Source: https://www.handbook.fca.org.uk/handbook/EG/8/?section=eg%208.1&view=instrument
Timestamp: 2019-11-13 09:37:53
Document Index: 697505026

Matched Legal Cases: ['art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4', 'art 4']

EG 8 - FCA Handbook
1The FCA has powers under section 55J of the Act to vary or cancel an authorised person’sPart 4A permission and a power under section 55L to impose requirements on an authorised person. The FCA may use these powers where:
1 SUP 7 provides more information about the situations in which the FCA may decide to take formal action in the context of its supervision activities.
1Examples of circumstances in which the FCA will consider varying a firm'sPart 4A permission because it has serious concerns about a firm, or about the way its business is being or has been conducted include where:
in relation to the grounds for exercising the power under section 55J(1)(c)(i) or section 55L(2)(c), it appears that the interests of consumers are at risk because the firm appears to have breached any of Principles 6 to 10 of the FCA’sPrinciples (see PRIN 2.1.1R) to such an extent that it is desirable that limitations, restrictions, or prohibitions are placed on the firm'sregulated activity.
circumstances suggesting a serious problem within a firm or with a firm’scontrollers that calls into question the firm’s ability to continue to meet the threshold conditions.
The extent to which customer assets appear to be at risk. Urgent exercise of the FCA’sown-initiative power may be appropriate where the information available to the FCA suggests that customer assets held by, or to the order of, the firm may be at risk.
The financial resources of the firm. Serious concerns may arise where it appears the firm may be required to pay significant amounts of compensation to consumers. In those cases, the extent to which the firm has the financial resources to do so will affect the FCA’s decision about whether exercise of the FCA’sown-initiative powers is appropriate to preserve the firm's assets, in the interests of the consumers. The FCA will take account of any insurance cover held by the firm. It will also consider the likelihood of the firm's assets being dissipated without the FCA’s intervention, and whether the exercise of the FCA’s power to petition for the winding up of the firm is more appropriate than the use of its own-initiative powers (see chapter 13 of this guide).
The impact that use of the FCA’sown-initiative powers will have on the firm's business and on its customers. The FCA will take into account the (sometimes significant) impact that a variation of permission may have on a firm's business and on its customers' interests, including the effect of variation on the firm's reputation and on market confidence. The FCA will need to be satisfied that the impact of any use of the own-initiative power is likely to be proportionate to the concerns being addressed, in the context of the overall aim of achieving its statutory objectives.
1Examples of the limitations that the FCA may impose when exercising its own-initiative variation power in support of its enforcement function include limitations on: the number, or category, of customers that a firm can deal with; the number of specified investments that a firm can deal in; and the activities of the firm so that they fall within specific regulatory regimes (for example, so that oil market participants,2corporate finance advisory firms and service providers are permitted only to carry on those types of activities).
1The FCA will consider cancelling a firm'sPart 4A permission using its own-initiative powers contained in sections 55J and 55Q respectively of the Act in two main circumstances:
where the firm'sregulated activities have come to an end and it has not applied for cancellation of its Part 4A permission.
1The grounds on which the FCA may exercise its power to cancel an authorised person's permission under section 55J of the Act are the same as the grounds for variation and for imposition of requirements. They are set out in section 55J(1) and section 55L(2) and described in EG 8.1.1. Examples of the types of circumstances in which the FCA may cancel a firm'sPart 4A permission include:
1However, where the FCA has cancelled a firm'sPart 4A permission, it is required by section 33 of the Act to go on to give a direction withdrawing the firm'sauthorisation. Accordingly, the FCA may decide to keep a firm'sPart 4A permission in force to maintain the firm's status as an authorised person and enable it (the FCA) to monitor the firm's activities. An example is where the FCA needs to supervise an orderly winding down of the firm's regulated business (see SUP 6.4.22 (When will the relevant regulator grant an application for cancellation of permission)). Alternatively, the FCA may decide to keep a firm'sPart 4A permission in force to maintain the firm's status as an authorised person to use administrative enforcement powers against the firm.
3The FCA has a power under section 55Q to vary, or alternatively cancel, a firm’sPart 4A permission, or to impose requirements on a firm, in support of an overseas regulator. Section 55Q(4), (5) and (6) set out matters the FCA may, or must, take into account when it considers whether to exercise these powers. The circumstances in which the FCA may consider varying a firm’sPart 4A permission or imposing requirements in support of an overseas regulator depend on whether the FCA is required to consider exercising the power in order to comply with a Community obligation. This reflects the fact that under section 55Q, if a relevant overseas regulator acting under prescribed provisions has made a request to the FCA for the exercise of its own-initiative power to vary or cancel a Part 4A permission or to impose requirements, the FCA must consider whether it must exercise the power in order to comply with a Community obligation.
3Relevant Community obligations which the FCA may need to consider include those under the Capital Requirements Directive, the Solvency II Directive1, the Investment Services Directive/Markets in Financial Instruments Directive, the Insurance Distribution Directive (IDD)4 ,2 and the Market Abuse Regulation2. Each of these legislative acts2 imposes general obligations on the relevant EEAcompetent authority to cooperate and collaborate closely in discharging their functions under the legislative acts2 .
an EEACompetent authority requests it to do so; and
3Where section 55Q(5) applies and the FCA is considering whether to vary a firm'sPart 4A permission or to impose requirements on a firm, it may take account of all the factors described in paragraphs 8.6.1 to 8.6.8 but may give particular weight to:
any specific request made to it by the overseas regulator to impose requirements or to vary, rather than cancel, the firm'sPart 4A permission.
3The FCA will give careful consideration to whether the relevant authority's concerns would provide grounds for the FCA to exercise its own-initiative powers to vary, impose requirements or cancel if they related to a UK firm. It is not necessary for the FCA to be satisfied that the overseas provisions being enforced mirror precisely those which apply to UK firms. However, the FCA will not assist in the enforcement of regulatory requirements or other provisions that appear to extend significantly beyond the purposes of UKregulatory provisions.
EG 8.7 1The FCA’s policy on exercising its power of intervention against incoming firms under section 196 of the Act
1The FCA adopts a similar approach to the exercise of its power of intervention under section 196 as it does to its own-initiative powers to vary Part 4A permission or impose requirements, but with suitable modification for the differences in the statutory grounds for exercising the powers. Consequently the factors and considerations set out in paragraphs 8.2.1 to 8.4.4 and 8.6.1 to 8.6.8 may also be relevant when the FCA is considering regulatory concerns about incoming firms.
EG 8.7.2 01/03/2016 RP
1When it is considering action against an incoming firm, the FCA will co-operate with the firm'sHome State regulator as appropriate, including notifying and informing the firm'sHome State regulator as required by the relevant section of the Act.
Removal of directors and senior executives and appointment of temporary managers
EG 8.8.1 26/05/2017 RP
1The Bank Recovery and Resolution Order 2016 amended the Act by adding sections 71B to 71I. The FCA has powers to remove directors and senior executives and to appoint temporary managers of relevant firms or parent undertakings, as defined by section 71I of the Act. Where a temporary manager has been appointed, the FCA also has powers to require the directors not to exercise specified functions during the period of appointment and to consult the temporary manager, or obtain the consent of the temporary manager, before taking specified decisions or specified action. The FCA will exercise these powers in accordance with the conditions and procedures set out in the relevant sections of the Act.