Related provisions for LR 11.1.7B

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SUP 10C.12.1GRP
(1) SUP 10C.12 describes the regime for conditional and time-limited approvals.(2) In particular, SUP 10C.12 sets out the FCA's policies on giving approval under section 59 subject to conditions or for a limited period only, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation).(3) (In the case of a PRA-authorised person) the3 policies described in SUP 10C.12 also apply when the FCA is considering whether to give its consent
SUP 10C.12.2GRP
(1) The power to grant an approval subject to conditions or for a limited period only applies to senior management functions.(2) As all FCA controlled functions specified in this chapter are senior management functions, this means that this power applies to all FCA controlled functions specified in this chapter.(3) The FCA has (in SUP 10A (FCA Approved Persons in Appointed Representatives)4) specified controlled functions for SMCR firms2 that are not designated senior management
SUP 10C.12.3GRP
The FCA2 may:(1) grant an application for approval subject to any conditions that the FCA considers appropriate; and(2) grant the application to give approval only for a limited period.
SUP 10C.12.4GRP
The FCA may use this power only if it appears to the FCA that it is desirable to do so to advance one or more of its operational objectives.
SUP 10C.12.5GRP
Factors that the FCA will take into account include: (1) those relating to the firm at the time of the application, such as: (a) its size, scale and complexity; and(b) its plans and prospects; and(2) those relating to the candidate and, in particular, the candidate’s fitness and properness.
SUP 10C.12.6GRP
The FCA expects that the most common use of the power to give qualified approvals would be:(1) time-limited approvals;(2) a time limitation in relation to an ongoing or prospective enforcement investigation;(3) a competency-related condition; and(4) a role-limited condition.
SUP 10C.12.7GRP
An example of a time-limited approval is where a firm needs to appoint the candidate on an interim basis while the firm seeks to appoint a permanent candidate. The FCA may approve the interim appointee on a time-limited basis.
SUP 10C.12.8GRP
The FCA would not generally impose a time limitation in these circumstances for a period of less than 12 weeks. The FCA would expect the firm to use the 12-week rule in SUP 10C.3.13R.
SUP 10C.12.9GRP
An example of when the FCA may approve an individual on a time-limited basis is where, following a sudden or unexpected departure:(1) a firm needs to fill an FCA-designated senior management function vacancy immediately; but(2) it is likely to take longer than 12 weeks to recruit a permanent replacement; and(3) there is an individual at the firm not currently approved to perform the relevant FCA-designated senior management function whom the firm and the FCA think capable of fulfilling
SUP 10C.12.10GRP
Generally, the FCA would not impose a time limitation of this type for longer than 12 to 18 months.
SUP 10C.12.11GRP
The FCA would consider using this power for a person who is in the running for the long-term appointment.
SUP 10C.12.12GRP
(1) An example of how the FCA could deal with a person who is in the running for the long-term appointment is outlined below.(2) The head of compliance resigns unexpectedly from a firm. The firm wishes to appoint one of the deputies. The FCA and the firm believe the deputy to be capable of running the firm's compliance function on a day-to-day ‘business as usual basis’ but the deputy has no experience developing a long-term, firm-wide strategy. The firm estimates that it could
SUP 10C.12.13GRP
In deciding whether a candidate is fit and proper, the FCA will take into account the role that the candidate is going to perform. The standard for a person who is appointed on a temporary basis may be different from a person appointed on a permanent basis when the person with a temporary appointment has a more limited role.
SUP 10C.12.14GRP
The FCA may impose a condition on the approval, as well as time limitation. For example, in the example in SUP 10C.12.12G, the FCA may impose a condition prohibiting the candidate from significantly amending the management structure of the department.
SUP 10C.12.17GRP
The FCA will generally limit an enforcement action time-limited approval for a period long enough to allow the investigation to be completed so far as relevant to the candidate. Imposing a time limitation on approval would allow the FCA to look at the situation in more detail after approval, with the benefit of all the facts arising from the investigation.
SUP 10C.12.19GRP
The FCA may take the view that a candidate would meet the fit and proper requirement with an approval subject to either, or both, of the following:(1) one or more conditions; and/or(2) a time limitation;who would not have met that requirement without the qualification.
SUP 10C.12.21GRP
(1) The FCA is likely only to give a qualified approval on the basis described in SUP 10C.12.19G in limited circumstances.(2) Generally, the FCA would only use this power in place of rejection where the deficiency is in only a relatively small proportion of the required job competencies.(3) Lack of technical knowledge is more likely to be easier to remedy than a problem with personal characteristics.(4) The FCA is only likely to give its approval on this basis when the candidate
SUP 10C.12.23GRP
The FCA does not see this as being a probationary or standalone measure. The competency-related limitation would be time specific and linked to something that the FCA would wish to re-examine after the period has expired.
SUP 10C.12.24GRP
(1) When the FCA is imposing a competence-related condition where there is a shortfall, approval will only be granted on the condition that the candidate is required to undertake training or receive mentoring to eliminate the shortfall.(2) See SUP 10C.12.39G (role-limited approval) for an example of a shortfall in competence that is not dealt with by trying to remove it.
SUP 10C.12.26GRP
(1) A competency-related approval is likely to be linked with a time-limited approval.(2) Under an approval of this kind, the candidate will be required to undertake the necessary training or other remedial measures.(3) The time for which the approval will last would be set to give the firm and the candidate a reasonable time to complete the measures.(4) At the end of the period, the firm would need to apply to the FCA to appoint the candidate on a permanent basis.
SUP 10C.12.27GRP
The FCA would only be likely to consider a qualified approval based on competence if it was sure that the candidate could achieve the required level of competence within a specified period, which is unlikely to be more than 12 to 18 months.
SUP 10C.12.28GRP
(1) The FCA may give a conditional approval instead of rejection in cases where the condition does not relate to the candidate’s abilities.(2) For example, the FCA may consider that the candidate is suitable only if the candidate refrains from, or ceases undertaking, certain actions and makes the approval conditional on that basis.(3) The FCA may require the candidate to go beyond the regulatory requirements in a given area.
SUP 10C.12.29GRP
(1) An example of SUP 10C.12.28G is where a firm wishes to appoint someone as an executive director who has a number of non-executive directorships.(2) The FCA may be concerned about the potential impact of these other commitments on that individual’s ability to devote sufficient time to the proposed role with the firm.(3) In this situation, it might be appropriate to attach a condition to the individual’s approval requiring that person to resign from some of their non-executive
SUP 10C.12.31GRP
One example of a role-limited approval relates to the fact that the size, nature, scope and complexity of a firm's activities can change over time. An individual may be fit and proper to perform a senior management function at a certain firm at a point in time but the FCA may wish to re-assess that individual if the firm's situation changes.
SUP 10C.12.32GRP
It is not FCA policy to impose role-limited approvals routinely for all firms or for a certain category of firm. For example, there is no blanket policy that approval of a candidate for a post in a small firm would be subject to a qualification based on the firm remaining small.
SUP 10C.12.33GRP
Where a firm is expanding or transforming its business model or its risk profile and there are identifiable upcoming milestones, the FCA may wish to link the duration of a candidate's approval to these milestones.
SUP 10C.12.34GRP
If the change is likely to occur in the near future and the details are clear, the FCA may consider its approval of the application in the light of this proposed change.
SUP 10C.12.35GRP
(1) Very often it will be uncertain whether a change in circumstances will happen at all, the details may not yet be known or the timing may be uncertain.(2) In that case, the FCA may, subject to (3), make its judgement based on the candidate's proposed role, without taking into account the possible change. This reflects the fact that the judgement of whether a candidate is fit and proper takes into account the role that they are actually going to play.(3) However, to reflect
SUP 10C.12.42GRP
Although it is not general FCA policy to use the power to give qualified approval as a probationary measure, there may be circumstances where a firm wants to appoint a candidate to perform an FCA-designated senior management function who, although fit and proper, may, in the role, be responsible for the firm's approach to dealing with particularly unusual or severe challenges in the near future. In this situation, it might be appropriate to approve the candidate subject to a time
SUP 10C.12.45GRP
Sections 59 and 63A of the Act show that failure to observe a condition does not in itself necessarily2 invalidate an approval. Instead, both the firm and the SMF manager may be subject to a penalty for breach of the Act. Such a failure may also:(1) involve a breach of FCArules by the firm and a breach by the SMF manager of COCON; and(2) call into question the fitness of the SMF manager.
DEPP 6.2.1GRP
The FCA4 will consider the full circumstances of each case when determining whether or not to take action for a financial penalty or public censure. Set out below is a list of factors that may be relevant for this purpose. The list is not exhaustive: not all of these factors may be applicable in a particular case, and there may be other factors, not listed, that are relevant.4(1) The nature, seriousness and impact of the suspected breach, including:(a) whether the breach was deliberate
DEPP 6.2.2GRP
When deciding whether to take action for market abuse7, the FCA4 may consider the following additional factors:4(1) The degree of sophistication of the users of the market in question, the size and liquidity of the market, and the susceptibility of the market to market abuse.(2) The impact, having regard to the nature of the behaviour, that any financial penalty or public censure may have on the financial markets or on the interests of consumers:(a) a penalty may show that high
DEPP 6.2.2AGRP
2The factors to which the FCA4 will have regard when deciding whether to impose a penalty under regulation 34 of the RCB Regulations are set out in RCB 4.2.3 G. 4
DEPP 6.2.3GRP
The FCA's4 rules on systems and controls against money laundering are set out in SYSC 3.2 and SYSC 6.3. The FCA4, when considering whether to take action for a financial penalty or censure in respect of a breach of those rules, will have regard to whether a firm has followed relevant provisions in the Guidance for the UK financial sector issued by the Joint Money Laundering Steering Group.44
DEPP 6.2.4GRP
Disciplinary action against senior managers of firms and other individuals is one of the FCA’s key tools in deterring firms and individuals from committing breaches.644
DEPP 6.2.5GRP
In some cases it may not be appropriate to take disciplinary measures against a firm for the actions of an individual6 (an example might be where the firm can show that it took all reasonable steps to prevent the breach). In other cases, it may be appropriate for the FCA4 to take action against both the firm and the individual6. For example, a firm may have breached the rule requiring it to take reasonable care to establish and maintain such systems and controls as are appropriate
DEPP 6.2.6GRP
In addition to the general factors outlined in DEPP 6.2.1 G, there are some additional considerations that may be relevant when deciding whether to take action against an individual under6section 66 of the Act. This list of those considerations is non-exhaustive. Not all considerations below may be relevant in every case, and there may be other considerations, not listed, that are relevant.(1) The individual's6 position and responsibilities. The FCA4 may take into account the
DEPP 6.2.6AGRP
6DEPP 6.2.6BG to DEPP 6.2.9G apply to action taken by the FCA under section 66 of the Act, except for action taken by virtue of section 66A(5). DEPP 6.2.9-AG to DEPP 6.2.9-FG apply only to action taken by virtue of section 66A(5).9
DEPP 6.2.6BGRP
6The FCA may take disciplinary action against an individual where there is evidence of personal culpability on the part of that individual. Personal culpability arises if the individual’s behaviour was deliberate or below the standard which would be reasonable in all the circumstances at the time of the conduct concerned.
DEPP 6.2.7GRP
The FCA will not discipline individuals6 on the basis of vicarious liability (that is, holding them responsible for the acts of others), provided appropriate delegation and supervision has taken place (see APER 4.6.13G, APER 4.6.14G, COCON 4.1.8G and COCON 4.2.17G to COCON 4.2.24G6). In particular, disciplinary action will not be taken against an approved person performing a significant influence function or a senior conduct rules staff member6 simply because a regulatory failure
DEPP 6.2.9GRP
Where disciplinary action is taken against an individual6 the onus will be on the FCA4 to show that the individual6 has been guilty of misconduct.4
DEPP 6.2.9-AGRP
9The FCA is able to take action against an SMF manager under section 66A(5) of the Act where: (1) there has been (or continues to be) a contravention of a relevant requirement by the SMF manager’sfirm;(2) at the time of the contravention, the SMF manager was responsible for the management of any of the firm’s activities in relation to which the contravention occurred; and(3) the SMF manager did not take such steps as a person in their position could reasonably be expected to take
DEPP 6.2.9-BGRP
9When deciding whether to take action further to section 66A(5) of the Act, the FCA will follow the approach in DEPP 6.2.1G and DEPP 6.2.6G.
DEPP 6.2.9-CGRP
9When determining, for the purposes of section 66A(5) of the Act, whether an SMF manager was responsible for the management of any of the firm’s activities in relation to which a contravention of a relevant requirement by the firm occurred, the FCA will consider the full circumstances of each case. A list of considerations that may be relevant for this purpose is set out below. This list is not exhaustive.(1) The SMF manager’sstatement of responsibilities, including whether the
DEPP 6.2.9-EGRP
9When determining under section 66A(5)(d) of the Act whether or not an SMF manager has taken such steps as a person in their position could reasonably be expected to take to avoid the contravention of a relevant requirement by the firm occurring (or continuing), additional considerations to which the FCA would expect to have regard include, but are not limited to:(1) the role and responsibilities of the SMF manager (for example, such steps as an SMF manager in a non-executive
DEPP 6.2.9-FGRP
Where action is taken against an SMF manager under section 66A(5) of the Act the onus will be on the FCA to show that the SMF manager has been guilty of misconduct.
DEPP 6.2.9AGRP
3In addition to the general factors outlined in DEPP 6.2.1 G, there are some additional considerations that the FCA4 will have regard to when deciding whether to take action against a person that performs a controlled function without approval contrary to section 63A of the Act.4(1) The conduct of the person. The FCA4 will take into consideration whether, while performing controlled functions without approval, the person committed misconduct in respect of which, if he had been
DEPP 6.2.10GRP
The primary responsibility for ensuring compliance with Part VI of the Act, the Part 6 rules, the prospectus rules or a provision of the Prospectus Regulation15 or a requirement imposed under such provision rests with the persons identified in section 91(1) and section 91(1A) (Penalties for breach of Part 6 rules) of the Act respectively. Normally therefore, any disciplinary action taken by the FCA4 for contraventions of these obligations will in the first instance be against
DEPP 6.2.11GRP
However, in the case of a contravention by a person referred to in section 91(1)(a) or section 91(1)(b) or section 91(1A) of the Act ("P"), where the FCA4 considers that another person who was at the material time a director of P was knowingly concerned in the contravention, theFCA4 may take disciplinary action against that person. In circumstances where the FCA4 does not consider it appropriate to seek a disciplinary sanction against P (notwithstanding a breach of relevant requirements
DEPP 6.2.13GRP
In deciding whether to take action, the FCA4 will consider the full circumstances of each case. Factors that may be relevant for this purpose include, but are not limited to, the factors at DEPP 6.2.1 G.4
DEPP 6.2.14GRP
The Principles are set out in PRIN 2.1.1 R. The Principles are a general statement of the fundamental obligations of firms under the regulatory system. The Principles derive their authority from the FCA's4 rule-making powers set out in section 137A4(General rule-making power) of the Act. A breach of a Principle will make a firm liable to disciplinary action. Where the FCA4 considers this is appropriate, it will discipline a firm on the basis of the Principles alone.444
DEPP 6.2.15GRP
In determining whether a Principle has been breached, it is necessary to look to the standard of conduct required by the Principle in question at the time. Under each of the Principles, the onus will be on the FCA4 to show that a firm has been at fault in some way. 4
DEPP 6.2.16GRP
The Listing Principles and Premium Listing Principles5 are set out in LR 7. The Listing Principles set out in LR 7.2.1 R5 are a general statement of the fundamental obligations of all5listed companies. In addition to the Listing Principles, the Premium Listing Principles set out in LR 7.2.1A R are a general statement of the fundamental obligations of all listed companies with a premium listing11. The Listing Principles and Premium Listing Principles5 derive their authority from
DEPP 6.2.17GRP
In determining whether a Listing Principle or Premium Listing Principle5 has been broken, it is necessary to look to the standard of conduct required by the Listing Principle or Premium Listing Principle5 in question. Under each of the Listing Principles and Premium Listing Principles5, the onus will be on the FCA4 to show that a listed company has been at fault in some way. This requirement will differ depending upon the relevant5 Listing Principle or Premium Listing Princip
DEPP 6.2.19GRP
Some types of breach may potentially result not only in action by the FCA4, but also action by other domestic or overseas regulatory authorities or enforcement agencies.4
DEPP 6.2.20GRP
When deciding how to proceed in such cases, the FCA4 will examine the circumstances of the case, and consider, in the light of the relevant investigation, disciplinary and enforcement powers, whether it is appropriate for the FCA4 or another authority to take action to address the breach. The FCA4 will have regard to all the circumstances of the case including whether the other authority has adequate powers to address the breach in question.444
DEPP 6.2.21GRP
In some cases, it may be appropriate for both the FCA4and another authority to be involved, and for both to take action in a particular case arising from the same facts. For example, a breach of RIE rules may be so serious as to justify the FCA4 varying or cancelling the firm's Part IV permission, or withdrawing approval from approved persons, as well as action taken by the RIE. In such cases, the FCA4 will work with the relevant authority to ensure that cases are dealt with efficiently
DEPP 6.2.22GRP
In relation to behaviour7 which may have happened or be happening in the context of a takeover bid, the FCA4 will refer to the Takeover Panel and give due weight to its views. Where the Takeover Code has procedures for complaint about any behaviour, the FCA4 expects parties to exhaust those procedures. The FCA4 will not, save in exceptional circumstances, take action under any of section 123 (FCA's4power to impose penalties), section 123A (Power to prohibit individuals from managing
DEPP 6.2.23GRP
The FCA4 will not take action against a person over behaviour7 which does not amount to market abuse. Behaviour is less likely to amount to market abuse where it7 (a) conforms with the Takeover Code or rules of an RIE and (b) falls within the terms of MAR 1.10.4G to 1.10.6G7 which state7 that behaviour7 so conforming is unlikely to, of itself,7 amount to market abuse. The FCA4 will seek the Takeover Panel's or relevant RIE's views on whether behaviour7 complies with the Takeover
DEPP 6.2.24GRP
If any of the circumstances in DEPP 6.2.26 G apply, and the FCA4 considers that the use of its disciplinary powers under section 123 or section 129, or of its injunctive powers under section 381 or of its powers relating to restitution under section 383 or 384 is appropriate, it will not take action during an offer to which the Takeover Code applies except in the circumstances set out in DEPP 6.2.27 G.4
DEPP 6.2.25GRP
In any case where the FCA4 considers that the use of its powers under any of sections 123, 123A, 123B,7 129, 381, 383 or 384 of the Act may be appropriate, if that use may affect the timetable or outcome of a takeover bid or where it is appropriate in the context of any exercise by the Takeover Panel of its powers and authority, the FCA4 will consult the Takeover Panel before using any of those powers.44
DEPP 6.2.26GRP
Where the behaviour7 of a person which amounts to market abuse is behaviour7 to which the Takeover Code is relevant, the use of the Takeover Panel's powers will often be sufficient to address the relevant concerns. In cases where this is not so, the FCA4 will need to consider whether it is appropriate to use any of its own powers under the market abuse regime. The principal circumstances in which the FCA4 is likely to consider such exercise are:44(1) where the behaviour7 falls
DEPP 6.2.27GRP
The exceptional circumstances in which the FCA4 will consider the use of powers during a takeover bid are listed in DEPP 6.2.26G (1), DEPP 6.2.26G (3) and DEPP 6.2.26G (4), and, depending on the circumstances, DEPP 6.2.26G (5).4
SUP 10C.14.1GRP
(1) An FCA-approved SMF manager's job may change from time to time as a result, for instance, of a change in personal job responsibilities or a firm'sregulated activities. (2) Where the changes will involve the SMF manager performing one or more FCA-designated senior management functions different from those for which approval has already been granted, an application must be made to the FCA for approval for the SMF manager to perform those FCA-designated senior management functions.(3)
SUP 10C.14.3GRP
If it is proposed that an FCA-approved SMF manager:(1) will no longer be performing an FCA-designated senior management function under an arrangement entered into by one firm or one of its contractors; but(2) will be performing the same or a different FCA-designated senior management function under an arrangement entered into by a new firm or one of its contractors (whether or not the new firm is in the same group as the old firm);the new firm will be required to make a fresh
SUP 10C.14.4GRP
In certain circumstances, when the FCA already has the information it would usually require, a shortened version of the relevant Form A may be completed. See SUP 10C.10.8D to SUP 10C.10.8BD4 for full details.
SUP 10C.14.5RRP
(1) A firm must notify the FCA no later than ten3business days after an FCA-approved SMF manager permanently7 ceases to perform an FCA-designated senior management function.(2) It must make that notification by submitting to the FCA a completed Form C (SUP 10C Annex 5R4).(3) If: (a) the firm is also making an application for approval for that approved person to perform a controlled function within the same firm or group; and(b) ceasing to perform the FCA-designated senior management
SUP 10C.14.7RRP
(1) A firm must notify the FCA as soon as practicable after it becomes aware, or has information which reasonably suggests, that it will submit a qualified Form C for an FCA-approved SMF manager.(2) Form C is qualified if the information it contains:(a) relates to the fact that the firm has dismissed, or suspended, the FCA-approved SMF manager from its employment; (b) relates to the resignation by the FCA-approved SMF manager while under investigation by the firm, the FCA or any
SUP 10C.14.8GRP
(1) Notification under SUP 10C.14.7R may be made by telephone, email or fax and should be made, where possible, within one business day of the firm becoming aware of the information. (2) Oral notifications should be given directly to the firm's usual supervisory contact at the FCA. An oral notification left with another person or left on a voicemail, or other automatic messaging service, is unlikely to have been given appropriately.
SUP 10C.14.9GRP
A firm is responsible for notifying the FCA if any FCA-approved SMF manager has permanently7 ceased to perform an FCA-designated senior management function under an arrangement entered into by its contractor or where any such FCA-approved SMF manager is temporarily absent7.
SUP 10C.14.10GRP
(1) A firm can submit Form C or Form E (and any MiFID Article 4 SMR Information Form3 required by SUP 10C.10.9BD)4 to the FCA in advance of the cessation date. (2) If the actual cessation date turns out to be different from the one notified in advance, the firm should notify the FCA.(3) If the firm:4(a) does not submit Form C (including a qualified one) following notification under SUP 10C.14.7R; or4(b) submits a form in advance under (1) but it turns out that there is no requirement
SUP 10C.14.11GRP
(1) When a person ceases the arrangement under which they perform an FCA-designated senior management function, they will automatically cease to be an FCA-approved SMF manager in relation to that FCA-designated senior management function. (2) A person can only be an FCA-approved SMF manager in relation to a specific FCA-designated senior management function. Therefore, a person is not an FCA-approved SMF manager during any period between ceasing to perform one FCA-designated senior
SUP 10C.14.13RRP
If an FCA-approved SMF manager's title, name or national insurance number changes, the firm for which the person performs an FCA-designated senior management function must notify the FCA on Form D (SUP 10C Annex 6R4), of that change within seven business days of the firm4 becoming aware of the matter.
SUP 10C.14.14GRP
The duty to notify in SUP 10C.14.13R does not apply to changes to an FCA-approved SMF manager's private address.
SUP 10C.14.15RRP
(1) If any of the details relating to:(a) the arrangements in relation to any of a firm'sFCA-approved SMF managers; or(b) any FCA-designated senior management functions of one of its FCA-approved SMF managers;are to change, the firm must notify the FCA on Form D (SUP 10C Annex 6R4).(2) The notification under (1) must be made as soon as reasonably practicable after the firm becomes aware of the proposed change.(3) This rule does not apply to anything required to be notified under
SUP 10C.14.17GRP
(1) Under section 62A of the Act, a firm should provide the FCA with a revised statement of responsibilities if there has been any significant change in the responsibilities of an FCA-approved SMF manager.(2) Details can be found in SUP 10C.11 (Statements of responsibilities).
SUP 10C.14.18RRP
(1) If a firm becomes aware of information which would reasonably be material to the assessment of the fitness and propriety of an FCA-approved SMF manager, or of candidate to be one (see FIT), it must inform the FCA either:(a) on Form D; or(b) if it is more practical to do so and with the prior agreement of the FCA, by email or fax;as soon as practicable and, in any case, within seven business days.(2) This rule does not apply to anything required to be notified under SUP 10C.14.5R
SUP 10C.14.20GRP
Failing to disclose relevant information to the FCA may be a criminal offence under section 398 of the Act.
SUP 10C.14.22RRP
If a firm is required to notify the FCA about an FCA-approved SMF manager under any of the following:(1) section 63(2A) of the Act (Duty to notify regulator of grounds for withdrawal of approval); or2(2) [deleted]2(3) section 64C of the Act (Requirement for 4authorised persons to notify regulator of disciplinary action);it must give that notification:(4) under SUP 10C.14.5R (Form C) if that rule applies; (5) under SUP 10C.14.7R (Qualified Form C) if that rule applies; or(6) (in
SUP 10C.14.24GRP

Table: Explanation of the sections of the Act mentioned in SUP 10C.14.22R4

1Section

Summary of relevant parts

Other Handbook material

Comments

Section 63(2A) (Duty to notify regulator of grounds for withdrawal of approval)

At least once a year, each firm must, in relation to every SMF manager for whom an approval has been given on the application of that firm:

(a) consider whether there are any grounds on which the FCA could withdraw the approval; and

(b) if the firm is of the opinion that there are such grounds, notify the FCA of those grounds.

FIT sets out guidance on the factors a firm should take into account when assessing the fitness and propriety of an approved person.

2

2

2

Section 64C of the Act (Requirement for 4authorised persons to notify regulator of disciplinary action)

If:

(a) a firm takes disciplinary action in relation to an SMF manager; and

(b) the reason, or one of the reasons, for taking that action is a reason specified in SUP 15.11.6R;

the firm should notify the FCA of that fact.

SUP 15.11 (Notification of COCON breaches and disciplinary action)

An example of when a notification should be made using Form C rather than Form D is when a firm is required to notify the FCA under section 64C of the Act that it has dismissed an SMF manager.

SUP 10C.14.25GRP
(1) When considering how to notify the FCA under SUP 10C.14.18R or SUP 10C.14.22R, a firm should have regard to the urgency and significance of a matter. If appropriate, the firm should also notify its usual supervisory contact at the FCA by telephone or by other prompt means of communication, before submitting a written notification.(2) Oral notifications should be given directly to the firm's usual supervisory contact at the FCA. An oral notification left with another person
SUP 10C.14.26GRP
(1) The obligations to supply information to the FCA under:(a) SUP 10C; or(b) the sections of the Act listed in SUP 10C.14.22R;apply notwithstanding any agreement (for example, a 'COT 3' Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS)) or any other arrangements entered into by a firm and an employee upon termination of the employee's employment. (2) A firm should not enter into any such arrangements or agreements that could conflict with its obligations
SUP 10C.14.27GRP
Failing to disclose relevant information to the FCA may be a criminal offence under section 398 of the Act.
SUP 10C.14.28RRP
This section also applies to a notification to the FCA4 about a PRA-approved SMF manager who is not an FCA-approved SMF manager required by any of the provisions of the Act listed in SUP 10C.14.22R.
SUP 10C.14.30GRP
If a firm is required to notify the FCA about a PRA-approved SMF manager who is not an FCA-approved SMF manager under one of the sections of the Act referred to in SUP 10C.14.28R, it should make a single notification under the PRA's requirements. There is no need for a separate notification to the FCA.
SUP 10C.13.1GRP
This section deals with variation of a conditional approval at the:(1) request of the firm; and(2) initiative of the FCA.
SUP 10C.13.2GRP
(1) In particular, this section sets out the FCA’s policies about varying conditional approvals at the request of a firm, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation). (2) This section does not deal with the FCA’s policies on varying a condition on its own initiative. DEPP 8 deals with that. However this section gives a short description of the FCA’s powers to impose such variations.2
SUP 10C.13.3GRP
A firm may apply to the FCA to change a conditional or time-limited2 approval. The changes for which a firm may apply are:(1) a variation of the condition;(2) removal of the condition; 2(3) the imposition of a new condition; or2(4) where the approval is time-limited:2(a) varying the time limit; or2(b) removing the time limit.2
SUP 10C.13.4GRP
(1) If3 the firm applying for a change described in SUP 10C.13.3G2 is a PRA-authorised person, there are requirements about whether it3 should apply to the FCA or2 the PRA. Paragraphs (2) to (3) summarise these requirements.22(2) If the firm is applying for the imposition of a new condition, the firm should apply to the FCA if the approval to which the application relates was given by the FCA.(2A) If a firm is applying for a change of the type described in SUP 10C.13.3G(1) or
SUP 10C.13.6DRP
An application by a firm to the FCA under section 63ZA of the Act (Variation of senior manager's approval at request of 2authorised persons) must be made by using Form I (SUP 10C Annex 8D)2.
SUP 10C.13.8GRP
SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications to vary a conditional approval should be submitted.
SUP 10C.13.9GRP
The FCA has until the end of the period of three months from the time it receives a properly completed application to consider the application and come to a decision.
SUP 10C.13.10GRP
The FCA must either grant the application or, if it proposes not to grant an application, issue a warning notice (see DEPP 2).
SUP 10C.13.11GRP
The FCA may refuse an application if it appears to the FCA that it is desirable to do so to advance one or more of its operational objectives.
SUP 10C.13.12GRP
Before making a decision to grant the application or give a warning notice, the FCA may ask the firm for more information. If it does this, the three-month period in which the FCA must determine a completed application:(1) will stop on the day the FCA requests the information; and(2) will start running again on the day on which the FCA finally receives all the requested information.
SUP 10C.13.13GRP
Whenever it grants an application, the FCA will confirm this in writing to all interested parties.
SUP 10C.13.14GRP
If the FCA proposes to refuse an application, it must follow the procedures for issuing warning notices and decision notices to all interested parties. The requirements relating to warning and decision notices are in DEPP 2.
SUP 10C.13.15RRP
A firm notifying the FCA of its withdrawal of an application for variation of an approval must use Form B (SUP 10C Annex 4R)2.
SUP 10C.13.18GRP
The FCA’s policy on approving or refusing a request for a variation is the same as it is for imposing conditions on approval (see SUP 10C.12 (Conditional and time-limited approvals)).
SUP 10C.13.19GRP
(1) An example of a situation in which the FCA would consider varying a condition would be a competency-related condition which required a training course to be completed (see, in particular, SUP 10C.12.24G for this type of condition).(2) If the firm later concludes that a different course would be better, the firm may apply for a variation of the condition.
SUP 10C.13.20GRP
Another example of a situation in which the FCA would consider varying a condition would be a condition relating to a remedial programme (see SUP 10C.12.41G). If the remedial programme is changed, it may be appropriate to change the condition.
SUP 10C.13.21GRP
(1) Other examples of where the FCA may agree to removing a condition are where:(a) the approved person's role has changed so that the reason for the condition originally being imposed no longer applies; or(b) new information has come to light that removes any doubt about the approved person's competence so a condition is no longer necessary.(2) For example, the FCA may agree to removing a condition about the scope of the approved person's role of the type described in SUP 10
SUP 10C.13.22GRP
See SUP 10C.12.38G for another example of a case where the FCA may agree to removing a condition (condition imposed pending reorganisation).
SUP 10C.13.23GRP
Under section 63ZB of the Act (Variation of senior manager's approval on initiative of regulator), the FCA may vary an approval given by the FCA or the PRA for the performance of a designated senior management function if the FCA considers that it is desirable to do so to advance one or more of its operational objectives.
SUP 10C.13.24GRP
The FCA may vary an approval by:(1) imposing a condition; (2) varying a condition; (3) removing a condition; 2(4) limiting the period for which the approval is to have effect; or2(5) removing or varying a time limit on an approval.2
SUP 10C.13.25GRP
More information about the FCA's powers to vary a condition on its own initiative, including its policy on using these powers, can be found in DEPP 8.
EG 6.2.1RP
3For supervisory notices (as defined in section 395(13)) which have taken effect, decision notices and final notices, section 391 of the Act requires the FCA to publish, in such manner as it considers appropriate, such information about the matter to which the notice relates as it considers appropriate. Section 391 prevents the FCA from publishing warning notices, but the FCA may publish such information about the matter to which a warning notice falling within section 391(1ZB)
EG 6.2.2RP
3The FCA’s approach to publishing information about warning notices is set out in paragraphs 6.2.3 to 6.2.11 below. This should be contrasted with the FCA’s approach to the publication of decision notices and final notices as set out in paragraphs 6.2.12 to 6.2.15 below. In particular, the considerations that the FCA will take into account when deciding what information to publish about a warning notice, including whether publication would be unfair, recognise that the FCA has
EG 6.2.3RP
3The FCA may publish information about warning notices which fall within section 391(1ZB) of the Act. These are essentially disciplinary warning notices, for example, where the FCA is proposing to censure, fine, or impose a suspension, restriction, condition or limitation on1 a firm or individual. The power to publish information does not apply, for example, to warning notices which only propose to prohibit an individual, withdraw the approval of an individual or cancel the permission
EG 6.2.4RP
3The decisions on whether to exercise the power to publish information about a warning notice, and if so what information to publish, will (subject to EG 6.2.4AG)4 be taken by the RDC after it has consulted with the persons to whom the warning notice has been given or copied. The procedure the FCA will follow when making these decisions is set out in DEPP 3.
EG 6.2.4ARP
4Where the settlement decision makers decide to issue a warning notice, they shall also take the decision on whether to exercise the power to publish information about a warning notice and if so what information to publish. The settlement decision makers will consult with the persons to whom the warning notice has been given or copied. The FCA expects that the settlement decision makers are unlikely to decide it is appropriate to publish information about a warning notice where
EG 6.2.5RP
3The principal purpose of this power is to promote the early transparency of enforcement proceedings. This has several benefits, including: consumers, firms and market users will be able to understand the types of behaviour that the FCA considers unacceptable at an earlier stage, which in turn should encourage more compliant behaviour;by showing at an earlier stage that the FCA is taking action, confidence in the FCA and the regulatory system should be enhanced;there will be more
EG 6.2.6RP
3The FCA will take the following initial steps in considering whether it is appropriate to exercise this power: (1) It will consider whether it is appropriate to publish details of the warning notice in order to enable consumers, firms and market users to understand the nature of the FCA’s concerns. The FCA will consider the circumstances of each case but expects normally to consider it appropriate to publish these details. (2) Where the FCA considers it is appropriate to publish
EG 6.2.7RP
3A person to whom the warning notice is given or copied who seeks to demonstrate potential unfairness from publication must provide clear and convincing evidence of how that unfairness may arise and how he could suffer a disproportionate level of damage. For example, this may be the case if publication could materially affect the person’s health, result in bankruptcy or insolvency, a loss of livelihood or a significant loss of income, or prejudice criminal proceedings to which
EG 6.2.8RP
3If, after consulting the persons to whom the notice is given or copied, the FCA still considers it is appropriate to publish information about a warning notice, it will publish this information in a statement (a warning notice statement). This will ordinarily include a brief summary of the facts which gave rise to the warning notice to enable consumers, firms and market users to understand the nature of the FCA’s concerns. Where the FCA considers it appropriate to identify the
EG 6.2.9RP
3As the FCA may only publish information about disciplinary warning notices and not others, it will in many cases not be able to publish details of all of the sanctions it is seeking to impose (for example, the fact that it is proposing to prohibit an individual as well as impose a fine). For this reason, the FCA will not normally publish the nature and level of the proposed disciplinary sanctions.
EG 6.2.10RP
3Any warning notice statement the FCA publishes will make clear that: (a) the warning notice is not the final decision of the FCA;(b) the recipient has the right to make representations to the RDC which, in the light of those representations, will decide on the appropriate action and whether to issue a decision notice; and (c) if a decision notice is issued, the subject of the notice will have the right to refer the matter to the Tribunal which will reach an independent decision
EG 6.2.11RP
3Publication will generally include placing the warning notice statement on the FCA website. The FCA will also consider what information about the matter should be included on the Financial Services Register.
EG 6.2.12RP
3The FCA will consider the circumstances of each case, but will ordinarily publicise enforcement action where this has led to the issue of a final notice. The FCA may also publicise enforcement action where this has led to the issue of a decision notice. The FCA will decide on a case-by-case basis whether to publish information about the matter to which a decision notice relates, but expects normally to publish a decision notice if the subject of enforcement action decides to
EG 6.2.13RP
3If the FCA intends to publish a decision notice, it will give advance notice of its intention to the person to whom the decision notice is given and to any third party to whom a copy of the notice is given. The FCA will consider any representations made, but will normally not decide against publication solely because it is claimed that publication could have a negative impact on a person’s reputation. The FCA will also not decide against publication solely because a person asks
EG 6.2.14RP
3Publication will generally include placing the decision notice or final notice on the FCA website and this will often be accompanied by a press release. The FCA will also consider what information about the matter should be included on the Financial Services Register. Additional guidance on the FCA's approach to the publication of information on the Financial Services Register in certain specific types of cases is set out at the end of this chapter.
EG 6.2.15RP
3However, as required by the Act (see paragraph 6.2.1 above), the FCA will not publish information if publication of it would, in its opinion, be unfair to the person in respect of whom the action is taken or prejudicial to the interests of consumers, or detrimental to the stability of the UK financial system. It may make that decision where, for example, publication could damage market confidence or undermine market integrity in a way that could be damaging to the interests of
EG 6.2.16RP
3Publishing notices is important to ensure the transparency of FCA decision-making; it informs the public and helps to maximise the deterrent effect of enforcement action. The FCA will upon request review warning notice statements, decision notices, final notices and related press releases that are published on the FCA's website. The FCA will determine at that time whether continued publication is appropriate, or whether notices and publicity should be removed or amended.
EG 6.2.17RP
3In carrying out its review the FCA will consider all relevant factors. In particular, the FCA will take into account: the seriousness of the person’s misconduct;the nature of the action taken by the FCA and the level of any sanction imposed on the person;whether the FCA has continuing concerns in respect of the person and any risk they might pose to the FCA's objectives;whether the person is a firm or an individual;whether the publication sets out the FCA's expectations
EG 6.2.18RP
3The FCA expects usually to conclude that warning notice statements, notices and related press releases that have been published for less than six years should not be removed from the website, and that notices and related press releases relating to prohibition orders which are still applicable should not be removed from the website regardless of the length of time they have been published.
EG 6.2.19RP
3In cases where the FCA publishes a warning notice statement and the FCA subsequently decides not to take any further action, or where it publishes a decision notice and the subject of enforcement action successfully refers the matter to the Tribunal, the FCA will make it clear on its website that the warning notice or the 2decision notice no longer applies. The FCA will normally do this by publishing a notice of discontinuance with the consent of the person to whom the notice
EG 6.2.19ARP
2In other cases where a case is resolved following the publication of a warning notice statement, the FCA will consider on a case-by-case basis whether to update its website to explain what the outcome was of the case described in the warning notice statement. Where the warning notice statement was issued on an anonymised basis, the FCA will at the same time consider the extent to which it is appropriate to identify the subject of the statement.
EG 6.2.21RP
3It is important that the FCA maintains an accurate public record. One of the ways the FCA does this is by publishing1 the reasons for variations of Part 4A permission, the imposition of requirements,5 variations of the approval of SMF managers and the imposition and variation of directions under regulation 74C(5) of the Money Laundering Regulations5. The FCA will always aim to balance1 the interests of consumers and the possibility of unfairness to the person subject to the
EG 6.2.22RP
3The FCA will amend the Financial Services Register to reflect a firm’s actual Part 4A permission,5 the terms of an SMF manager’s actual approval under section 59 of the Act1 following any variation or the terms of a direction imposed under regulation 74C of the Money Laundering Regulations5.
DEPP 5.1.1GRP
(1) 1A person subject to enforcement action may agree to a financial penalty or other outcome rather than contest formal action by the FCA.4Alternatively, they may enter into a focused resolution agreement and in this way partly contest the proposed action (see DEPP 5.1.8AG to DEPP 5.1.8DG).54(1A) 5Further, even if the person subject to enforcement action wishes to fully contest the proposed enforcement action, they may choose to do so by (i) agreeing to the FCA issuing the required
DEPP 5.1.2GRP
A person who is or may be subject to enforcement action may wish to discuss the proposed action with FCA4 staff through settlement discussions.4
DEPP 5.1.3GRP
Settlement discussions may take place at any time during the enforcement process if both parties agree. This might be before the giving of a warning notice, before a decision notice, or even after referral of the matter to the Tribunal. But the FCA4 would not normally agree to detailed settlement discussions until it has a sufficient understanding of the nature and gravity of the suspected misconduct or issue to make a reasonable assessment of the appropriate outcome. Settlement
DEPP 5.1.4GRP
FCA4staff and the person concerned may agree that neither the FCA4 nor the person concerned would seek to rely against the other on any admissions or statements made in the course of their settlement discussions if the matter is considered subsequently by the RDC or the Tribunal.44
DEPP 5.1.5GRP
(1) The settlement decision makers may, but need not, participate in the discussions exploring possible settlement.(2) If the settlement decision makers have not been involved in the discussions, but an agreement has been reached, they may ask to meet the relevant FCA4 staff or the person concerned in order to assist in the consideration of the proposed settlement.4
DEPP 5.1.6GRP
The terms of any proposed settlement:(1) will be put in writing and be agreed by FCA4 staff and the person concerned;4(2) may refer to a draft of the proposed statutory notices setting out the facts of the matter and the FCA's4 conclusions; 4(3) may, depending upon the stage in the enforcement process at which agreement is reached, include an agreement by the person concerned to: (a) waive and not exercise any rights under sections 387 (Warning notices) and 394 (Access to Authority
DEPP 5.1.7GRP
The settlement decision makers may:(1) accept the proposed settlement by deciding to give a statutory notice based on the terms of the settlement; or(2) decline the proposed settlement;whether or not the settlement decision makers have met with the relevant FCA4 staff or the person concerned.4
DEPP 5.1.8GRP
(1) Where the settlement decision makers decline to issue a statutory notice despite the proposed settlement, they may invite FCA4 staff and the person concerned to enter into further discussions to try to achieve an outcome the settlement decision makers would be prepared to endorse.4(2) However, if the proposed action by the FCA4 has been submitted to the RDC for consideration, it will be for the RDC to decide:4(a) whether to extend the period for representations in response
DEPP 5.1.8BGRP
5The terms of any proposed focused resolution agreement:(1) will be put in writing and be agreed by FCA staff and the person concerned;(2) may refer to a draft of the proposed warning notice; and (3) may, depending upon the stage in the enforcement process at which agreement is reached, include an agreement by the person concerned to: (a) waive and not exercise any rights under sections 387 (Warning notices) and 394 (Access to Authority material) of the Act to notice of, or access
DEPP 5.1.8CGRP
5Where the proposed settlement is on the basis of a focused resolution agreement, the role of the settlement decision makers shall be as follows:(1) The settlement decision makers will decide whether or not to give a warning notice. (For the avoidance of doubt, the settlement decision makers may meet the relevant FCA staff or the person concerned in accordance with DEPP 5.1.5G and any such meeting shall not affect the settlement decision makers’ ability to decide whether or not
DEPP 5.1.8DGRP
5For the avoidance of doubt, the decision whether to agree a proposed focused resolution agreement is entirely within the discretion of the settlement decision makers.
DEPP 5.1.8EGRP
(1) 5The purpose of this section is to define a procedure (the “expedited reference procedure”) enabling a person subject to enforcement action to challenge the proposed action before the Tribunal without engaging with the FCA’s internal decision-making process.(2) DEPP 5.1.8FG to DEPP 5.1.8IG set out the circumstances in which the expedited reference procedure is available, the steps a person must take to make use of the procedure, and how the procedure operates, depending on
DEPP 5.1.8FGRP
5The expedited reference procedure is available only if:(1) the proposed action requires the FCA to issue a warning notice; (2) the FCA considers that it has a sufficient understanding of the nature and gravity of the breach to make a reasonable assessment of the appropriate penalty or other outcome; and(3) the FCA has communicated that assessment to the person concerned.
DEPP 5.1.8GGRP
5To use the expedited reference procedure, the person subject to enforcement action must notify the FCA that they:(1) wish to make an expedited reference to the Tribunal; and(2) waive and will not exercise any rights under section 387(2) of the Act in respect of the warning notice given (or to be given) in relation to the proposed action.
DEPP 5.1.8HGRP
5To use the expedited reference procedure before a warning notice has been given:(1) the notification set out in DEPP 5.1.8GG must be given to FCA staff; (2) the decision to issue a warning notice will then be taken by the settlement decision makers; and(3) the decision to issue a decision notice will also be taken by the settlement decision makers, taking into consideration any representations by any third party under section 393 of the Act or any interested party under section
DEPP 5.1.8JGRP
5Once a decision notice has been given as part of the expedited reference procedure (whether by the settlement decision makers or the RDC), it is the responsibility of the person subject to enforcement action to seek to refer the matter to the Tribunal under the Act if they so wish. If the matter is not referred to the Tribunal within the time required under section 390(1) of the Act, the FCA will, on taking the action to which the decision notice relates, give a final notice
DEPP 5.1.8KGRP
5If FCA staff consider that it is appropriate to publish information about the matter to which a warning notice falling within section 391(1ZB) of the Act relates and is given by the settlement decision makers, they will make a recommendation to the settlement decision makers that such information should be published.
DEPP 5.1.8LGRP
5The settlement decision makers will then consider whether it is appropriate in all the circumstances to publish information about the matter to which the warning notice falling within section 391(1ZB) of the Act relates. The FCA's policy on publishing such information is set out in EG 6.
DEPP 5.1.8MGRP
5If the settlement decision makers propose that the FCA should publish information about the matter to which a warning notice falling within section 391(1ZB) of the Act relates:(1) the settlement decision makers will settle the wording of the statement it proposes the FCA should publish (warning notice statement);(2) the FCA staff will make appropriate arrangements for the warning notice statement that the settlement decisions makers propose the FCA should publish to be given
DEPP 5.1.8NGRP
5If no response to the proposed warning notice statement is received, the FCA will make appropriate arrangements to publish the warning notice statement.
DEPP 5.1.8OGRP
5If the settlement decision makers receive a response from the person to whom the proposed warning notice statement was given, the settlement decision makers will consider their response and decide whether it is appropriate in all the circumstances to publish information about the matter to which the warning notice relates.
DEPP 5.1.8PGRP
5If the settlement decision makers decide that the FCA should publish a warning notice statement:(1) the settlement decision makers will notify the relevant parties (including the relevant FCA staff) in writing of that decision;(2) the settlement decision makers will settle the wording of the warning notice statement; and(3) the FCA will make appropriate arrangements for the warning notice statement to be published.
DEPP 5.1.8QGRP
5If the settlement decision makers decide that the FCA should not publish a warning notice statement they will notify the relevant parties (including the relevant FCA staff) in writing of that decision.
DEPP 5.1.9GRP
The FCA4 and other parties may agree to mediation as a way of facilitating settlement in appropriate cases.4
DEPP 5.1.10GRP
(1) DEPP 2.4 sets out the FCA's4 approach to giving third parties copies of statutory notices pursuant to section 393 (Third party rights) of the Act.4(2) The decision to give a warning notice or a decision notice to a third party is a statutory notice associated decision.(3) In cases therefore where the decision to give a warning notice or decision notice is taken by settlement decision makers, those decision makers will decide whether a copy of the notice should be given to
SUP 10C.10.2RRP
6Unless the context otherwise requires, in SUP 10C.10 (Application for approval and withdrawing an application for approval) to SUP 10C.15 (Forms and other documents and how to submit them to the FCA), where reference is made to a firm, this includes an applicant for Part 4A permission and other persons seeking to carry on regulated activities as an SMCR firm.
SUP 10C.10.3GRP
(1) Section 59 of the Act (Approval for particular arrangements) says that a firm must take reasonable care to ensure that no one performs an FCA controlled function (including an FCA-designated senior management function) unless that person is acting in accordance with an approval given by the FCA.(2) That means that where a candidate will be performing one or more FCA-designated senior management functions, a firm must take reasonable care to ensure that the candidate does not
SUP 10C.10.4GRP
(1) If a person performs an FCA controlled function (including an FCA-designated senior management 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:(a) a person (‘P’) has at any time performed an FCA controlled function without approval; and(b) at that time P knew, or could reasonably be expected to have known, that P was performing an FCA controlled function without
SUP 10C.10.5GRP
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:(1) the FCA candidate; or(2) (where the FCA candidate works for the firm'sparent undertaking or holding company) by the firm'sparent undertaking or holding company.
SUP 10C.10.6GRP
(1) The firm that is employing the FCA candidate to perform the FCA-designated senior management function will usually make the submission itself. (SUP 10C.10.7G describes some common situations.) (2) Where a firm has outsourced the performance of an FCA-designated senior management function, the details of the outsourcing determines whom the FCA anticipates will submit the FCA-approved persons application forms.(3) The firm which is outsourcing is referred to as ‘A’ and the
SUP 10C.10.7GRP

Outsourcing arrangements

1Outsourcing arrangements

Explanation

Submitting form

Firm A to firm B

The FCA will consider A to have taken reasonable care if it enters into a contract with B under which B is responsible for ensuring that the relevant FCA-designated senior management functions are performed by FCA-approved SMF managers, and that it is reasonable for A to rely on this.

Firm B submits FCA-approved persons forms on behalf of firm A.

Outsourcing by A to B (both being a member of the same United Kingdomgroup and each having its registered office in the United Kingdom)

See SUP 10C.3.9G

Either A or B may submit FCA-approved persons forms on behalf of firms in the group (see SUP 15.7.8G).

(i) A to B, where B:

(a) is not an authorised person; and

(b) is not part of the same group as A; or

(ii) A to B, where A is a branch of an overseas firm in the United Kingdom, and B is an overseasundertaking of the same group; or

(iii) A to B, where A is a UK authorised subsidiary of an overseas firm and B is an overseasundertaking of the same group.

Responsibility for (as opposed to the performance of) any activity outsourced to B will remain with A. See SYSC 8.

A ensures that an individual approved by the FCA or the PRA to perform a designated senior management function has responsibility for the outsourcedarrangement and A submits a form in relation to that individual.

SUP 10C.10.8DRP
(1) An application by a firm for the FCA's approval under section 59 of the Act (Approval for particular arrangements) for the performance of an FCA-designated senior management function must be made by completing Form A (SUP 10C Annex 3D6), except where SUP 10C.10.9D requires Form E.(2) If a firm must make an application using Form A, it must use Form A (shortened form) in the circumstances described in SUP 10C.10.8AD.6
SUP 10C.10.10GRP
SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications should be submitted.
SUP 10C.10.11GRP
An application by a firm for the FCA's approval under section 59 of the Act (Approval for particular arrangements) for the performance of an FCA-designated senior management function should be accompanied by a statement of responsibilities about the candidate6.
SUP 10C.10.14GRP
Under section 60A of the Act, before a firm makes an application for approval, it should be satisfied that the candidate is a fit and proper person to perform the function to which the application relates. In deciding that question, the firm should have particular regard to whether the candidate, or any person who may perform a function on the candidate's behalf:(1) has obtained a qualification; (2) has undergone, or is undergoing, training; (3) possesses a level of competence;
SUP 10C.10.15GRP
For guidance on criteria that a firm should use for assessing whether an FCA candidate is fit and proper (including the FCArules referred to in SUP 10C.10.14G), see FIT.
SUP 10C.10.18GRP
The6firm should not send a copy of the certificate to the FCA unless required to do so under SUP 10C.10.18AG or SUP 10C.10.28G (requests for additional information)6.5
SUP 10C.10.24GRP
The Act sets out the time that the FCA has to consider an application and come to a decision.
SUP 10C.10.25GRP
In any case6 where the application for approval is made by a person applying for a Part 4A permission, 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 10C.10.27GRP
The FCA will deal with cases more quickly than this whenever circumstances allow and will try to meet the standard response times published on the website and in its Annual Report. However, the processing time will be longer than the published standard response times if:(1) an application is incomplete when received; or(2) the FCA has knowledge that, or reason to believe that, the information is incomplete.
SUP 10C.10.28GRP
Before making a decision to grant the application or give a warning notice, the FCA may ask the firm for more information about the FCAcandidate. If it does this, the three-month period in which the FCA must determine a completed application:(1) will stop on the day the FCA requests the information; and(2) will start running again on the day on which the FCA finally receives all the requested information.
SUP 10C.10.29GRP
If there is a delay in processing the application within the standard response time, the FCA will tell the firm making the application as soon as this becomes apparent.
SUP 10C.10.30GRP
(1) Application forms must always be completed fully and honestly. Further notes on how to complete the form are contained in each form. (2) If forms are not completed fully and honestly, applications will be subject to investigation and the FCA candidate's suitability to be approved to undertake an FCA controlled function will be called into question. (3) A person who provides information to the FCA that is false or misleading may commit a criminal offence and could face prosecution
SUP 10C.10.31GRP
The FCA may grant an application only if it is satisfied that the FCA candidate is a fit and proper person to perform the FCA-designated senior management function stated in the application form. Responsibility lies with the firm making the application to satisfy the FCA that the FCA candidate is fit and proper to perform the FCA-designated senior management function applied for.
SUP 10C.10.32GRP
For further guidance on criteria for assessing whether an FCA candidate is fit and proper for the purposes of SUP 10C.10.31G, see FIT.
SUP 10C.10.33GRP
The FCA must:(1) grant the application; (2) grant the application subject to conditions or limitations (see SUP 10C.12 for more information); or(3) refuse the application.
SUP 10C.10.34GRP
Whenever it grants an application, the FCA will confirm this in writing to all interested parties.
SUP 10C.10.35GRP
If the FCA proposes to take the steps in SUP 10C.10.33G(2) or SUP 10C.10.33G(3)6 in relation to one or more FCA-designated senior management functions, it must follow the procedures for issuing warning and decision notices to all interested parties. The requirements relating to warning and decision notices are in DEPP 2.
SUP 10C.10.36RRP
A firm notifying the FCA of its withdrawal of an application for approval must use Form B (SUP 10C Annex 4R6).
SUP 10C.10.38GRP
SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how a notice of withdrawal should be submitted.
DEPP 2.5.2GRP
In some circumstances, the19 decision to give a warning notice and a decision notice in a particular matter will 19not be taken by the same decision maker. For example19, in enforcement cases the RDC might take the decision to give a warning notice,4 but the decision to give a decision notice could be taken by the settlement decision makers on the basis that the person concerned does not contest the action proposed (see DEPP 5).664
DEPP 2.5.3GRP
FCA6 staff under executive procedures will take the decision to give a warning notice if the FCA6 proposes to:66(1) refuse an application for a Part 4A permission6 or to refuse an application to cancel a Part 4A permission6;66(2) impose a limitation or a requirement which was not applied for, or specify a narrower description of regulated activity than that applied for, on the grant of a Part 4A permission6;6(3) refuse an application to vary a Part 4A permission6, or to restrict
DEPP 2.5.5AGRP
[deleted]196
DEPP 2.5.6GRP
[deleted]196666666
DEPP 2.5.6AGRP
6FCA staff under executive procedures will take the decision where the FCA is proposing or deciding to:(1) refuse its consent to the granting by the PRA of an application for a Part 4A permission, or give its consent subject to conditions; (2) refuse its consent to the granting by the PRA of an application for the variation of a Part 4A permission, or give its consent subject to conditions; or(3) refuse its consent to the granting by the PRA of an application to perform a controlled
DEPP 2.5.7GRP
FCA staff under executive procedures19 will take the decision to give a supervisory notice exercising the FCA's 6own-initiative powers (by removing a regulated activity, by imposing a limitation or requirement or by specifying a narrower description of regulated activity), including where the action involves a fundamental variation or requirement19 (see DEPP 2.5.8 G).666666666
DEPP 2.5.7AGRP
FCA6 staff under executive procedures will be the decision maker when19 a firm agrees not to contest the FCA's6 exercise of its own-initiative powers and when the exercise of the FCA’s own-initiative powers is contested by a firm.366666666
DEPP 2.5.8BGRP
FCA staff under executive procedures will be the decision maker when19 all of the interested parties (as defined by section 63ZC(6) of the Act) agree not to contest the FCA’s exercise of its power under section 63ZB of the Act and when the exercise of such powers is contested by any of the interested parties (as so defined)19.9
DEPP 2.5.8CGRP
9The FCA’s statement of policy on the use of the power to vary an SMF manager’s approval on its own initiative is set out in DEPP 8.
DEPP 2.5.9GRP
FCA6 staff under executive procedures will take the following statutory notice decisions:6(1) the refusal of an application for listing of securities;(2) the suspension of listing on the FCA's6 own initiative or at the request of the issuer;6(3) [deleted]22(4) the discontinuance of listing of securities at the issuer's request;(5) the exercise of any of the powers in sections 87K or 87L of the Act in respect of a breach of any applicable provision; and2(6) [deleted]22(7) the refusal
DEPP 2.5.10GRP
FCA staff under executive procedures20 will take statutory notice decisions relating to the discontinuance of listing of securities on the FCA's6 own initiative.6
DEPP 2.5.11GRP
If securities have matured or otherwise ceased to exist the FCA6 will remove any reference to them from the official list. This is a purely administrative process, and not a discontinuance of listing in the sense used in Part 6 of the Act. Decisions relating to imposition of limitations or other restrictions of sponsors and primary information providers.66
DEPP 2.5.11AGRP
6Under section 88(4)(aa) of the Act, if the FCA proposes to impose limitations or other restrictions on the services to which a sponsor's approval relates, it must give him a warning notice. If, after considering any representations made in response to the warning notice, the FCA decides to impose limitations or other restrictions on the services to which a sponsor's approval relates, it must give him a decision notice. 19FCA staff under executive procedures will take the decision
DEPP 2.5.11BGRP
6If the FCA is proposing or deciding to refuse a sponsor's application for the withdrawal or variation of a limitation or other restriction on the services to which a sponsor's approval relates under section 88(8)(d) of the Act, the decision maker will be FCA staff under executive procedures.19
DEPP 2.5.11CGRP
6Under section 89P(5)(b) of the Act, if the FCA proposes to impose limitations or other restrictions on the dissemination of regulated information to which a primary information provider's approval relates, it must give him a warning notice. If, after considering any representations made in response to the warning notice, the FCA decides to impose limitations or other restrictions on the dissemination of regulated information to which a primary information provider's approval
DEPP 2.5.11DGRP
6Under section 89P(9)(d) of the Act, if the FCA is proposing or deciding to refuse a primary information provider's application for the withdrawal or variation of a limitation or other restriction on the dissemination of regulated information to which a primary information provider's approval relates, the decision maker will be FCA staff under executive procedures.19
DEPP 2.5.12GRP
FCA6 staff will usually inform or discuss with the person concerned any action they contemplate before they recommend to FCA staff under executive procedures19 that the FCA6 takes formal action. The FCA6 may also be invited to exercise certain powers by the persons who would be affected by the exercise of those powers. In these circumstances such decisions, including those referred to in DEPP 2.5.13G, will be taken by FCA staff under executive procedures19 if the person concerned
DEPP 2.5.13GRP
The decisions referred to in DEPP 2.5.12 G are:(1) the decision to give a supervisory notice pursuant to section 259(3), (8) or 9(b) (directions on authorised unit trust schemes); section 268(3), 7(a) or 9(a) (directions in respect of recognised overseas schemes); or section 282(3), (6) or (7)(b) (directions in respect of relevant recognised schemes) of the Act;(1A) the decision to give a supervisory notice pursuant to section 261Z1(3), (8) or (9)(b) (Procedure on giving directions
DEPP 2.5.15GRP
A decision to give a warning notice or decision notice refusing an application for an authorisation order declaring a scheme7 to be an AUT, ACS7 or ICVC2 or an AUT, ACS or ICVC to be a money market fund12 will be taken by FCA staff under executive procedures, including if the application is by an authorised fund manager who is not the operator of an existing AUT, ACS or ICVC.776622
DEPP 2.5.16GRP
[deleted]13555556655
DEPP 2.5.17GRP
The FCA6 expects to adopt a procedure in respect of notices under enactments other than the Act which is similar to that for statutory notices under the Act, but which recognises any differences in the legislative framework and requirements. DEPP 2 Annex 1 and DEPP 2 Annex 2 therefore identify notices to be given pursuant to other enactments and the relevant FCA6 decision maker.66
DEPP 2.5.18GRP
Some of the distinguishing features of notices given under enactments other than the Act are as follows: (1) [deleted]66(2) [deleted]66(3) Friendly Societies Act 1992, section 58A1: The warning notice and decision notice must set out the terms of the direction which the FCA6 proposes or has decided to give and any specification of when the friendly society is to comply with it. A decision notice given under section 58A(3) must give an indication of the society's right, given by
SUP 15.3.1RRP
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:3535(1) the firm failing to satisfy one or more of the threshold conditions; or(2) any matter which could have a significant adverse impact on the firm's reputation; or(3) any matter which could affect the firm's ability to continue to provide adequate services to its customers
SUP 15.3.2GRP
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.3535
SUP 15.3.3GRP
In determining whether the FCA11 should be notified of35 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. 35
SUP 15.3.5GRP
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.3535
SUP 15.3.7GRP
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 as well as any appointed representatives34.35353535
SUP 15.3.7AGRP
10Although PRIN does not apply to a firm in relation to its carrying on of auction regulation bidding, the FCA35expects to be given notice of events that are material to the FCA's35supervision 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.3535
SUP 15.3.8GRP
Compliance with Principle 11 includes, but is not limited to, giving the FCA11 notice of:3535(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:(a) setting up a new undertaking within a firm'sgroup, or a new branch (whether in the United Kingdom or overseas); or (b) commencing the provision of cross border services into a new territory; or(c) commencing
SUP 15.3.9GRP
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. 3535
SUP 15.3.10GRP
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
SUP 15.3.11RRP
(1) A firm must notify the FCA11 of:3535(a) a significant breach of a rule (which includes a Principle, a Statement of Principle or a COCONrule)20; or2020(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(b) a breach of any requirement imposed by the Act or by regulations
SUP 15.3.13GRP
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.3535
SUP 15.3.15RRP
A firm must notify the FCA11 immediately if:35(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) any action is brought against the firm under section 71 of the Act (Actions for damages) or section 138D24 (Actions for damages); or(3) disciplinary measures or sanctions have been imposed on the firm by any statutory or regulatory authority, competition authority, 21professional
SUP 15.3.17RRP
A firm must notify the FCA11 immediately if one of the following events arises and the event is significant:3535(1) it becomes aware that an employee may have committed a fraud against one of its customers; or(2) it becomes aware that a person, whether or not employed by it, may have committed a fraud against it; or(3) it considers that any person, whether or not employed by it, is acting with intent to commit a fraud against it; or(4) it identifies irregularities in its accounting
SUP 15.3.19GRP
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.3535
SUP 15.3.20GRP
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'sinternal controls.3535
SUP 15.3.21RRP
A firm must notify the FCA11 immediately of any of the following events:3535(1) the calling of a meeting to consider a resolution for winding up the firm; or(2) an application to dissolve the firm or to strike it off the Register of Companies; or(3) the presentation of a petition for the winding up of the firm; or(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) an application for the appointment of
SUP 15.3.22DRP
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:3535(1) comply with its general duty under section 314 of the Act (Regulators’35 general duty);35(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) enforce the provisions
SUP 15.3.23DRP
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:3535(1) the regulated activities for which the Society has permission; or (2) underwriting agents; or (3) approved persons or individuals acting for or on behalf of underwriting agents.
SUP 15.3.24DRP
3The Society must inform the FCA11 if it commences investigations or disciplinary proceedings relating to apparent breaches:3535(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) 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 15.3.25DRP
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:3535(1) involve an underwriting agent, or an approved person who carries out controlled functions for it or on its behalf; or (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.
SUP 15.3.26RRP
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 15.3.27GRP
15Changes that the FCA would expect to be notified of under SUP 15.3.26 R include:(1) an AIFM being appointed to manage another AIF;(2) the appointment of a different depositary for an AIF the AIFM manages; and(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 15.3.27ARRP
19A full-scope UK AIFM must notify the FCA of material changes under SUP 15.3.26 R in the following manner:(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) 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) for all other material changes, by using the form in SUP 15 Annex 6C R .
SUP 15.3.28RRP
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:171619(1) immediately notify the FCA using the form in SUP 15 Annex 6D R;19 and(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 15.3.29RRP
(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) (1) does not apply where:(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
SUP 15.3.30DRP
(1) 19A small registered UK AIFM must notify the FCA of changes in the following manner:(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;(b) (a) does not apply where:(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
SUP 15.3.31GRP
19A SEF manager or a RVECA manager29 should notify the FCA of the following changes in the following manner:(1) for changes to senior personnel, by using the form in SUP 15 Annex 6B R; and (2) for changes to the jurisdiction in which its SEF or RVECA29 is marketed or to market a new SEF or RVECA29, by using the form in SUP 15 Annex 6F G
SUP 15.3.32RRP
(1) 21A firm must notify the FCA if it has or may have committed a significant infringement of any applicable competition law.(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) (a) A firm must make the notification in writing unless (3)(b) applies.(b) A firm may make the notification orally where it has made or will make an oral application for leniency
SUP 15.3.35GRP
(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:(a) does not infringe competition law; or (b) is, or will be, immune from enforcement.(2) Notification under SUP 15.3.32R is not sufficient to constitute an application for leniency or immunity from penalty in any subsequent investigation
EG 19.34.1RP
1The MiFI Regulations in part implemented2MiFID. The FCA has investigative and enforcement powers in relation to both criminal and non-criminal breaches of the MiFI Regulations (including requirements imposed on persons subject to the MiFI Regulations by MiFIR and any onshored regulation which was an EU regulation2 made under MiFIR or MiFID). The MiFI Regulations impose requirements on:(1) persons holding positions in relevant contracts for commodity derivatives trading on trading
EG 19.34.2RP
1The FCA’s approach to enforcing under the MiFI Regulations, whether the person is authorised or not, will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the
EG 19.34.3RP
1The regulatory powers which the MiFI Regulations provide to the FCA include:(1) the power to require information and appoint investigators;(2) powers of entry and inspection;(3) the power to publicly censure;(4) the power to impose financial penalties;(5) the power to apply for an injunction or restitution order;(6) the power to require restitution; (7) the power to impose limitation, restriction or requirement; and(8) the power to prosecute relevant offences.
EG 19.34.4RP
1In addition, the MiFI Regulations provide the power to require the removal of persons from the management board of an investment firm, a credit institution or a recognised investment exchange. This is a supervisory power, rather than a disciplinary one, and it may be exercised whenever the FCA deems it necessary for the purpose of any of our functions under MiFID or MiFIR.
EG 19.34.5RP
1The MiFI 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 we have under the Act. Key features of the FCA’s approach are described below.
EG 19.34.7RP
1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the MiFI Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the MiFI Regulations is to use powers to
EG 19.34.9RP
1The MiFI Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 12.
EG 19.34.10RP
1The MiFI Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 10 and EG 11.
EG 19.34.11RP
1The MiFI Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.
EG 19.34.12RP
1Certain FCA decisions (for example a requirement to reduce the size of a position, publication of a statement and the imposition of a penalty) may be referred to the Tribunal by an aggrieved party.
EG 19.34.13RP
1When determining whether to take action to impose a penalty or to issue a public censure under the MiFI Regulations the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.
EG 19.34.14RP
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the MiFI Regulations to assist us to exercise our functions under the MiFI 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 19.34.15RP
1The FCA will apply the approach to publicity that is outlined in EG 6, read in light of the applicable publicity provisions in section 391D of the Act.
EG 19.34.17RP
1This power may be used where the FCA considers that the removal is necessary for the purpose of exercising functions under MiFID or MiFIR. Examples of where this power may be used include, but are not limited to, ensuring that all members of the management body:(1) are of sufficiently good repute;(2) possess sufficient knowledge, skills and experience to perform their duties;(3) commit sufficient time to perform their functions;(4) do not hold too many directorships;(5) act with
EG 19.34.18RP
1The FCA will have regard to all relevant circumstances, on a case-by-case basis, taking into account the specific circumstances of the investment firm, credit institution or recognised investment exchange and the member of the management board. The FCA will exercise this power fairly and proportionately.
EG 19.34.19RP
1It should be noted that, while the FCA will have regard to the range of regulatory tools at its disposal, we are not required to exhaust all other options before imposing the requirement to remove a person from the management board.
EG 19.34.20RP
1The FCA will take into account all relevant circumstances when considering whether to require the removal to occur immediately or on a specified date.
EG 19.34.21RP
1The MiFI 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 MiFI Regulations the FCA will follow the procedures described in DEPP 7.
REC 2.3.1UKRP

Schedule to the Recognition Requirements Regulations, Paragraph 1

2(1) The [UK RIE] must have financial resources sufficient for the proper performance of its [ relevant functions] as a [UK RIE].

(2) In considering whether this requirement is satisfied, the [FCA]5must (without prejudice to the generality of regulation 6(1)) take into account all the circumstances, including the [UK RIE's] connection with any person , and any activity carried on by the [UK RIE], whether or not it is anexempt activity.

5
REC 2.3.3GRP
In determining whether a UK recognised body has financial resources sufficient for the proper performance of its relevant functions, the FCA5 may have regard to:5(1) the operational and other risks to which the UK recognised body is exposed;(2) if the UK recognised body guarantees the performance of transactions in specified investments, the counterparty and market risks to which it is exposed in that capacity; 5(3) the amount and composition of the UK recognised body's capital;(4)
REC 2.3.4GRP
The FCA5 will usually rely on a UK recognised body's published and internal management accounts and financial projections, provided that those accounts and projections are prepared in accordance with UK, US or international accounting standards. 5
REC 2.3.5GRP
In assessing whether a UK recognised body has sufficient financial resources in relation to counterparty and market risks, the FCA5 may have regard to:5(1) the amount and liquidity of its financial assets and the likely availability of liquid financial resources to the UK recognised body during periods of major market turbulence or other periods of major stress for the UK financial system;3 and(2) the nature and scale of the UK recognised body's exposures to counterparty and market
REC 2.3.6GRP
In assessing whether a UK recognised body has sufficient financial resources in relation to operational and other risks, the FCA5 may have regard to the extent to which, after allowing for the financial resources necessary to cover counterparty and market risks, the UK recognised body's financial resources are sufficient and sufficiently liquid:5(1) to enable the UK recognised body to continue carrying on properly the regulated activities that it expects to carry on; and(2) to
REC 2.3.7GRP
In considering whether a UK recognised body has sufficient financial resources in relation to operational and other risks, the FCA5 will normally have regard to two components: eligible financial resources and net capital.454
REC 2.3.9GRP
4(1) 4The FCA5 considers that a UK RIE which at any time holds:5(a) eligible financial resources not less than the greater of:(i) the amount calculated under the standard approach; and (ii) the amount calculated under the risk-based approach; and (b) net capital not less than the amount of eligible financial resources determined under (1)(a);will, at that time, have sufficient financial resources to meet the recognition requirement in respect of operational and other risks unless
REC 2.3.10GRP
4The FCA5 would expect to provide a UK recognised body with individual guidance, issued with a frequency determined in accordance with the usual prudential cycle for such bodies, communicated from time to time,6 on the amount of eligible financial resources which it considers would be sufficient for the UK recognised body to hold in respect of operational and other risks6 to satisfy the recognition requirements. In formulating its individual guidance, the FCA5 will ordinarily
REC 2.3.12GRP
4For the purposes of REC 2.3, "net capital" should be in the form of equity. For this purpose, the FCA5 considers that common stock, retained earnings, disclosed reserves and other instruments classified as common equity tier one capital or additional tier one capital constitute equity. The FCA5 considers that, when calculating its net capital, a UK recognised body:55(1) should deduct holdings of its own securities, or those of any undertaking in the same group as the UK recognised
REC 2.3.13GRP
(1) 4Under the standard approach, the amount of eligible financial resources is equal to six months of operating costs.(2) Under the standard approach, the FCA5 assumes liquid financial assets are needed to cover the costs that would be incurred during an orderly wind-down of the UK recognised body'sexempt activities, while continuing to satisfy all the recognition requirements and complying with any other obligations under the Act (including the obligations to pay periodic fees
REC 2.3.15GRP
4For the purposes of calculating the risk-based approach, the FCA5 would normally expect the UK RIE to provide the FCA5 with an annual financial risk assessment that identifies the risks to its business. As a financial risk assessment is likely to form an integral part of the UK RIE's management process and decision-making culture, the FCA5 would normally expect it to be approved by the UK RIE'sgoverning body.555
REC 2.3.16GRP
4The FCA5 would normally expect to use the most recent6 financial risk assessment prepared by the UK RIE in the course of preparing individual guidance, issued in accordance with the usual prudential cycle for such bodies,6 on the amount of financial resources that it considers is sufficient for a UK RIE to hold6 to satisfy the recognition requirements. The financial risk assessment would provide the basis for calculating the amount of eligible financial resources that should
REC 2.3.17GRP
4The financial risk assessment should be based on a methodology which provides a reasonable estimate of the potential business losses which a UK RIE might incur in stressed but plausible market conditions. The FCA5 would expect a UK RIE to carry out a financial risk assessment at least once in every twelve-month period, or more frequently if there are material changes in the nature, scale or complexity of the UK RIE's operations or its business plans that suggest such financial
REC 2.3.18GRP
4The FCA5 would normally expect a financial risk assessment to include a description of the methodology applied by the UK RIE to arrive at the proposal made in accordance with REC 2.3.17G (5).5
REC 2.3.19GRP
4Where a UK RIE is a member of a group, the FCA5 would normally expect the annual risk assessment to be accompanied by a consolidated balance sheet: 5(1) of any group in which the UK RIE is a subsidiary undertaking; or(2) (if the UK RIE is not a subsidiary undertaking in any group) of any group of which the UK RIE is a parent undertaking.
REC 2.3.20GRP
4The FCA5 would expect to consider the relevant annual6 financial risk assessment, any proposal with respect to an operational risk buffer and, if applicable, the consolidated balance sheet, in formulating, in accordance with the usual prudential cycle for UK RIEs,6 its guidance on the amount of eligible financial resources it considers to be sufficient for the UK RIE to hold for6 the recognition requirements. In formulating its guidance, the FCA5 would, where relevant, consider
REC 2.3.21GRP
4The FCA5 would normally consider a UK recognised body to be failing the recognition requirements if it held financial resources less than the amount calculated under REC 2.3.9G (1)(a)(i) (in respect of UK RIEs). The FCA5 therefore expects a UK recognised body to hold an operational risk buffer of a sufficient amount in excess of this minimum, to ensure that it is at all times able to comply with its regulatory obligations.555
REC 2.3.22GRP
(1) [deleted]55(2) The FCA5 would normally expect a UK RIE to hold, in addition to the minimum amount determined under REC 2.3.9G (1)(a)(i), an operational risk buffer consistent with a risk-based approach.5(a) Where the amount of eligible financial resources calculated by a UK RIE under REC 2.3.17G (5) (the risk-based approach) is greater than the amount of eligible financial resources calculated under REC 2.3.13 G (the standard approach), and the difference is of an amount sufficient
EG 19.35.1RP
1The DRS Regulations implemented2MiFID. The FCA has investigation and enforcement powers in relation to both criminal and non-criminal breaches of the DRS Regulations (including requirements imposed on persons subject to the DRS Regulations by MiFIR and any onshored regulation which was an EU regulation2 made under MiFIR or MiFID). The DRS Regulations impose requirements on data reporting services providers (“DRSPs”) which are entities authorised or verified to provide services
EG 19.35.2RP
1The FCA’s approach to enforcing the DRS Regulations will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter
EG 19.35.3RP
1The regulatory powers which the DRS Regulations provide to the FCA include:(1) the power to require information and appoint investigators;(2) powers of entry and inspection;(3) the power of public censure;(4) the power to impose financial penalties;(5) the power to impose a limitation or other restrictions;(6) the power to apply for an injunction;(7) the power to require restitution; and(8) the power to prosecute unauthorised providers.
EG 19.35.4RP
1In addition, the DRS Regulations provide the power for the FCA to take criminal or non-criminal action for misleading the FCA.
EG 19.35.5RP
1The DRS 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 we have under the Act. Key features of the FCA’s approach are described below.
EG 19.35.7RP
1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the DRS Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the DRS Regulations is to use powers to compel
EG 19.35.9RP
1For decisions made by executive procedures the procedures to be followed will be those described in DEPP 4.
EG 19.35.10RP
1The DRS Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 12.
EG 19.35.11RP
1The DRS Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow our decision making procedure for the equivalent decisions under the Act, as set out in EG 10 and EG 11.
EG 19.35.12RP
1The DRS Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.
EG 19.35.13RP
1Certain FCA decisions (for example the publication of a statement and the imposition of a penalty) may be referred to the Tribunal by an aggrieved party.
EG 19.35.14RP
1When determining whether to take action to impose a penalty or to issue a public censure under the DRS Regulations the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.
EG 19.35.15RP
1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the DRS Regulations to assist us to exercise our functions under the DRS Regulations in the most efficient and economic way.[Note: See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.]
EG 19.35.16RP
1The FCA will apply the approach to publicity that is outlined in EG 6, read in light of applicable publicity provisions in section 391D of the Act.
EG 19.35.17RP
1The DRS 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 DRS Regulations the FCA will follow the procedures described in DEPP 7.
DEPP 7.2.1GRP
Under section 169(1)(b) and section 131FA2 of the Act, the FCA3 may appoint an investigator to investigate any matter at the request of an overseas regulator4. The powers of the investigator appointed by the FCA3 (referred to here as the 'FCA's3 investigator') include the power to require persons to attend at a specified time and place and answer questions (the compulsory interview power).3233
DEPP 7.2.2GRP
Where the FCA3 appoints an investigator in response to a request from an overseas regulator4 it may, under section 169(7) or section 131FA2 of the Act, direct him to permit a representative of that regulator to attend and take part in any interviews conducted for the purposes of the investigation. The FCA3 may only give a direction under section 169(7) or section 131FA2 if it is satisfied that any information obtained by an overseas regulator4 as a result of the interview will be
DEPP 7.2.4GRP
The FCA's3 policy on how it will use its investigative powers, including its power to appoint investigators, in support of overseas regulators4, is set out in the FCA's3 Enforcement Guide (EG).323
DEPP 7.2.5GRP
The FCA3 may need to consider whether to use its direction power at two stages of an investigation:3(1) at the same time that it considers the request from the overseas regulator4 to appoint investigators;2(2) after it has appointed investigators, either at the request of the overseas regulator4 or on the recommendation of the investigators.2
DEPP 7.2.6GRP
Before making a direction under section 169(7) or section 131FA2 the FCA3 will discuss and determine with the overseas regulator4 how this statement of policy will apply to the conduct of the interview, taking into account all the circumstances of the case. Amongst other matters, the FCA3 will at this stage determine the extent to which the representative of the overseas regulator4 will be able to participate in the interview. The overseas regulator4 will be notified of this
DEPP 7.2.7GRP
The direction will contain the identity of the representative of the overseas regulator4 that is permitted to attend any interview and the role that he will play in the interview. If the FCA3 envisages that there will be more than one interview in the course of the investigation, the direction may also specify which interview(s) the representative is allowed to attend.232
DEPP 7.2.8GRP
In circumstances where an interview is to be conducted as part of the investigation, the FCA's3 investigator will have conduct of the interview. In general, the FCA's3 investigators will be employees of the FCA3, but in appropriate cases the FCA3 may appoint persons who are not its employees. In those cases, the FCA3 may choose to require that an FCA3 employee is present at the interview and may choose to appoint that person as an investigator.333333
DEPP 7.2.9GRP
The FCA's3 investigator will act on behalf of the FCA3 and under its control. He may be instructed to permit the representative of the overseas regulator4 to assist in the preparation of the interview. Where the FCA3 considers it appropriate, it may permit the representative to attend and ask questions of the interviewee in the course of the interview. The interview will be conducted according to the terms of the direction and the notification referred to in DEPP 7.2.6 G.332
DEPP 7.2.10GRP
If the direction does permit the representative of an overseas regulator4 to attend the interview and ask the interviewee questions, the FCA's3 investigator will retain control of the interview throughout. Control of the interview means the following will apply:23(1) The FCA's3 investigator instigates and concludes the interview, introduces everyone present and explains the procedure of the interview. He warns the interviewee of the possible consequences of refusing to answer
DEPP 7.2.11GRP
The FCA3 will in general provide written notice of the appointment of an investigator to the person under investigation pursuant to the request of an overseas regulator4 . Whether or not the interviewee is the person under investigation, the FCA's3 investigator will inform the interviewee of the provisions under which he has been appointed, the identity of the requesting authority and general nature of the matter under investigation. The interviewee will also normally be informed
DEPP 7.2.13GRP
The FCA's3 investigator will determine the venue and timing of the interview. The interviewee will be notified of the venue and timing of the interview in advance and in writing.3
DEPP 7.2.14GRP
When the FCA's3 investigator has exercised the compulsory interview power, at the outset of the interview the interviewee will be given an appropriate warning. The warning, amongst other things, must state that the interviewee is obliged to answer all questions put to them during the interview, including any put by the representative of the overseas regulator4 . It will also state that in criminal proceedings or proceedings for market abuse the FCA3 will not use as evidence against
DEPP 7.2.15GRP
The FCA's3 investigator may decide which documents or other information may be put to the interviewee, and whether it is appropriate to give the interviewee sight of the documents before the interview takes place. Where the overseas regulator4 wishes to ask questions about documents during the interview and the FCA's3 investigator wishes to inspect those documents before the interview, he will be given the opportunity to do so. If the FCA's3 investigator wishes to inspect them
DEPP 7.2.16GRP
When the FCA's3 investigator has exercised the compulsory interview power, the FCA's3 investigator will require the person attending the interview to answer questions. Where appropriate, questions may also be posed by the representative of the overseas regulator4 . The interviewee will also be required to answer these questions. The FCA's3 investigator may intervene at any stage during questioning by the representative of the overseas regulator4.33232
DEPP 7.2.17GRP
Interviews will, in general, be conducted in English. Where the interviewee's first language is not English, at the request of the interviewee arrangements will be made for the questions to be translated into the interviewee's first language and for his answers to be translated back into English. If a translator is employed at the request of the representative of the overseas regulator4 then the translation costs will normally be met by the overseas regulator4. In any event,
DEPP 7.2.18GRP
All compulsory interviews will be tape-recorded. The method of recording will be decided on and arranged by the FCA's3 investigator. Costs will be addressed similarly to that set out in the preceding paragraph. The FCA3 will not provide the overseas regulator4 with transcripts of the tapes of interviews unless specifically agreed to, but copies of the tapes will normally be provided where requested. The interviewee will be provided with a copy of tapes of the interview but will
DEPP 7.2.19GRP
The interviewee may be accompanied at the interview by a legal adviser or a non-legally qualified observer of his choice. The costs of any representation will not be met by the FCA3. The presence at the interview of a representative of the overseas regulator4 may mean that the interviewee wishes to be represented or accompanied by a person either from or familiar with that regulator's jurisdiction. As far as practical the arrangements for the interview should accommodate this
DEPP 7.2.20GRP
In relation to the publication of investigations by overseas regulators4, the FCA3 will pursue a policy similar to the policy that relates to its own investigations.23
SUP 8.3.1GRP
Under section 138A(4) of the Act, the appropriate regulator9 may not give a waiver unless it is satisfied that:99(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.99
SUP 8.3.1AGRP
Even if the conditions in section 138A(4)9 of the Act are satisfied, the appropriate regulator9will consider other relevant factors before giving a waiver.8992
SUP 8.3.2GRP
The appropriate regulator9 is required by section 138B9 of the Act to publish a waiver unless it is satisfied that it is inappropriate or unnecessary to do so (see SUP 8.6).99
SUP 8.3.2AGRP
9The 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 8.3.3AGRP
(1) 59The PRA’s7 preferred method of submission for waiver applications is by e-mail.9 The FCA’s preferred method of submission for waiver applications is through online submission via the FCA’s website at www.fca.org.uk.75(2) The form is available on the appropriate regulator's website.9559
SUP 8.3.4AGRP
9Firms or persons other than PRA-authorised persons should send applications for waivers or applications for variations of waivers to the FCA.
SUP 8.3.4BGRP
9PRA-authorised persons should send applications for waivers or applications for variations of waivers to: (1) the FCA in respect of rules in the FCA Handbook applicable to that PRA-authorised person; and(2) the PRA in respect of rules in the PRA Handbook.
SUP 8.3.5GRP
The appropriate regulator9 will acknowledge an application promptly and if necessary will seek further information from the firm. The time taken to determine an application will depend on the issues it raises. A firm should make it clear in the application if it needs a decision within a specific time.96
SUP 8.3.5AGRP
The appropriate regulator9 will treat a firm's application for a waiver as withdrawn if it does not hear from the firm within 20 business days of sending a communication which requests or requires a response from the firm. The appropriate regulator9 will not do this if the firm has made it clear to the appropriate regulator9 in some other way that it intends to pursue the application. 3999
SUP 8.3.6GRP
In some cases, the appropriate regulator9 may give a modification of a rule rather than direct that the rule is not to apply. The appropriate regulator9 may also impose conditions on a waiver, for example additional reporting requirements. A waiver may be given for a specified period of time only, after which time it will cease to apply. A firm wishing to extend the duration of a waiver should follow the procedure in SUP 8.3.3 D. A waiver will not apply retrospectively.99
SUP 8.3.7GRP
If the appropriate regulator9 decides not to give a waiver, it will give reasons for the decision.9
SUP 8.3.8GRP
A firm may withdraw its application at any time up to the giving of the waiver. In doing so, a firm should give the appropriate regulator9 its reasons for withdrawing the application.9
SUP 8.3.9GRP
If the appropriate regulator9 believes that a particular waiver given to a firm may have relevance to other firms, it may publish general details about the possible availability of the waiver. For example, IPRU(INV) 3-80(10)G explains that a firm that wishes to use its own internal model to calculate its position risk requirement (PRR) will need to apply for a waiver of the relevant rules.9
SUP 8.3.10GRP
Under section 138A(1) of the Act the appropriate regulator9 may give a waiver with the consent of a firm. This power may be used by the appropriate regulator9 in exceptional circumstances where the appropriate regulator9 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 regulator9 will inform the firms concerned that the waiver
SUP 8.3.13GRP
For an application for a waiver of the presumption of contravention of a binding rule, which is actionable under section 138D9 of the Act, the appropriate regulator9 would normally wish to be satisfied that the evidential rule is itself unduly burdensome or does not achieve the purpose of the rule.299
SYSC 4.8.6RRP
[deleted] 5
SYSC 4.8.8GRP
[deleted] [Editor’s note: The text of this provision has been moved to SYSC 24.3.14G]5
SYSC 4.8.9RRP

[deleted] 5

SYSC 4.8.10RRP
(1) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.3.2R(1)]5(2) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.3.2R(2)]5(3) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.3.2R(3)]5(4) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.3.3R]5(5) [deleted]5(6) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.4.3R]5(7) [deleted
SYSC 4.8.11GRP
(1) [deleted] 5(2) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.6.4G(1)]55(3) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.6.4G(2)]5(4) [deleted]55(5) [deleted]5(6) [deleted]5
SYSC 4.8.17GRP
[deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.7.3G]55
SYSC 4.8.21GRP
[deleted] 5
SYSC 4.8.22GRP
[deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.9.2G]5
SYSC 4.8.23GRP
[deleted] 5
SYSC 4.8.24GRP
[deleted] 5
SYSC 4.8.25GRP
[deleted] 5
SYSC 4.8.27GRP
[deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.8.3G]5
SYSC 4.8.28GRP
(1) [deleted] 5(2) [deleted] 5(3) [deleted] 5(4) [deleted] 5(5) [deleted] [Editor’s note: The text of this provision has been moved to SYSC 26.9.5G]5
SYSC 4.8.32GRP
[deleted] 5
EG 3.11.1RP
1The FCA recognises that there are good reasons for firms wishing to carry out their own investigations. This might be for, for example, disciplinary purposes, general good management, or operational and risk control. The firm needs to know the extent of any problem, and it may want advice as to what immediate or short-term measures it needs to take to mitigate or correct any problems identified. The FCA encourages this proactive approach and does not wish to interfere with a
EG 3.11.2RP
1A firm’s report – produced internally or by an external third party – can clearly assist the firm, but may also be useful to the FCA where there is an issue of regulatory concern. Sharing the outcome of an investigation can potentially save time and resources for both parties, particularly where there is a possibility of the FCA taking enforcement action in relation to a firm’s perceived misconduct or failing. This does not mean that firms are under any obligation to share the
EG 3.11.3RP
1Work done or commissioned by the firm does not fetter the FCA's ability to use its statutory powers, for example to require a skilled person’s report under section 166 of the Act or to carry out a formal enforcement investigation; nor can a report commissioned by the firm be a substitute for formal regulatory action where this is needed or appropriate. But even if formal action is needed, it may be that a report could be used to help the FCA decide on the appropriate action to
EG 3.11.4RP
1The FCA invites firms to consider, in particular, whether to discuss the commissioning and scope of a report with FCA staff where: (1) firms have informed the FCA of an issue of potential regulatory concern, as required by SUP 15; or (2) the FCA has indicated that an issue or concern has or may result in a referral to Enforcement.
EG 3.11.5RP
1The FCA's approach in commenting on the proposed scope and purpose of the report will vary according to the circumstances in which the report is commissioned; it does not follow that the FCA will want to be involved in discussing the scope of a report in every situation. But if the firm anticipates that it will proactively disclose a report to the FCA in the context of an ongoing or prospective enforcement investigation, then the potential use and benefit to be derived from the
EG 3.11.6RP
1Some themes or issues are common to any discussion about the potential use or value of a report to the FCA. These include: (1) to what extent the FCA will be able to rely on the report in any subsequent enforcement proceedings; (2) to what extent the FCA will have access to the underlying evidence or information that was relied upon in producing the report; (3) where legal privilege or other professional confidentiality is claimed over any material gathered or generated in the
EG 3.11.7RP
1In certain circumstances the FCA may prefer that a firm does not commission its own investigation (whether an internal audit report or a report by external advisers) because action by the firm could itself be damaging to an FCA investigation. This is true in particular of criminal investigations, where alerting the suspects could have adverse consequences. For example, where the FCA suspects that individuals are abusing positions of trust within financial institutions and that
EG 3.11.8RP
1Nothing in paragraphs 3.11.1 to 3.11.7 extends or increases the scope of the existing duty to report facts or issues to the FCA in accordance with SUP 15 or Principle 11.
EG 3.11.9RP
1Where a firm does conduct or commission an investigation, it is very helpful if the firm maintains a proper record of the enquiries made and interviews conducted. This will inform the FCA's judgment about whether any further work is needed and, if so, where the FCA's efforts should be focused.
EG 3.11.10RP
1How the results of an investigation are presented to the FCA may differ from case to case; the FCA acknowledges that different circumstances may call for different approaches. In this sense, one size does not fit all. The FCA will take a pragmatic and flexible approach when deciding how to receive the results of an investigation. However, if the FCA is to rely on a report as the basis for taking action, or not taking action, then it is important that the firm should be prepared
EG 3.11.11RP
1The FCA is not able to require the production of “protected items”, as defined in the Act, but it is not uncommon for there to be disagreement with firms about the scope of this protection. Arguments about whether certain documents attract privilege tend to be time- consuming and delay the progress of an investigation. If a firm decides to give a report to the FCA, then the FCA considers that the greatest mutual benefit is most likely to flow from disclosure of the report itself
EG 3.11.12RP
1For reasons that the FCA can understand, firms may seek to restrict the use to which a report can be put, or assert that any legal privilege is waived only on a limited basis and that the firm retains its right to assert legal privilege as the basis for non-disclosure in civil proceedings against a private litigant.
EG 3.11.13RP
1The FCA understands that the concept of a limited waiver of legal privilege is not one which is recognised in all jurisdictions; the FCA considers that English law does permit such “limited waiver” and that legal privilege could still be asserted against third parties notwithstanding disclosure of a report to the FCA. However, the FCA cannot accept any condition or stipulation which would purport to restrict its ability to use the information in the exercise of the FCA's statutory
EG 3.11.14RP
1This does not mean that information provided to the FCA is unprotected. The FCA is subject to strict statutory restrictions on the disclosure of confidential information (as defined in section 348 of the Act), breach of which is a criminal offence (under section 352 of the Act). Reports and underlying materials provided voluntarily to the FCA by a firm, whether covered by legal privilege or not, are confidential for these purposes and benefit from the statutory protections.
EG 3.11.15RP
1Even in circumstances where disclosure of information would be permitted under the “gateways” set out in the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations, the FCA will consider carefully whether it would be appropriate to disclose a report provided voluntarily by a firm. The FCA appreciates that firms feel strongly about the importance of maintaining confidentiality, and that firms are more likely to volunteer information to the
EG 19.10.1RP
1The FCA, together with several other UK authorities, has powers under Part 8 of the Enterprise Act to enforce breaches of consumer protection law. Where a breach has been committed, the FCA will liaise with other authorities, particularly the Competition and Markets Authority (the CMA), to determine which authority is best placed to take enforcement action. The FCA would generally expect to be the most appropriate authority to deal with breaches by authorised firms in relation
EG 19.10.3RP
[deleted]21
EG 19.10.4RP
1The FCA has powers under Part 8 of the Enterprise Act both as a “designated enforcer” in relation to domestic and Schedule 132 infringements and as a “Schedule 132 enforcer” which gives the FCA and other Schedule 132 enforcers additional powers in relation to Schedule 132 infringements under the CRA2.
EG 19.10.5RP
1As a designated enforcer, the FCA has the power to apply to the courts for an enforcement order which requires a person who has committed a domestic or Schedule 132 infringement or, as to the latter, is likely to commit such an infringement: (1) not to engage, including through a company and, as to a domestic infringement, whether or not in the course of business, in the conduct which constituted, or is likely to constitute, the infringement; (2) to publish the order and/or a
EG 19.10.6RP
1The FCA may also apply, if necessary without notice, for interim enforcement orders where immediate temporary prohibition of the relevant conduct is expedient pending full consideration by the court. Such interim orders can also be sought pre-emptively in relation to Schedule 132 infringements, but again only preventing conduct in the course of business.
EG 19.10.7RP
1The FCA’s investigative powers in support of its Enterprise Act enforcement powers are set out in Schedule 5 to the CRA. The FCA can, under Schedule 5, require any person to provide it with information which will enable it to (i) exercise or consider exercising its functions as an enforcer; or (ii) determine whether a person is complying with an enforcement order, an interim enforcement order or an undertaking given as described below. If the FCA requires a person to provide
EG 19.10.8RP
1Before the FCA may apply for an enforcement order, including an interim enforcement order, it must: (1) give notice to the CMA of its intention to apply for an enforcement order; and (2) unless the application relates to breach of an undertaking given to the court (other than one to provide information), consult the person against whom the enforcement order would be made.
EG 19.10.10RP
1The aim of consultation is to ensure that any action taken is necessary and proportionate, and to ensure that businesses are given a reasonable opportunity to put things right before the courts become involved. The consultation period starts when the person receives the FCA's request for consultation and runs whether or not that person agrees to be consulted and/or is available for consultation.
EG 19.10.12RP
1The FCA may take steps to publish the undertakings it receives, and may apply to the court for an enforcement order if a person fails to comply with an undertaking that he has given.
EG 19.10.13RP
1In addition to its powers as a designated enforcer under the Enterprise Act, the FCA also has powers, in its capacity as a “Schedule 132 enforcer” under the CRA2 and, therefore, only in respect of Schedule 132 infringements, to enter commercial premises with or without a warrant. The FCA must give at least two working days’ notice of its intention to enter such premises without a warrant unless that is not reasonably practicable. If the FCA cannot give a notice in advance, it
EG 19.10.14RP
1The FCA anticipates that its powers under the Act will be adequate to address the majority of breaches which it would also be able to enforce under the Enterprise Act and that there will therefore be limited cases in which it would seek to use its powers as an Enterprise Act enforcer. Where the FCA does use its powers under the Enterprise Act, it will have regard to the enforcement guidelines which are published on the CMA’s website.2323www.gov.uk/governmentorganisations
EG 19.10.15RP
[deleted]21
EG 19.10.17RP
1The FCA may apply for such an order where a criminal investigation has been started or where proceedings have started but not concluded; in either case there must be reasonable cause to believe that the defendant has benefited from criminal conduct. In this context, a person benefits from criminal conduct if he obtains property or a pecuniary advantage as a result of or in connection with conduct that would be an offence if it took place in England or Wales, regardless of whether
EG 19.10.20RP
1The order can apply to assets wherever they are held, and anyone breaching the order would be guilty of contempt of court in this country. The FCA may request that the court make ancillary orders requiring the person to disclose his assets and/or to repatriate assets held overseas.
EG 19.10.21RP
1POCA also contains various powers of investigation which the FCA may use in specified circumstances. However, where these powers overlap with powers under the Act, the FCA will in most cases consider it more appropriate to rely on its investigation powers under the Act.
LR 8.6.1GRP
The FCA will maintain a list of sponsors on its website.
LR 8.6.2RRP
A person wanting to provide sponsor services4, and to be included on the list of sponsors, must apply to the FCA for approval as a sponsor by submitting the following to the Primary Market Specialist Supervision10 Team at the FCA's address:4(1) a completed Sponsor Firm Application Form; and4(2) [deleted]44(3) the application fee set out in 1FEES 31.[Note: The Sponsor's Firm Application Form can be found on the Primary Markets10 section of the FCA's website.]4
LR 8.6.3RRP
A person wanting to provide sponsor services4and be included on the list of sponsors must also submit:4(1) all additional documents, explanations and information as required by the FCA; and(2) verification of any information in such a manner as the FCA may specify.
LR 8.6.4GRP
When considering an application for approval as a sponsor the FCA may:(1) carry out any enquiries and request any further information which it considers appropriate, including consulting other regulators;(2) request that the applicant or its specified representative answer questions and explain any matter the FCA considers relevant to the application; and6(3) take into account any information which it considers appropriate in relation to the application.22(4) [deleted]22[Note:
LR 8.6.5RRP
The FCA will approve a person as a sponsor only if it is satisfied that the person :4(1) is 4an authorised person or a member of a designated professional body;(2) is 4competent to provide8sponsor services4 in accordance with LR 88; and8(3) has appropriate 4systems and controls in place to carry out its role as a sponsor in accordance with LR 884.488
LR 8.6.5ARRP
7The FCA may impose restrictions or limitations on the services a sponsor can provide at the time of granting a sponsor's approval.
LR 8.6.5BGRP
7Situations when the FCA may impose restrictions or limitations on the services a sponsor can provide include (but are not limited to) where it appears to the FCA that: (1) the employees of the person applying to be a sponsor whom it is proposed will perform sponsor services have no or limited relevant experience and expertise of providing certain types of sponsor services or of providing sponsor services to certain types of company; or(2) the person applying to be a sponsor does
LR 8.6.5CGRP
8Where a person wishes to apply for approval as a sponsor to provide a limited range of sponsor services, it may do so on the basis that the FCA will impose a limitation or restriction on its approval (in accordance with section 88 of the Act). In such circumstances, the FCA will assess whether the person satisfies LR 8.6.5R (2) and LR 8.6.5R (3) taking into consideration the sponsor services to which the approval, as formally limited or restricted by the FCA, will relate.
LR 8.6.7RRP
A sponsor, or a 8person48applying for approval as a sponsor, will not satisfy LR 8.6.5R (2) unless it has:4888(1) 8submitted a sponsor declaration to the FCA:(a) for a person applying for approval as a sponsor, within three years of the date of its application; and(b) for a sponsor, within the previous three years; and(2) 8a sufficient number of employees with the skills, knowledge and expertise necessary for it to:(a) provide sponsor services in accordance with LR 8.3; (b) understand:(i)
LR 8.6.7AGRP
8To determine whether a sponsor or a person applying for approval as a sponsor is able to satisfy LR 8.6.7R (1)(a), the FCA may consider whether any of the person'semployees have had material involvement in the provision of sponsor services that have required the submission of a sponsor declaration within the previous three years.
LR 8.6.7BGRP
8In exceptional circumstances, the FCA may consider dispensing with, or modifying, the requirement in LR 8.6.7R (1) in accordance with LR 1.2.1 R.
LR 8.6.7CGRP
8In assessing whether a sponsor or a person applying for approval as a sponsor satisfies LR 8.6.7R (2), the FCA will consider a variety of factors including:(1) the nature, scale and complexity of its business;(2) the diversity of its operations; (3) the volume and size of transactions it undertakes;(4) the volume and size of transactions it anticipates undertaking in the following year; and (5) the degree of risk associated with the transactions it undertakes or anticipates
LR 8.6.7DGRP
8Notwithstanding LR 8.6.7C G, when considering whether a sponsor satisfies LR 8.6.7R (2)(c) the FCA expects a sponsor to have no less than two employees who are able to satisfy the key contact requirements in LR 8.6.19R (2).
LR 8.6.9BGRP
4In assessing whether a sponsor or a8person applying for approval as a sponsor can demonstrate it is competent in the areas required under LR 8.6.7R (2), the FCA may also take into account, where relevant, the guidance or advice on the listing rules or disclosure requirements9 and transparency rules5the sponsor or8person has given in circumstances other than in providing sponsor services.885
LR 8.6.13GRP
When considering a sponsor's ability to comply with LR 8.6.12 R, the FCA will consider8 a variety of factors, including:8(1) the nature, scale and complexity of its business;(2) the diversity of its operations;(3) the volume and size of the transactions it undertakes;4(4) the volume and size of the transactions it anticipates undertaking in the following year; and44(5) the degree of risk associated with the transactions it undertakes or anticipates undertaking in the following
LR 8.6.16ARRP
6A sponsor must have effective arrangements to create and retain for six years accessible records which are sufficient to be capable of demonstrating that it has provided sponsor services and otherwise complied with its obligations under LR 8 including:88(1) where a declaration is to be submitted to the FCA:88(a) under LR 8.4.3R (1), LR 8.4.9R (1), LR 8.4.13R (1), LR 8.4.14R (2) or LR 8.4.17 R; or (b) pursuant to an appointment under LR 8.2.1R (5);the basis of each declaration
LR 8.6.16CGRP
6In considering whether a sponsor has satisfied the requirements regarding sufficiency of records in LR 8.6.16A R, the FCA will consider whether the records would enable a person with general knowledge of the sponsor regime but no specific knowledge of the actual sponsor service undertaken to understand and verify the basis upon which material judgments have been made throughout the provision of the sponsor service.
LR 8.6.19RRP
4For each 8sponsor service requiring the submission of a document to the FCA or contact with the FCA, a sponsor must:8(1) at the time of submission or on first making contact with the FCA8notify the FCAof the name and contact details of a key 8contact within8 the sponsor for that matter8; and8888(2) ensure that its key8contact : 88(a) has8 sufficient knowledge about the listed company or applicant and the proposed matter8to be able to answer queries from the FCA about it; 888(b)
LR 8.6.20GRP
8The FCA expects an employee carrying out the role of key contact to have provided a sponsor service in the previous three years.