator set out in sections 187A, 187B and 191A of the Act, as applicable.545144
SUP 5.5.1RRP
When a firm appoints a skilled person4 to provide a report under section 166 (Reports by skilled persons) or collect or update information under section 166A (Appointment of skilled person to collect and update information) of the Act,4 the firm must, in a contract with the skilled person:44(1) require and permit the skilled person during and after the course of his appointment:(a) to cooperate with the FCA3 in the discharge of its functions under the Act in relation to the firm;
SUP 5.5.2GRP
In complying with the contractual duty in SUP 5.5.1 R (1) the FCA3 expects that a skilled person appointed by a firm4 under section 166 (Reports by skilled persons) or section 166A (Appointment of skilled person to collect and update information) of the Act4 will cooperate with the FCA3 by, amongst other things, providing information or documentation about the planning and progress of the report and its findings and conclusions, if requested to do so. A firm should therefore
SUP 5.5.9RRP
A firm must provide all reasonable assistance to any skilled person appointed to provide a report under section 166 (Reports by skilled persons) or to collect or update information under section 166A (Appointment of skilled person to collect and update information) of the Act.44
SUP 5. 5.11AGRP
2Section 166(7) of the Act (as applied by article 23(2)(b) of the MCD Order) imposes, in appropriate circumstances, a duty on CBTL firms to give the skilled person all such assistance as the skilled person may reasonably require. Where this duty applies to a CBTL firm, the FCA expects the CBTL firm to:(1) take reasonable steps to ensure that, when reasonably required by the skilled person, each of its appointed representatives waives any duty of confidentiality;(2) take reasonable
SUP 5.5.12GRP
When a firm appoints a skilled person to provide a report under section 166 (Reports by skilled persons) or collect or update information under section 166A (Appointment of skilled person to collect and update information) of the Act,4 a firm is expected, including where applicable in complying with Principle 11,4 to take reasonable steps to ensure that a skilled person delivers a report or collects or updates information4 in accordance with the terms of his appointment.4
SUP 5.5.13GRP
In respect of the appointment of a skilled person under section 166 of the Act (Reports by skilled persons), section 166(7) of the Act4 imposes a duty on certain persons to give assistance to a skilled person. The persons on whom this duty is imposed are those who are providing, or have at any time provided, services to any person falling within SUP 5.2.1 G. They include suppliers under material outsourcing arrangements.4
SUP 5.5.14GRP
4In respect of the appointment of a skilled person under section 166A (Appointment of skilled person to collect and update information) of the Act, under section 166A(5) a skilled person may require any person to provide all such assistance as the skilled person may reasonably require to collect or update the information in question.
SUP 10A.13.1GRP
In accordance with section 59 of the Act (Approval for particular arrangements), where a candidate will be performing one or more FCA controlled functions, a firm must take reasonable care to ensure that the candidate does not perform these functions unless he has prior approval from the FCA.
SUP 10A.13.2GRP
If a person performs an FCA controlled function without approval it is not only the firm that is accountable. Under section 63A of the Act (Power to impose penalties), if the FCA is satisfied that:(1) a person (“P”) has at any time performed an FCA controlled function without approval; and(2) at that time P knew, or could reasonably be expected to have known, that P was performing an FCA controlled function without approval;it may impose a penalty on P of such amount as it considers
SUP 10A.13.3DRP
An application by a firm for the FCA's approval under section 59 of the Act (Approval for particular arrangements) must be made by completing Form A (except where SUP 10A.14.4 D requires a Form E).
SUP 10A.13.5GRP
(1) In accordance with section 60 of the Act (Applications for approval), applications must be submitted by, or on behalf of, the firm itself, not by:(a) the FCAcandidate; or(b) (where the FCAcandidate works for the firm'sparent undertaking or holding company) by the firm'sparent undertaking or holding company.(2) Usually this will be the firm that is employing the FCAcandidate to perform the FCA controlled function. Where a firm has outsourced the performance of an FCA controlled
SUP 10A.13.8GRP
The Act sets out the time that the FCA has to consider an application and come to a decision.
SUP 10A.13.9GRP
In any case where the application for approval is made by a person applying for permission under Part 4A of the Act, the FCA has until the end of whichever of the following periods ends last: (1) the period within which an application for that permission must be determined; and(2) the period of three months from the time it receives a properly completed application.
SUP 10A.13.12GRP
Application forms must always be completed fully and honestly. Further notes on how to complete the form are contained in each form. If forms are not completed fully and honestly, applications will be subject to investigation and the FCAcandidate's suitability to be approved to undertake an FCA controlled function will be called into question. A person who provides information to the FCA that is false or misleading may commit a criminal offence, and could face prosecution under
SUP 10A.13.20GRP
Under section 61(5) of the Act (Determination of applications), the firm may withdraw an application only if it also has the consent of the candidate and the person by whom the candidate is or would have been employed, if this is not the firm making the application.
REC 3.26.1GRP
1Under section 300B(1) of the Act (Duty to notify proposal to make regulatory provision), a UK RIE3 that proposes to make any regulatory provision must give written notice of the proposal to the FCA4without delay.344
REC 3.26.2GRP
1Under section 300B(2) of the Act, the FCA4may, by rules under section 293 (Notification requirements):4(1) 1specify descriptions of regulatory provision in relation to which, or circumstances in which, the duty in section 300B(1) does not apply, or(2) 1provide that the duty applies only to specified descriptions of regulatory provision or in specified circumstances.
REC 3.26.3GRP
1Under section 300B(3) of the Act, the FCA4may also by rules under section 293: 4(1) 1make provision as to the form and contents of the notice required, and(2) 1require the UK recognised body to provide such information relating to the proposal as may be specified in the rules or as the FCA4may reasonably require.4
REC 3.26.4RRP
1The duty in section 300B(1) of the Act does not apply to any of the following:(1) any regulatory provision which is required under EU2 law or any enactment or rule of law in the United Kingdom; or2(2) (a) the specification of the standard terms of any derivative which a UK RIE proposes to admission to trading, or the amendment of the standard terms of any derivative already admitted to trading; or(b) the specification or any amendment of standard terms relating to the provision
REC 3.26.5RRP
1A notice under section 300B(1) of the Act of a proposal to make a regulatory provision must be in writing and state expressly that it is a notice for the purpose of that section. To be effective, a notice must: (1) 1contain full particulars of the proposal to make a regulatory provision which is the subject of that notice; and(2) 1either be accompanied by sufficient supporting information to enable the FCA4to assess the purpose and effect of the proposed regulatory provision
REC 3.26.7RRP
1A UK RIE3must provide such additional information in connection with a notice under section 300B(1) of the Act as the FCA4may reasonably require.344
REC 3.26.8GRP
1Where a UK RIE3wishes to give notice to the FCA4for the purposes of section 300B(1) of the Act, it should in the first instance inform its usual supervisory contact at the FCA.43444
PERG 4.11.1GRP
Section 19 of the Act (The general prohibition) provides that the requirement to be authorised under the Act only applies in relation to regulated activities which are carried on 'in the United Kingdom'. In many cases, it will be quite straightforward to identify where an activity is carried on. But when there is a cross-border element, for example because a borrower is outside the United Kingdom or because some other element of the activity happens outside the United Kingdom,
PERG 4.11.2GRP
Even if a person concludes that he is not carrying on a regulated activity in the United Kingdom, he will need to ensure that he does not contravene other provisions of the Act that apply to unauthorised persons. These include the controls on financial promotion (section 21 (Financial promotion) of the Act) (see PERG 8 (Financial promotion and related activities)), and on giving the impression that a person is authorised (section 24 (False claims to be authorised or exempt)).
PERG 4.11.4GRP
Section 418 of the Act deals with the carrying on of regulated activities in the United Kingdom. It extends the meaning that 'carry on a regulated activity in the United Kingdom' would ordinarily have by setting out additional cases. The Act states that in these cases a person who is carrying on a regulated activity but would not otherwise be regarded as carrying on the activity in the United Kingdom is, for the purposes of the Act, to be regarded as carrying on the activity in
PERG 4.11.5GRP
For the purposes of regulated mortgage activities, sections 418(2), (4), (5), (5A) and (6) are relevant, as follows:(1) Section 418(2) refers to a case where a UK-based person carries on a regulated activity in another EEA State in the exercise of rights under a Single Market Directive. The only Single Market Directives which are relevant to mortgages are the CRD and the MCD.44(2) Section 418(4) refers to the case where a UK-based person carries on a regulated activity and the
PERG 4.11.8GRP
The FCA's view of the effect of the Act and Regulated Activities Order in various territorial scenarios is set out in the remainder of this section. In those scenarios:(1) the term "service provider" is used to describe a person carrying on any of the regulated mortgage activities;(2) the term "borrower" refers to a borrower who is an individual and not a trustee; the position of a borrower acting as a trustee is not considered; and(3) it is assumed that the activity is not an
PERG 4.11.10GRP
Where a person is carrying on any of the regulated mortgage activities from an establishment maintained by him in the United Kingdom, that person will be 'carrying on a regulated activity in the United Kingdom'. The location and residence of the borrower is irrelevant. That is the practical effect of sections 418(4), (5) and (6) of the Act.
PERG 4.11.12GRP
If a service provider is overseas, the question of whether that person is carrying on a regulated activity in the United Kingdom will depend upon:(1) the type of regulated activity being carried on;(2) section 418 of the Act;(3) the residence and location of the borrower;(4) the application of the overseas persons exclusion in article 72(5A) to (5F) of the Regulated Activities Order; and(5) whether the service provider is carrying on an electronic commerce activity.The factors
PERG 4.11.12AGRP
4If the service provider is a UK firm exercising its rights under a Single Market Directive by providing services from another EEA State, section 418 of the Act means that the services are treated as being carried on in the United Kingdom. This factor is not covered further in the remainder of this section.
COND 2.7.1UKRP
(1) 1A’s business model (that is, A’s strategy for doing business) must be suitable for a person carrying on the regulated activities that A carries on or seeks to carry on.(2) The matters which are relevant in determining whether A satisfies the condition in sub-paragraph (1) include-(a) whether the business model is compatible with A’s affairs being conducted, and continuing to be conducted, in a sound and prudent manner;(b) the interests of consumers;(c) the integrity of the
COND 2.7.2GRP
1Paragraph 2F of Schedule 6 to the Act sets out the business model threshold condition for firms carrying on, or seeking to carry on, regulated activities which do not include a PRA-regulated activity.
COND 2.7.4GRP
1Paragraph 3E of Schedule 6 to the Act sets out the business model threshold condition which is relevant to the discharge by the FCA of its functions under the Act in relation to firms carrying on, or seeking to carry on, regulated activities which include a PRA-regulated activity.
COND 2.7.5GRP
1The guidance in COND 2.7 should be read as applying to both paragraph 2F of Schedule 6 to the Act and, as far as relevant to the discharge by the FCA of its functions under the Act in respect of firms carrying on, or seeking to carry on, a PRA-regulated activity, paragraph 3E of Schedule 6 of the Act.
COND 2.7.7GRP
1In assessing whether the threshold conditions set out in paragraphs 2F and 3E of Schedule 6 to the Act are satisfied, the FCA may consider all matters that might affect the design and execution of a firm's business model, taking into account the nature, scale and complexity of a firm's business.
COND 2.7.8GRP
1In deciding how they will satisfy and continue to satisfy the threshold conditions set out in paragraphs 2F and 3E of Schedule 6 to the Act, firms should consider matters including (but not limited to) the following:(1) the assumptions underlying the firm's business model and justification for it;(2) the rationale for the business the firm proposes to do or continues to do, its competitive advantage, viability and the longer-term profitability of the business;(3) the needs of
COND 2.7.12GRP
1The FCA's assessment of a firm's satisfaction of the3threshold conditions set out in paragraphs 2F and 3E of Schedule 6 to the Act will not necessarily be limited to a firm'sregulated activities if the FCA believes the firm's other business activities, if any, may impact on a firm'sregulated activities.
BIPRU 12.8.2GRP
However, the appropriate regulator recognises that there may be circumstances in which it would be appropriate for a firm to rely on liquidity resources which can be made available to it by other members of its group, or for a firm to rely on liquidity resources elsewhere in the firm for the purposes of ensuring that its UKbranch has adequate liquidity resources in respect of the activities carried on from the branch. Where the appropriate regulator is satisfied that the statutory
BIPRU 12.8.4GRP
In considering whether the statutory tests in section 138A of the Act have been met, the appropriate regulator will, amongst others, have regard to the factors detailed below in relation to an intra-group liquidity modification (of the kind permitting the inclusion in a firm's liquidity resources of parent undertaking liquidity support) and a whole-firm liquidity modification. In practice it is likely that the appropriate regulator will view these as preconditions to the grant
BIPRU 12.8.5GRP
This section represents merely an indication of the matters to which the appropriate regulator will have regard in considering an application for a whole-firm liquidity modification or an intra-group liquidity modification. In considering such an application, the appropriate regulator will always take into account anything that it reasonably considers to be relevant for the purposes of assessing whether the statutory tests in section 138A of the Act are met. In doing so, it will
BIPRU 12.8.7GRP
The appropriate regulator recognises that a firm may be part of a wider group which manages its liquidity on a group-wide basis. A firm which considers that the statutory tests in section 138A of the Act are met may apply for an intra-group liquidity modification permitting it to rely on liquidity support from elsewhere in its group. Until a firm has such a modification it will need to meet the overall liquidity adequacy rule from its own liquidity resources. The effect of an
BIPRU 12.8.10GRP
The appropriate regulator also recognises that a firm incorporated in the United Kingdom and to which BIPRU 12 applies may wish to rely on liquidity support from a subsidiary undertaking of that firm which is incorporated in a country or territory outside the United Kingdom. The appropriate regulator is, however, likely to consider that an application for an intra-group liquidity modification that contemplates reliance for liquidity support on only, or mostly, an applicant firm's
BIPRU 12.8.11GRP
In each application for an intra-group liquidity modification, the appropriate regulator will consider the extent to which it is appropriate to modify the overall liquidity adequacy rule to allow reliance by an applicant firm on liquidity resources elsewhere in a firm'sgroup. However, it is unlikely that the appropriate regulator would consider the conditions in section 138A of the Act to be met in circumstances in which the overall liquidity adequacy rule was modified to allow
BIPRU 12.8.16GRP
It will not always be the case that an applicant firm wishes to rely on a parent undertaking, or other group entity, that is itself subject to a regime of liquidity regulation, whether or not equivalent to the appropriate regulator's. In assessing a firm's application for an intra-group liquidity modification, the appropriate regulator will always have regard to the regulatory framework to which the entity on which it is proposed to rely for liquidity support is subject. Other
BIPRU 12.8.22GRP
In relation to an incoming EEA firm or third country BIPRU firm, the overall liquidity adequacy rule provides that, for the purpose of complying with that rule, a firm may not, in relation to its UKbranch, include liquidity resources other than those which satisfy the conditions in BIPRU 12.2.3 R. Those conditions seek to ensure that a firm of this kind has a reserve of liquidity for operational purposes that is under the control of, and available for use by, that firm'sUKbranch.
BIPRU 12.8.30GRP
In determining the appropriate duration of a whole-firm liquidity modification, the appropriate regulator will have regard to the role and importance of the UKbranch in question in the UK1financial system. In some cases, the appropriate regulator may take the view that a whole-firm liquidity modification, covering a UKbranch whose role and importance in the UK1financial system are significant, ought to be reviewed more regularly than one granted in respect of a less systemically
SUP 3.8.2RRP
An auditor of a firm must cooperate with the appropriate regulator in the discharge of its functions under the Act.
SUP 3.8.3GRP
The appropriate regulator may ask the auditor to attend meetings and to supply it with information about the firm. In complying with SUP 3.8.2 R, the auditor should attend such meetings as the appropriate regulator requests and supply it with any information the appropriate regulator may reasonably request about the firm to enable the appropriate regulator to discharge its functions under the Act.
SUP 3.8.4RRP
An auditor of a firm must give any skilled person appointed by the firm or appointed by the appropriate regulator4 all assistance that person4 reasonably requires (see SUP 5 and section 166(5) of the Act (Reports by skilled persons)).4
SUP 3.8.8GRP
SUP 3.6.1 R requires a firm to cooperate with its auditor. SUP 3.6.3 G refers to the rights to information which an auditor is granted by the Act. SUP 3.6.4 G refers to similar rights granted by the Companies Act 1985 or where applicable, the Companies Act 2006,2 the Building Societies Act 1986 and the Friendly Societies Act 1992.
SUP 3.8.9GRP
Within the legal constraints that apply, the appropriate regulator may pass on to an auditor any information which it considers relevant to his function. An auditor is bound by the confidentiality provisions set out in Part XXIII of the Act (Public record, disclosure of information and cooperation) in respect of confidential information he receives from the appropriate regulator. An auditor may not pass on such confidential information without lawful authority, for example if
SUP 3.8.10GRP
(1) Auditors are subject to regulations made by the Treasury under sections 342(5) and 343(5) of the Act (Information given by auditor or actuary to a regulator). Section 343 and the regulations also apply to an auditor of an authorised person in his capacity as an auditor of a person who has close links with the authorised person.3(2) These regulations oblige auditors to report certain matters to the appropriate regulator. Sections 342(3) and 343(3) of the Act provide that an
EG 19.26.1RP
1The FCA has information gathering and sanctioning powers under the Act which are applicable to breaches of EMIR requirements by authorised persons or recognised bodies. The OTC derivatives, CCPs and trade repositories regulation adds to the powers available to the FCA for dealing with breaches of EMIR requirements and sets out information gathering and sanctioning powers enabling the FCA to investigate and take action for breaches of the EMIR requirements
EG 19.26.3RP
(1) 1The FCA has the power to publish a statement or impose a financial penalty of such amount as it considers appropriate on: (a) a financial counterparty who is not an authorised person, a non- financial counterparty or any other person who has breached an EMIR requirement or regulation 7 or 8 of the OTC derivatives, CCPs and trade repositories regulation; (b) a financial counterparty who is an authorised person who has breached regulation 8 of the
EG 19.26.4RP
1As the power to impose penalties for contravention of an EMIR requirement or regulations 7 or 8 of the OTC derivatives, CCPs and trade repositories regulation mirrors similar powers to that the FCA has under the Act, the FCA will adopt procedures and policies in relation to the use of those powers akin to those it has adopted under the Act, subject to EG 19.26.3(2).
EG 19.26.8RP
1Sections 393 and 394 of the Act apply to notices referred to in this section. See DEPP 2.4 (Third party rights and access to FCA material).
EG 19.26.10RP
1In relation to authorised persons and recognised bodies which are subject to obligations under EMIR, other information gathering powers and sanctions may also be applicable under the Act.
SUP 10C.3.2GRP
There are two types of FCA controlled function under the Act:(1) an FCA-designated senior management function; and(2) an FCA controlled function that is not a designated senior management function.
SUP 10C.3.6RRP
In accordance with section 59 of the Act (Approval for particular arrangements), a function specified in this chapter is an FCA controlled function only to the extent that it is performed under an arrangement entered into by:(1) a firm; or(2) a contractor of the firm;in relation to the carrying on by the firm of a regulated activity.
SUP 10C.3.7GRP
Section 59(1) and (2) of the Act provide that approval is necessary for an FCA controlled function which is performed under an arrangement entered into by a firm, or its contractor (typically an appointed representative), in relation to a regulated activity.
SUP 10C.3.8GRP
(1) Arrangement is defined in section 59(10) of the Act as any kind of arrangement for the performance of a function which is entered into by a firm or any of its contractors with another person.(2) Arrangement includes the appointment of a person to an office, a person becoming a partner, or a person's employment (whether under a contract of service or otherwise).(3) An arrangement need not be a written contract but could arise by conduct, custom and practice.
SUP 10C.3.11GRP
Section 59ZA(2) of the Act says that a function is a ‘senior management function’, in relation to the carrying on of a regulated activity by a firm, if: (1) the function will require the person performing it to be responsible for managing one or more aspects of the firm's affairs, so far as relating to the activity; and(2) those aspects involve, or might involve, a risk of serious consequences:(a) for the firm; or(b) for business or other interests in the United Kingdom.
SUP 10C.3.12GRP
Section 59ZA(3) of the Act says that ‘managing’ includes, for these purposes, taking decisions, or participating in the taking of decisions, about how one or more aspects of the firm's affairs should be carried on.
SUP 8.3.1GRP
Under section 138A(4) of the Act, the appropriate regulator8 may not give a waiver unless it is satisfied that:88(1) compliance by the firm with the rules, or with the rules as unmodified, would be unduly burdensome, or would not achieve the purpose for which the rules were made; and(2) the waiver would not adversely affect the advancement of, in the case of the PRA, any of its objectives and, in the case of the FCA, any of its operational objectives.88
SUP 8.3.1AGRP
Even if the conditions in section 138A(4)8 of the Act are satisfied, the appropriate regulator8will consider other relevant factors before giving a waiver, such as whether the waiver would be compatible with European law, including relevant EC Directives.288
SUP 8.3.2GRP
The appropriate regulator8 is required by section 138B8 of the Act to publish a waiver unless it is satisfied that it is inappropriate or unnecessary to do so (see SUP 8.6).88
SUP 8.3.2AGRP
8The FCA must consult the PRA before publishing or deciding not to publish a waiver which relates to:(1) a PRA-authorised person; or(2) an authorised person who has as a member of its immediate group a PRA-authorised person;unless the waiver relates to rules made by the FCA under sections 247 or 248 of the Act.
SUP 8.3.10GRP
Under section 138A(1) of the Act the appropriate regulator8 may give a waiver with the consent of a firm. This power may be used by the appropriate regulator8 in exceptional circumstances where the appropriate regulator8 considers that a waiver should apply to a number of firms (for example, where a rule unmodified may not meet the particular circumstances of a particular category of firm). In such cases the appropriate regulator8 will inform the firms concerned that the waiver
SUP 8.3.11GRP
An application for a waiver of an evidential provision will normally be granted only if a breach of the underlying binding rule is actionable under section 138D8 of the Act. Individual guidance would normally be a more appropriate response (see SUP 9 (Individual Guidance)) if there is no right of action.28
SUP 8.3.13GRP
For an application for a waiver of the presumption of contravention of a binding rule, which is actionable under section 138D8 of the Act, the appropriate regulator8 would normally wish to be satisfied that the evidential rule is itself unduly burdensome or does not achieve the purpose of the rule.288
SUP 8.3.13AGRP
8In accordance with section 138C(4) of the Act, in SUP 8.3.11 G to SUP 8.3.13 G, a reference to a rule does not include a rule made under:(1) section 137O of the Act; or(2) section 192J of the Act.
EG 19.30.4RP
1The FCA's approach to taking enforcement action under the MCDO will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate and responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its action,
EG 19.30.5RP
1The MCDO, for the most part, applies or mirrors the FCA's investigative and sanctioning powers under the Act. The FCA has adopted procedures and policies for the use of those powers that are akin to those it has under the Act. Key features of the FCA's approach are described below.
EG 19.30.6RP
1Article 23 of the MCDO applies many of the provisions of the Act in relation to the FCA’s investigation and information-gathering powers in respect of a registered firm. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating contraventions of the MCDO.
EG 19.30.7RP
1For example, the FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the MCDO and the reasons for the appointment, unless notification is likely to result in the investigation being frustrated. In most cases, the FCA expects to carry out a scoping visit early on in the enforcement process. The FCA's policy in regulatory investigations under the MCDO is to use powers to compel information, in the same way as
EG 19.30.10RP
1Article 18(3) applies sections 393 and 394 of the Act to warning notices and decision notices given under the MCDO and so require the FCA to give third party rights and to give access to material as set out under the Act. Article 24(1) applies the procedural provisions of Part 9 of the Act, in respect of matters that can be referred to the Tribunal, and article 24(2) applies Part 26 of the Act to warning and decision notices given under the MCDO.
EG 19.30.12RP
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving breaches of the MCDO to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA’s settlement process and the settlement discount scheme.
SUP 13A.3.1GRP
Section 31 of the Act (Authorised persons) states that an EEA firm is authorised for the purposes of the Act if it qualifies for authorisation under Schedule 3 to the Act (EEA Passport Rights). Under paragraph 12 of Part II of that Schedule, an EEA firm that is an EEA pure reinsurer, or an EEA firm that has received authorisation under article 18 of the auction regulation,75qualifies for authorisation without condition. Other than those two types of EEA firm, an7EEA firm qualifies
SUP 13A.3.1CGRP
(1) 6Under paragraph 15A(1) of Part II of Schedule 3 to the Act, an EEA UCITS management company intending to exercise an EEA right to provide collective portfolio management services for a UCITS scheme must, before it undertakes that activity, obtain the FCA's10 approval to manage that UCITS scheme. Firms should use the application form set out in SUP 13A Annex 3 R (EEA UCITS management companies: application for approval to manage a UCITS scheme established in the United Kingdom)
SUP 13A.3.4GRP
Under section 31 of the Act, a Treaty firm is authorised for the purposes of the Act if it qualifies for authorisation under Schedule 4 (Treaty Rights), that is:(1) the Treaty firm is seeking to carry on a regulated activity; and(2) the conditions set out in paragraph 3(1) of Schedule 4 to the Act are satisfied.
SUP 13A.3.6GRP
The effect of paragraph 5(1) and 5(2) of Schedule 4 to the Act is that a Treaty firm which qualifies for authorisation under that Schedule must, at least seven days before it carries on any of the regulated activities covered by its permission, give the appropriate UK regulator10 written notice of its intention to do so. Failure to do so is a criminal offence under paragraph 6(1) of that Schedule.10
SUP 13A.3.7DRP
(1) A written notice from a Treaty firm under paragraph 5(2) of Schedule 4 to the Act must be: (a) addressed for the attention of the authorisations team in the PRA or FCA, as appropriate; and101010(b) delivered to the appropriate UK regulator10 by one of the methods in (2).10(2) The written notice may be delivered by:(a) post to either of the following addresses, as appropriate:1010(i) the address for notices to the FCA: The Financial Conduct Authority, 12 Endeavour Square, London,
SUP 13A.3.8GRP
The written notice required by paragraph 5(2) of Schedule 4 to the Act should be accompanied by confirmation of the Treaty firm's authorisation from the Home State regulator, as referred to in paragraph 3(2) of Schedule 4 to the Act.
SUP 13A.3.10GRP
(1) The guidance in PERG 2 is relevant to Treaty firms to help them determine if they require authorisation under the Act.(2) A Treaty firm which qualifies for authorisation is referred to in the Handbook as an incoming Treaty firm.
SUP 13A.3.12GRP
Under Schedule 5 to the Act (Persons concerned in collective investment schemes), a person who for the time being is an operator, trustee or depositary of a scheme which is a recognised scheme under section 264 of the Act is an authorised person. Such a person is referred to in the Handbook as a UCITS qualifier.
SUP 13A.3.13GRP
A UCITS qualifier has permission under paragraph 2 of Schedule 5 to the Act, to carry on, as far as is appropriate to the capacity in which it acts in relation to the scheme:88(1) the regulated activity of establishing, operating or winding up a collective investment scheme; and(2) any activity in connection with, or for the purposes of, the scheme (including the regulated activity of managing a UCITS).88
REC 4.2D.1GRP
(1) 1Under section 313A of the Act, the FCA5 may for the purpose of protecting:5(a) the interests of investors; or (b) the orderly functioning of the financial markets; require a UK RIE to suspend or remove a financial instrument from trading.(2) If the FCA5 exercises this power, the UK RIE concerned may refer the matter to the Tribunal.5
REC 4.2D.2GRP
The procedure the FCA5 will follow if it exercises its power to require a UK RIE to suspend or remove a financial instrument3 from trading is set out in sections 313B to 313BE of the Act.3 The FCA's internal arrangements provide for decisions to exercise this power to be taken at an appropriately senior level. If the FCA5 exercises this power, the UK RIE concerned and the issuer (if any) of the relevant financial instrument may refer the matter to the Tribunal(see EG 2.39)2.2
REC 4.2D.7GRP
6Under sections 313CA(2) and (3) of the Act, if the FCA imposes a requirement to suspend or remove a financial instrument from trading, the FCA must require any trading venue or systematic internaliser, falling under its jurisdiction as defined in section 313D of the Act, which trades the same instrument to suspend or remove the instrument if the suspension or removal was due to suspected market abuse; a take-over bid; or the non-disclosure of inside information about the issuer
REC 4.2D.8GRP
6Under sections 313CB (2) and (3) of the Act, if the FCA receives notice that a person operating a trading venue has suspended or removed a financial instrument from trading on the trading venue because the instrument no longer complies with the venue’s rules, the FCA must require any other trading venue or systematic internaliser, falling under its jurisdiction as defined in section 313D of the Act, which trades the same instrument to suspend or remove the instrument if the suspension
REC 4.2D.10GRP
6Under sections 313CC (2) and (3) of the Act, if the FCA receives notice that a competent authority of another EEA State has suspended or removed a financial instrument from trading on a trading venue or systematic internaliser pursuant to articles 32.2, 52.2 or 69.2 of MiFID, the FCA must require any trading venue or systematic internaliser falling under its jurisdiction as defined in section 313D of the Act, and which trades the same instrument, to suspend or remove the instrument
REC 4.2D.11GRP
6The FCA receives notice for the purposes of REC 4.2D.10G when it is provided by a competent authority of another EEA State or ESMA in accordance with section 313CC(4) of the Act.
PERG 2.10.3GRP
The Act provides that appointed representatives (see PERG 2.10.5 G), recognised investment exchanges and recognised clearing houses (see PERG 2.10.6 G) and certain other persons exempt under miscellaneous provisions (see PERG 2.10.7 G) are exempt persons (although in certain circumstances, an appointed representative may not be an exempt person, but may have a limited permission to carry on certain credit-related regulated activities)5. Members of Lloyds and members of the professions
PERG 2.10.6GRP
Investment exchanges and clearing houses can apply for recognition under Part XVIII of the Act (Recognised investment exchanges and clearing houses). Auction platforms can apply for recognition under the RAP Regulations.3 See REC.3
PERG 2.10.7GRP
Various named persons are exempted by Order made by the Treasury under section 38 of the Act from the need to obtain authorisation (the Exemption Order). Some of the exemptions are subject to restrictions as to the circumstances in which they apply. For example, a person is only exempt when acting in a particular capacity or for particular purposes.
PERG 2.10.10GRP
But under section 316 of the Act (Direction by a regulator) the general prohibition does not apply to a person who is a member of the Society of Lloyds unless the FCA or PRA has made a direction that it should apply. The general prohibition is disapplied in relation to any regulated activity carried on by a member relating to contracts of insurance written at Lloyds. Directions can be made by the FCA or PRA in relation to individual members or the members of the Society of Lloyds
PERG 2.10.11GRP
A person who ceased to be an underwriting member at any time on or after 24 December 1996 may, without authorisation, carry out contracts of insurance he has underwritten at Lloyds. But this is subject to any requirements or rules that the PRA may impose under sections 320 to 322 of the Act (Former underwriting members).
PERG 2.10.12GRP
The general prohibition does not in certain circumstances apply to a person providing professional services that are supervised and regulated by a professional body designated by the Treasury under section 326 of the Act (Designation of professional bodies) (see PROF). Certain of the exclusions from regulated activities outlined in PERG 2.8 and PERG 2.9 will be relevant to members of designated professional bodies. The regime outlined below applies only where no exclusion applies
PERG 2.10.13GRP
Such a person may carry on regulated activities if the conditions outlined below are met, that is the person:(1) is not affected by an order or direction made by the FCA under section 328 or 329 of the Act (Directions and orders in relation to the general prohibition) which has the effect of re-imposing the general prohibition in any particular case;(2) is, or is controlled by, a member of a profession;(3) does not receive any pecuniary reward or other advantage from the regulated
PERG 2.10.14GRP
The regulated activities that may be carried on in this way are restricted by an Order made by the Treasury under section 327(6) of the Act (Exemption from the general prohibition) (the Non-Exempt Activities Order). Accordingly, under that section, a person may not by way of business carry on any of the following activities without authorisation:(1) accepting deposits;(2) effecting or carrying out contracts of insurance;(3) dealing in investments as principal;(3A) 4bidding in
PERG 2.10.16GRP
A person carrying on regulated activities under the regime for members of the professions will be subject to rules made by the professional body designated by the Treasury. Such bodies are obliged to make rules governing the carrying on by their members of those regulated activities that they are able to carry on without authorisation under the Act. Where such a person is carrying on insurance mediation or reinsurance mediation, he must also be included on the register kept by
SUP 8.6.1GRP
The appropriate regulator3 is required by sections 138B(1) and (2)3 of the Act to publish a waiver unless it is satisfied that it is inappropriate or unnecessary to do so. If the appropriate regulator3 publishes a waiver, it will not publish details of why a waiver was required or any of the supporting information given in a waiver application.333
SUP 8.6.1AGRP
3The FCA must consult the PRA before publishing or deciding not to publish a waiver which relates to:(1) a PRA-authorised person; or(2) an authorised person who has as a member of its immediate group a PRA-authorised person;unless the waiver relates to rules made by the FCA under sections 247 or 248 of the Act.
SUP 8.6.2GRP
When considering whether it is satisfied under section 138B(2)3, the appropriate regulator3 is required by section 138B(3)3 of the Act:333(1) to take into account whether the waiver relates to a rule contravention of which is actionable under section 138D3 of the Act (Actions for damages); Schedule 5 identifies such rules;3(2) to consider whether its publication would prejudice, to an unreasonable degree, the commercial interests of the firm concerned, or any other member of its
SUP 8.6.3GRP
Waivers can affect the legal rights of third parties, including consumers. In the appropriate regulator's3 view it is important that the fact and effect of such waivers should be transparent. So the fact that a waiver relates to a rule that is actionable under section 138D3 of the Act (see SUP 8.6.2 G (1)) will tend to argue in favour of publication.33
SUP 8.6.4GRP
In making waiver applications under section 250 of the Act or regulation 7 of the OEIC Regulations, SUP 8.6.2 G (2) should be read in application to rules in COLL as if the word "commercial" were omitted.12
SUP 8.6.5GRP
In considering whether commercial interests would be prejudiced to an unreasonable degree (see SUP 8.6.2 G (2)), the appropriate regulator3 will weigh the prejudice to firms' commercial interests against the interests of consumers, markets and other third parties in disclosure. In doing so the appropriate regulator3 will consider factors such as the extent to which publication of the waiver would involve the premature release of proprietary information to commercial rivals, for