CP15/28: Quarterly Consultation Paper No. 10

Quarterly Consultation No.10 September 2015 Consultation Paper CP15/28*

Financial Conduct Authority September 2015 1 Quarterly Consultation No. 10 CP15/28 Abbreviations used in this paper 3 1 Overview 5 2 Offshore bonds – Financial Ombudsman Service and the COBS suitability rules 8 3 Mortgage Credit Directive: Minor changes to our rules and guidance 12 4 Changes to the Training and Competence sourcebook 21 5 Consumer Redress Schemes: Updating our guidance on section 404 23 6 Changes to Consumer Credit, Retail Mediation Activity, Mortgage Second Charge Lending and Recovery and Resolution Reporting 30 7 Clarifying the complaints recording, reporting and publication rules 35 8 Changes to the requirements on cancellation of listing, audit committees and other changes to LR, DTR, PR, GENPRU, SUP and the Glossary 40 9 Technical amendments to GEN 57 Appendices 1 List of questions 2 Offshore bonds instrument 3 Mortgage Credit Directive: Minor changes to our rules and guidance 4 Changes to the Training and Competence sourcebook 5 Consumer Redress Schemes changes to section 404 6 Changes to SUP 7 DISP amendments instrument 8A Miscellaneous changes to LR, DTR, PR, GENPRU, SUP and the Glossary 8B SAAD instrument 8C Current prospectus forms 9 Technical amendments to GEN Contents

The Financial Conduct Authority invites comments on this Consultation Paper. Comments should reach us by 5 October 2015 for part of Chapter 8 and all of Chapters 4 and 9, 16 October 2015 for Chapter 3 and 5 November 2015 for Chapters 2, 5, 6, 7 and the remaining part of Chapter 8 (see the Overview section for further details). Comments may be sent by electronic submission using the form on the FCA’s website at www.fca.org.uk/your-fca/documents/consultation-papers/cp15-28-response-form or by email to cp15-28@fca.org.uk. Alternatively, please send comments in writing to: Chapter 2: Jenny Frost, Advice and Distribution Tel: 020 7066 3134 Chapter 3: Terry Denness, Mortgage Policy Tel: 020 7066 1768 Chapter 4: Steven McWhirter, Governance and Professionalism Tel: 0131 301 2164 Chapter 5: Clare Vicary, Redress Policy Tel: 020 7066 7606 Chapter 6: Paul Fothergill, Reporting Policy Tel: 020 7066 4884 Chapter 7: Sam Condry, Redress Policy Tel: 020 7066 7264 Chapter 8: Michael McKersie, Primary Markets Policy Tel: 020 7066 6698 Chapter 9: Nick Walker, Handbook team Tel: 020 7066 3176 If you are responding in writing to several chapters then please send your comments to Emily How or Emma Elder in Communications, who will pass your responses on as appropriate. All responses should be sent to: Financial Conduct Authority 25 The North Colonnade Canary Wharf London E14 5HS Telephone: 020 7066 2184

Financial Conduct Authority September 2015 3 Quarterly Consultation No. 10 CP15/28 Abbreviations used in this paper ABI Association of British Insurers AD Accounting Directive 2013/34/EU ADR Alternative Dispute Resolution AIF Alternative Investment Fund (as per Directive 2011/61/EU) APB Auditing Practices Board ASB Accounting Standards Board BBA British Bankers’ Association BIS Department for Business, Innovation and Skills CASS Client Assets sourcebook CBA cost benefit analysis CCA Consumer Credit Act CCD Consumer Credit Directive CJ Compulsory jurisdiction CMAR Client Money and Asset Return COBS Conduct of Business sourcebook COMP the Compensation sourcebook CONC Consumer Credit sourcebook CONRED Consumer Redress Schemes sourcebook CP Consultation Paper CRD Capital Requirements Directive CRRA credit-related regulated activities DISP Dispute Resolution: Complaints sourcebook

4 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 DMD Distance Marketing Directive DTR Disclosure Rule and Transparency Rule sourcebook EBA European Banking Authority EC European Community EEA European Economic Area EEC European Economic Community ESIS European Standardised Information Sheet ESMA European Securities and Markets Authority EU European Union FCA Financial Conduct Authority FCLD Fourth Company Law Directive 78/660/EEC FRC Financial Reporting Council FSA Financial Services Authority FSMA Financial Services and Markets Act 2000 GAAP Generally Accepted Accounting Practice GABRIEL GAthering Better Regulatory Information ELectronically (the FCA’s electronic reporting system) GEN General Provisions GENPRU General Prudential sourcebook HMT Her Majesty’s Treasury IAS International Accounting Standard KFI Key facts illustration LR Listing Rule sourcebook MAS Money Advice Service MCD Mortgage Credit Directive MCOB Mortgages and Home Finance: Conduct of Business sourcebook MIPRU Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries MLA Mortgage Lending and Administration

Financial Conduct Authority September 2015 5 Quarterly Consultation No. 10 CP15/28 MS Member State (of the EU) OD2 Omnibus II Directive 2014/51/EU PD Prospectus Directive 2003/71/EC PD Regulation Prospectus Directive Regulation No 809/2004 PERG The Perimeter Guidance manual PIE Public interest entity PRIN Principles for Businesses sourcebook PR Prospectus Rules sourcebook PRA Prudential Regulation Authority PS Policy Statement PSD Product sales data RAG Regulated Activity Group RAO Regulated Activities Order RMA Retail mediation activity RMC Regulated mortgage contract RTS Regulatory Technical Standards SAAD Statutory Audit Amending Directive 2014/56/EU SAD Statutory Audit Directive 2006/43/EC SCLD Seventh Company Law Directive 83/349/EEC SI Statutory Instrument SUP Supervision manual TC Training and Competence sourcebook TD Transparency Directive 2004/109/EC UCITS Undertaking for Collective Investment in Transferable Securities (as per Directive 2009/65/EC) UK United Kingdom VJ Voluntary jurisdiction

6 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10

Financial Conduct Authority September 2015 7 Quarterly Consultation No. 10 CP15/28 1. Overview Chapter No. Proposed changes to Handbook Consultation Closing Period 2 Extension of the right to turn to the Financial Ombudsman Service and the application of the COBS suitability rules when investment advice or discretionary management services are provided in relation to offshore life insurance bonds. 5 November 2015 3 Minor changes across our Handbook completing the implementation of the Mortgage Credit Directive to reflect legislative changes and to address minor issues identified in the MCD rules we published in PS15/9. 16 October 2015 4 Changes to the Training and Competence sourcebook (TC) list of appropriate qualifications. 5 October 2015 5 We have reviewed the guidance previously published by the FSA on Consumer Redress Schemes (GN10) and are proposing to update the guidance and incorporate it into the CONRED part of our Handbook. 5 November 2015 6 We are proposing to make various amendments to the Supervision manual (SUP) Chapter 16 in order to improve the data collection process for both firms and the FCA. 5 November 2015 7 We are proposing amendments to our DISP rules to make commencement dates for complaints reporting requirements more consistent and clear, as well as some amendments to make it clearer for firms how to send written communications to complainants. We also propose some minor corrections to the complaints return and guidance. 5 November 2015 8 Changes to the Glossary, LR, DTR, GENPRU and SUP. Changes to PR and the Glossary definition of Prospectus RTS Regulation 5 November 2015 5 October 2015 9 Technical changes to provisions in GEN to ensure that the FCA’s Handbook continues to work effectively, notwithstanding the PRA’s ongoing deletion of its Handbook. 5 October 2015

8 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 2. Offshore bonds – Financial Ombudsman Service and the COBS suitability rules Introduction 2.1 This chapter is a joint consultation with the Financial Ombudsman Service (the ombudsman service) on minor changes to our rules to deal with a gap in consumer protection which we became aware of following discussions with the industry on the tax position of offshore life insurance bonds. The power to make rules relating to the Financial Ombudsman Service is shared between the FCA and the Financial Ombudsman Service, and the proposals set out below are joint. Responses to this chapter should be regarded as responses to both the FCA and the ombudsman service. 2.2 An offshore life insurance bond is a life policy which is carried out by an offshore (i.e., non-UK) life company. The product provides the policyholder with exposure to the performance of an underlying portfolio of investments. 2.3 UK retail clients who buy an offshore life insurance bond following advice from a firm subject to our rules, such as a UK-based financial adviser, benefit from the protection of the FCA suitability rules in Chapter 9 of the Conduct of Business Sourcebook (COBS). These clients can make a complaint to the ombudsman service if they consider that they received poor advice from the firm. The Retail Distribution Review (RDR) adviser charging rules also apply to advice on the client’s initial investment in the offshore life insurance bond, if a personal recommendation has been given to a retail client on a retail investment product (a life policy). 2.4 However, once the bond has been purchased, the life company may appoint a UK firm (referred to in this chapter as the UK investment manager), on a discretionary or advisory basis, to manage the assets held to meet their liability to the policyholder. If advice is given directly to the policyholder on the investment of those assets, the policyholder is, in effect, making investment decisions as an agent of the life company. In either case the life company, rather than the policyholder, is the client at this second stage. This means that the policyholder does not have the protection of the suitability rules or the right to turn to the ombudsman service if poor advice is provided or unsuitable discretionary decisions to trade are taken. The ‘agent as client’ rule (COBS 2.4.3R) does not apply to this situation. 2.5 This is a complex arrangement for a consumer to follow, and it is not clear whether consumers who take out these bonds understand the protections being given up. Even if there is disclosure at the stage the bond is first bought, the emphasis may be on the advantages rather than on the disadvantages of the arrangement. So, following discussions with the industry – the Association of British Insurers (ABI) and British Bankers’ Association (BBA) – we propose to amend our rules to ensure that consumers benefit from the suitability rules and the right to make a complaint to the ombudsman service. The changes will apply in respect of advice provided, or investment management undertaken, in relation to offshore life insurance bonds,

Financial Conduct Authority September 2015 9 Quarterly Consultation No. 10 CP15/28 even though the policyholder is, in effect, the agent of the life company for receiving these services. As such, we want to introduce rules that require the UK investment manager to apply the suitability rules in COBS 9 as if the policyholder (rather than the life company) were its client when it is instructed to engage directly with the policyholder (as agent of the life company) in the provision of its investment advisory or discretionary investment management service. This means that the UK investment manager will be required to consider the knowledge, experience, financial situation and investment objectives of the policyholder in providing any personal recommendations or taking any decisions to trade. 2.6 The proposed changes are to the Dispute Resolution: Complaints sourcebook (DISP) and COBS. We considered whether we should also change the rules to require application of the adviser charging rules to the second stage advice provided to clients on the assets to be held in their bond. However, we concluded that the benefits of applying adviser charging were not as clear as the benefits of access to the ombudsman service and application of the suitability rules, as the advice costs would then become the cost of the client and be treated as a withdrawal if facilitated from the product. 2.7 The industry comments included a suggestion that the appropriate remedy, where a complaint is upheld by the ombudsman service and compensation is payable, is that the compensation should be paid to the life company to place within the bond, to avoid affecting the policyholder’s tax position. We do not propose to change the rules to require this. 2.8 Other comments from the industry are included in the section on the cost benefit analysis. Proposed changes to DISP and COBS 2.9 The proposed changes, set out in Appendix 2, are to: • DISP 2.7.6R on the jurisdiction of the ombudsman service, and • COBS 18 (Specialist regimes) to add a new section on offshore bonds, including a requirement for firms providing advice or discretionary investment management services to policyholders in relation to assets held in an offshore life insurance bond. This requirement will mean that these firms will need to disclose the circumstances in which the policyholder can refer complaints to the ombudsman service, with a six-month transitional period from the date on which the rules come into force to make the necessary changes to their disclosures on complaints. 2.10 The transitional period does not apply to the handling of complaints itself and relevant firms are required to handle complaints in accordance with the rules in force at the time they receive the complaint. This will mean telling consumers they have a right to complain to the ombudsman service in all final response letters and summary resolution communications issued from the date on which the new rules come into force. Effect on firms and consumers 2.11 We understand from the ABI and BBA that many firms already operate as if the holders of offshore life insurance bonds are eligible to complain to the ombudsman service, but are unable to provide clear disclosure of that fact, because it is not clear on the face of our rules that this

10 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 right currently exists. The ABI and BBA support changes to our rules to specify that this right exists and agree that it should be a requirement for firms to inform clients that they have this right. 2.12 Consumers will benefit from the new clarity around ombudsman service protection and from the ability of the ombudsman service to assess whether advice provided was, or investment decisions taken were, suitable for the policyholder (as opposed to the life company) when looking at a complaint. Effect on taxation of offshore life insurance bonds 2.13 If the proposed changes take the form outlined in this document and there is no legal change to the arrangements in place, adviser fees paid by the life company in these circumstances will not be a withdrawal from the bond for tax purposes. Therefore, such payments will not be included when calculating whether a policyholder has made withdrawals exceeding the net total allowable amount for any year or in the calculation of the gain at maturity or surrender. This will, however, depend on the specific facts of each arrangement. Q2.1: Do you agree that consumers who have purchased an offshore life insurance bond should have access to the Financial Ombudsman Service and the protection of the COBS suitability rules when receiving advice or a discretionary investment management service in relation to assets within the bond? If not, please give your reasons. Q2.2: Do you have any comments on our proposed changes to COBS and DISP relating to offshore life insurance bonds? Cost benefit analysis 2.14 Section 138L of the Financial Services and Markets Act 2000 (FSMA), as amended by the Financial Services Act 2012, requires us to publish a cost benefit analysis (CBA) of our proposed rules, unless we consider that there will be no increase in costs or that there will be an increase in costs but that increase will be of minimal significance. 2.15 During informal pre-consultation with the ABI and BBA, we were told that UK firms currently providing advisory and discretionary investment management services in relation to offshore life insurance bonds (where the policyholder is effectively acting as the agent of the life company) do generally recognise that such policyholders should be able to refer any complaints to the ombudsman service and the firms do not object when this occurs. We were also told that the industry would generally consider the policyholder’s risk profile in the provision of their advisory and discretionary services. This means that the cost of the new rules providing for access to the ombudsman service and the revised application of the suitability rules in respect of the advisory or discretionary management service would be low or zero. 2.16 Our proposed rules place the requirement to disclose the right to turn to the ombudsman service on the UK investment manager, rather than the offshore life company. The industry expects the costs for firms of amending their disclosures to be low. However, the suggestion has been made that the offshore life company should make the new disclosure to the policyholder, rather than the UK investment manager, given that the contract for the provision of advice or discretionary management services is between the two firms. Our view is that the new rules

Financial Conduct Authority September 2015 11 Quarterly Consultation No. 10 CP15/28 do not prevent the UK investment manager agreeing with the offshore life company that the disclosure in respect of the advice or discretionary investment service should be included in the documents provided to the policyholder by the life company. The responsibility for ensuring disclosure is provided will remain with the UK investment manager. 2.17 It has also been suggested that there should be no time limit for changes to firms’ literature to include the disclosure. Instead this should be left to firms to implement as part of their normal reprint process. The comment was made that there will be a cost to the affected firms to notify existing policyholders, given that the right to turn to the ombudsman service will apply to all policyholders and not just new ones going forward. We have allowed a six-month transitional period for firms to make the necessary changes to their documentation, which should be sufficient for most firms to make the changes when they make other amendments to their literature. We do not expect firms’ costs to be significant for new policyholders. Since the new rules refer to disclosure ‘in good time before the provision of the service’, they only apply to new clients and do not require a new notification to existing policyholders. Instead firms can, if they wish, inform existing policyholders when sending other communications to them. 2.18 Existing rules in DISP on complaints handling will continue to apply when the new rules come into force, in relation to both new and existing policyholders. These include the requirement to tell consumers they have a right to complain to the ombudsman service in all final response letters and summary resolution communications issued from the date on which the new rules come into force. Firms will already have procedures for handling complaints, so there will not be any additional costs in extending the procedures to policyholders with offshore bonds. Impact on mutual societies 2.19 There should not be any impact on mutual societies, as the proposed rule changes will only affect firms which provide investment advisory or discretionary investment management services in relation to assets held in offshore life insurance bonds. Q2.3: Do you agree that any additional costs for firms as a result of giving consumers with offshore life insurance bonds access to the Financial Ombudsman Service and the protection of the COBS suitability rules are likely to be small? If not, please give your reasons and details of estimated costs. Compatibility statement 2.20 Under section 138I(2)(d) of FSMA, we are required to include an explanation of why we believe that making the proposed rules is compatible with our strategic objective, advances one or more of our operational objectives, and how we have considered the regulatory principles in section 3B of FSMA. We believe that the proposals in this chapter are compatible with our objectives, in that they will provide an appropriate degree of protection for consumers and also remove a competitive distortion which currently exists as a result of some firms offering access to the ombudsman service, while others do not. Equality and diversity 2.21 We have assessed the likely equality and diversity impacts and rationale of these proposals and have concluded that they do not give rise to any concerns for particular groups of consumers.

12 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 3. Mortgage Credit Directive: Minor changes to our rules and guidance Introduction 3.1 In September 2014, we published CP14/20 which set out our proposals for the implementation of the Mortgage Credit Directive (MCD) and the application of our mortgage regime to second charge mortgages.1 The final rules were published in March 2015.2 We have also recently consulted on consequential changes to our Consumer Credit sourcebook (CONC) arising from MCD implementation (see CP15/63 ) and minor amendments to the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB) and the Training and Competence sourcebook (TC) (see CP15/194 ). 3.2 We are now consulting on a number of minor changes across our Handbook to complete the implementation of the MCD, to reflect legislative changes and to address some minor issues identified in the rules that we published in PS15/9, including changes to: • our Training and Competence sourcebook (TC), to specify the minimum standards for firms passporting into the UK under the Directive • the forms which firms need to complete to submit an application to passport under the Directive • the Glossary definition of ‘regulated mortgage contract’ to reflect the government’s proposed amendment to the Regulated Activities Order (RAO) relating to equitable mortgage bridging loans • the Glossary definition of a ‘credit-related regulated activity’ to incorporate the new activity introduced by article 53DA of the RAO of advising on regulated credit agreements for the acquisition of land • the Consumer Credit sourcebook (CONC) and the Perimeter Guidance manual (PERG) to reflect the treatment of investment property brokers and introducers under the RAO • the Glossary, CONC and PERG to reflect the treatment of residential renovation agreements under the MCD 1 CP14/20 Implementing the Mortgage Credit Directive and the new regime for second charge mortgages (September 2014) https://www.fca.org.uk/news/cp14-20-mcd 2 PS15/9 Implementation of the Mortgage Credit Directive and the new regime for second charge mortgages, feedback to CP14/20 and final rules (March 2015) https://www.fca.org.uk/news/cp14-20-mcd 3 CP15/6 Consumer credit – proposed changes to our rules and guidance (February 2015) http://www.fca.org.uk/static/fca/documents/ cp-15-06.pdf 4 CP15/19 Quarterly consultation (No 9) (June 2015) https://www.fca.org.uk/news/cp15-19-qcp-9

Financial Conduct Authority September 2015 13 Quarterly Consultation No. 10 CP15/28 • MCOB 5, removing from the Key Facts Illustration (KFI) template a reference to the Money Advice Service (MAS) providing comparative tables; and • MCOB 7.6.7R to ensure that firms making a further advance that varies an existing non￾MCD contract will have the choice to issue either an European Standardised Information Sheet (ESIS) or a KFI 3.3 Following PS15/20, we are also consulting on the proposal not to introduce the CONC 11 cancellations rights for MCD lending not secured on the home (see section 4). Summary of proposals Knowledge and competence requirements for firms passporting into the UK 3.4 From 21 March 2016, the MCD allows credit intermediaries to do business in EEA member states other than their home member state without being subject to new admission requirements from the host member state. This is known as ‘passporting’ and can be done either by establishing a physical presence in the host member state (‘branch’ business) or remotely from the home member state (‘services’ business). 3.5 The MCD provides that the host member state is responsible for the establishing the minimum knowledge and competence requirements for incoming ‘branch’ firms. We propose to apply to such firms the full requirements of TC, including appropriate qualification requirements where relevant. 3.6 The MCD also allows host states to require incoming ‘services’ firms’ staff to have appropriate knowledge and understanding of: • the laws related to the credit agreements for consumers (in particular, consumer protection) • the property purchasing process • the organisation and functioning of land registers, and • the market 3.7 We propose to apply only these knowledge and competency standards to incoming ‘services’ firms, and not to apply qualification requirements. 3.8 EEA firms authorised under the Capital Requirements Directive (CRD) (such as large banks) can currently provide mortgage lending and administration activities using a CRD passport. TC applies in full to such incoming firms operating on either a branch or a services basis. The MCD allows these firms to continue using their CRD passport for MCD activity, rather than having to reapply for an MCD passport. We propose that our MCD knowledge and competence requirements outlined above apply to both branch and services firms carrying out MCD activities using a CRD passport. There will be no changes to our current TC requirements for firms carrying out non-MCD activities using a CRD passport. Q3.1: Do you agree with our proposed approach to knowledge and competency for incoming passporting firms?

14 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Notification forms for passporting 3.9 The European Banking Authority (EBA) has adopted passporting notification guidelines for firms seeking to carry out MCD activities in other EU states. These requirements are intended to ensure that there is a consistent level of information exchanged between national regulators when a firm submits a passport notification. 3.10 We have created new passporting forms for firms wishing to passport MCD activities to other EU states in line with the EBA guidelines. These forms are included in Annex D and will be part of our Handbook. Q3.2: Do you have any comments on the proposed new passporting forms? Equitable mortgage bridging loans 3.11 We propose to amend the FCA Glossary definition of ‘regulated mortgage contract’ to reflect the government’s proposed changes to the legislative treatment of equitable mortgage bridging loans. 3.12 Bridging loans secured by an equitable charge or mortgage are currently exempt from mortgage regulation as they do not meet the definition of a regulated mortgage contract (RMC), and CONC App 1.3.1R removes these loans from the definition of a regulated credit agreement, provided that the firm in question is designated in CONC App 1.3.2R to 1.3.4R. The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the RAO), as amended by the Mortgage Credit Directive Order 2015 (the MCD Order), will capture equitable bridging loans within the definition of a RMC. For such lending to remain outside the regulatory perimeter, Her Majesty’s Treasury (HMT) proposes to amend the definition of ‘regulated mortgage contract’ to exclude such agreements5 , provided that they are exempt agreements under the relevant FCA rules (as above, this means CONC App 1.3.1R). 3.13 We do not propose any amendment to CONC App 1.3.1R. This means that only persons who currently benefit from exemption under CONC App 1.3.1R (that is, persons who are designated in CONC App 1.3.2R to 1.3.4R) will continue to benefit from an exemption from the RAO activities of entering into a regulated credit agreement as lender and entering into a regulated mortgage contract as lender for an equitable mortgage bridging loan. Q3.3: Do you have any comments on the proposed glossary change to reflect the treatment of equitable mortgage bridging loans? Amendment to definition of ‘credit related regulated activity’ 3.14 The MCD Order introduces a new activity of ‘advising on regulated credit agreements for the acquisition of land’ (53DA activity) by amending the RAO. The amendment comes into force on 21 March 2016 and the new 53DA activity will apply to advice to a borrower, or potential borrower, under a regulated credit agreement the purpose of which is to acquire or retain property rights in land or in an existing or projected building. We use the term ‘MCD loan not secured on the home’ to refer to this type of loan6 . 5 This change is being made by HMT through an affirmative instrument that has been laid before Parliament in draft but has not yet been debated and approved by Parliament or made by HMT. The draft instrument is available at http://www.legislation.gov.uk/id/ukdsi/2015/9780111138373 6 Article 3 sets out the scope of the MCD, and article 3(1)(b) covers lending for the purposes of acquisition or retention of property rights in land or in an existing or projected building.

Financial Conduct Authority September 2015 15 Quarterly Consultation No. 10 CP15/28 3.15 Other activities in relation to these credit agreements, such as entering into them as a lender or arranging them, are already captured by the existing regulated activities of ‘entering into a regulated credit agreement as a lender’ and ‘credit broking’, respectively. However, a new regulated activity was required for advice on an MCD loan not secured on the home, because under the RAO advising on regulated credit agreements is not otherwise a regulated activity. 3.16 We propose to amend the Glossary definition of ‘credit-related regulated activities’ (CRRAs) to include the new 53DA activity. We consider the Handbook treatment of CRRAs to be more appropriate for activities relating to credit agreements, and this also brings the treatment of the 53DA activity in line with the other regulated activities associated with this type of lending, such as ‘entering into a regulated credit agreement as a lender’ and ‘credit broking’, which are already classified as CRRAs. 3.17 The classification of 53DA activity as a CRRA has a number of practical impacts: • firms carrying on CRRAs, but no other regulated activity, need only provide the FCA with a complaints report once a year (if their revenue from the activity is less than £5m a year) rather than twice a year under the Dispute Resolution: Complaints sourcebook (DISP 1.10.1R) • firms carrying on regulated activities which are CRRAs, but no other type of regulated activity, need not undertake client categorisation (PRIN 1.2.2R in the Principles of Business sourcebook) • firms carrying on regulated activities which are CRRAs, but no other type of regulated activity, would only be required to fulfil certain record-keeping requirements (Chapter 9 of Senior Management Arrangements, Systems and Controls (SYSC)) for the carrying on of ancillary services to the CRRA and not the main activity • the Supervision manual (SUP) sets out rules on controlled functions, some of which differ in application for firms or individuals carrying out CRRAs. For example, SUP 10A sets out the limited controlled functions which apply to appointed representatives performing CRRAs in comparison to those performing other regulated activities 3.18 Several of the rules relating to procedural matters around CRRAs only apply when a firm carries on regulated activities which are CRRAs but no other type of regulated activity. This means that if a firm carries out mortgage business as well as activities relating to MCD lending not secured on the home, the non-CRRA requirements would still apply. 3.19 We are not proposing to introduce separate and specific data reporting requirements for article 53DA activity under SUP 16 as we consider it to be a disproportionate burden not consistent with our approach to implementation of the MCD. Firms ‘entering into’ or ‘broking’ in relation to an MCD loan not secured on the home will be subject to the reporting requirements for CRRAs, but their reporting of this lending and broking activity will be included as part of their reporting of entering into and broking of credit agreements generally. Q3.4: Do you have any comments on the proposed change to the definition of ‘credit-related regulated activity’ to include advising on MCD lending not secured on the home? MCD lending not secured on the home (CONC 11) 3.20 In CP15/6, we consulted on our approach to MCD lending not secured on the home. We had proposed applying CONC 11 cancellation rights to this lending through CONC 1.2.8R,

16 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 which transposes the Distance Marketing Directive (DMD) 14-day right of withdrawal for the consumer after entering into a distance contract (for example, an online sale). 3.21 As set out in PS15/20, we received two pieces of feedback in respect of CONC 11. One queried whether notice of the cancellation rights could be given in the ESIS and the other questioned whether CONC 11 should apply to this lending at all, given that a seven-day pre-sale right of reflection is introduced by the MCD and DMD allows Member States not to confer the cancellation rights for a distance contract where the lending is primarily for the purposes of acquisition or retention of property rights in land. We removed the reference to CONC 11 from CONC 1.2.8R in the rules which were published in PS15/20 and stated that we would consult further on this issue. 3.22 Having considered the matter further, we think that the seven-day pre-contract right of reflection should give sufficient protection to consumers and that conferring a post-contract right of withdrawal in addition would be unduly burdensome on firms. We consider this view to be consistent with our approach of implementing the MCD in a proportionate manner and with the approach taken for MCD mortgages more generally, where consumers have only the seven-day right of reflection. As such, we propose not to confer CONC 11 cancellation rights for MCD loans not secured on the home which is a distance contract. Q3.5: Do you have any comments on the proposal not to confer cancellation rights for an MCD loan not secured on the home which is a distance contract? Amendments to PERG and CONC to reflect the treatment of investment property loan brokers and introducers under the RAO 3.23 We are proposing to make minor changes to guidance in PERG 2.8.6CG and CONC 15.1.2G to reflect amendments to the RAO provisions dealing with investment property loan broking and introducing. Q3.6: Do you have any comments on the proposed changes to PERG and CONC to reflect the treatment of investment property loan brokers and introducers under the RAO? Amendments to CONC to reflect the treatment of residential renovation agreements under the MCD 3.24 We are proposing to make consequential changes to CONC to reflect article 46 of the MCD amending the Consumer Credit Directive in relation to residential renovation agreements, meaning certain provisions in the CCA will apply, even if the agreement is above £60,260 in value. 3.25 We are also applying these changes to what the legislation terms ‘article 36H agreements’, commonly called ‘peer-to-peer’ agreements. Q3.7: Do you have any comments on the proposed amendments to CONC to reflect the treatment of residential renovation agreements under the MCD? Amendment to MCOB 5 Annex 1R 3.26 We are proposing to make a minor amendment to MCOB 5 Annex 1R, removing the reference in the KFI to the MAS comparative tables, as the tables are no longer provided. Q3.8: Do you have any comments on the proposed changes to MCOB 5 Annex 1R?

Financial Conduct Authority September 2015 17 Quarterly Consultation No. 10 CP15/28 Amendment to MCOB 7.6 3.27 Our post-sale disclosure rules in MCOB 7.6 allow a firm to issue a KFI or an ESIS when carrying out a rate switch or adding/removing a party to an existing contract. However, we have identified that our rules do not allow a firm this choice where it makes a further advance that varies an existing non-MCD contract (e.g., where it has been entered into prior to 21 March 2016 or is otherwise exempt). We propose to amend MCOB 7.6 to enable firms to issue either an ESIS or a KFI for such further advances. Q3.9: Do you have any comments on the proposed amendment to MCOB 7.6? Cost benefit analysis 3.28 Section 138I(2)(a) of the Financial Services and Markets Act 2000 (FSMA) requires us to publish a cost benefit analysis (CBA) when proposing draft rules. Section 138L(3) of FSMA provides that section 138I(2)(a) does not apply where we consider that there will be no increase in costs or the increase will be of minimal significance. 3.29 CP14/20, CP15/6 and PS15/9 contained cost benefit analyses relating to the implementation of the MCD. Many of the changes proposed in this QCP are minor amendments to ensure our intended policy is achieved and the MCD is correctly implemented, so we do not expect these proposals to result in costs additional to those already identified in the main. Knowledge and competence requirements for firms passporting into the UK 3.30 The requirement for incoming branch firms to have appropriate qualifications for certain activities may result in some costs for new EEA intermediaries who wish to set up a branch in the UK. These costs are likely to be both one-off (ensuring relevant staff have the appropriate qualifications for a UK branch to be established) and ongoing (ensuring relevant new recruits are appropriately qualified and ensuring competency levels are maintained). Requiring appropriate qualifications for UK branches of EEA firms is in line with the requirements for domestic firms and existing lenders passporting under the CRD. We do not expect existing lenders to incur an increase in costs from the proposed requirements. 3.31 As part of MCD implementation, the FCA commissioned KPMG to undertake a cost benefit analysis of our policy proposals for second charge lending.7 Part of this report included an analysis of the cost to second charge firms of relevant sales staff obtaining the Level 3 qualification required by TC, and the cost of complying with the knowledge and competency requirements of MCD. Drawing upon the estimates provided for this analysis (as the qualification requirement for incoming branch firms will be the same), one-off costs for incoming branch firms are estimated to be between £1,000 and £1,500 per adviser to obtain the relevant qualification. 3.32 KPMG did not estimate the other costs of ensuring appropriate knowledge and competency levels for staff as required by MCD. One lender interviewed as part of the analysis suggested a figure of between £10,000 and £15,000 to assess competency levels and fill a training gap for fifteen staff who are not currently assessed for competence (between £700 and £1,000 per staff member). Costs may be similar for incoming branch firms if they identify training gaps in their UK-based staff but are likely to be lower if they employ staff in the UK branch who have existing experience in the UK mortgage market and can demonstrate an appropriate level of competence. The requirements for incoming service firms will be limited to ensuring 7 http://www.fca.org.uk/static/documents/consultation-papers/cba-second-charge-lending.pdf

18 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 that staff dealing with UK-based customers have the appropriate knowledge and competence in the areas indicated in this chapter and are, therefore, likely to be lower. There will also be some ongoing costs for both inward-branch and inward-service firms to ensure that staff competency levels are maintained and knowledge is kept up to date. 3.33 We believe that this proposal will result in consumer protection benefits through ensuring that staff dealing with UK consumers have an appropriate level of knowledge and expertise. However, we do not consider it reasonably practicable to quantify the full costs and benefits given that the total costs associated with this proposal will depend on the number of firms that choose to passport into the UK and whether these firms choose to do so on an inward-branch or inward-service basis. To attempt a sophisticated quantification exercise would not be a proportionate use of FCA resources as we would need to ascertain the passporting intentions of intermediary firms throughout the EEA. Glossary definition of ‘regulated mortgage contract’ 3.34 The proposed change to the definition of ‘regulated mortgage contract’ to exclude equitable mortgage bridging loans is a rule change required to reflect the amendments to the RAO being proposed by HMT. 3.35 We recognise that this change may result in some consumers no longer receiving the protection of those of our rules which relate to that activity, and that there is a risk of a negative impact on consumers which could potentially result in costs, e.g., the costs associated with being mis￾sold a loan of this type. However, the regulatory perimeter is set by HMT and the proposed amendments to our rules are consequential on these legislative amendments to the RAO. To the extent that there may be any such costs, we do not consider that it is reasonably practicable to estimate them. Amendments to CONC to reflect the treatment of residential renovation agreements under the MCD 3.36 The amendments to CONC to reflect the treatment of residential renovation agreements are primarily consequential changes driven by article 46 of the MCD, which brings such agreements into the scope of the Consumer Credit Directive (CCD) if they are above €75,000. A firm offering these agreements would now have to provide a pre-contractual explanation under CONC 4.2 and 4.3, which may lead to additional costs if they are not providing such an explanation for the affected agreements currently, e.g. costs in terms of staff time and/or systems changes. This change would be of benefit to consumers who are not currently receiving such an explanation in terms of understanding the features of a proposed agreement to allow them to assess whether it meets their needs and financial situation. 3.37 These amendments are consequential as a result of article 46 of the MCD. While we have set out here an analysis of likely costs and benefits, we consider it would be a disproportionate use of our resources (and not reasonably practicable) to give a full estimate of costs and benefits. 3.38 Some amendments will also impact on P2P agreements above €75,000 for residential renovation purposes that are not regulated credit agreements. In view of the way in which we understand such lending to be funded we do not consider that there are a material number of agreements above this limit. We therefore consider that any impact on firms will be of minimal significance and that it will be disproportionate use of our resources to give a full estimate of costs and benefits. Amendment to definition of ‘credit-related regulated activity’ 3.39 We do not consider that the change to the definition of CRRAs to include the new article 53DA activity will result in additional costs for firms. The Handbook treatment of firms who carry on

Financial Conduct Authority September 2015 19 Quarterly Consultation No. 10 CP15/28 CRRAs but no other type of regulated activity is generally less onerous than that of firms who carry on other types of regulated activity, e.g. requirements relating to complaints reporting under DISP 1.10.1R and DISP 1.10A.1R. As with all CRRAs, firms conducting other regulated activities (e.g. advising on regulated mortgage contracts) in addition to CRRAs will not have the benefit of rules that apply to firms who carry on CRRAs but no other type of regulated activity. As above, the inclusion of the 53DA activity in the definition of CRRAs is, in our view, unlikely to result in an increase in costs for these firms resulting from this proposed rule change. 3.40 We do note that firms providing advice on this form of lending that deal exclusively with high net worth individuals and that currently enjoy an exemption from CONC and the relevant provisions of the Consumer Credit Act 1974 (CCA) will be subject to the regulatory requirements for regulated activities (e.g. complaints reporting) for the first time and will be subject to some additional costs. However, these additional costs are due to this activity becoming a regulated activity because there is no exemption in the MCD for lending to high net worth individuals, rather than as a result of our treating this activity as a CRRA. Amending the definition of CRRA will help reduce the costs to these firms because the requirements for CRRAs (and, as above, for firms carrying on CRRAs but no other types of regulated activity) are generally less onerous than the industry standard or because the affected firms are likely to be conducting other regulated activities (e.g. in relation to regulated mortgage contracts). Because we think the change to the definition of CRRA would not result in an increase in costs for firms, we are not required to produce a cost benefit analysis for this proposal by virtue of section 138L(3) of FSMA. Amendment to MCOB 5 Annex 1R 3.41 The change to MCOB 5 Annex 1R reflects the fact that MAS no longer provide comparison tools for mortgage customers. Although the change to the prescribed text will result in some costs to firms in amending their KFIs, this will be balanced by the benefit to consumers in not providing them with misleading information. We also consider it unlikely that the costs to firms will be significant because the change will take effect on 21 March 2016, in line with when firms will be making changes to their disclosure documents anyway as a result of MCD implementation. As such, we do not consider that it would be a proportionate use of resources to produce a quantified estimate of costs and benefits for this change. Amendment to MCOB 7.6 3.42 The change to MCOB 7.6 is intended to ensure that firms can provide either an ESIS or a KFI when they make a further advance on a non-MCD contract. We consider that this will not result in additional costs for firms, as they will be able to issue whichever disclosure document they have chosen to provide for non-MCD contracts. Therefore, publication of a CBA is not required under section 138L(3) of FSMA. Impact on mutual societies 3.43 Section 138K of the Financial Services and Markets Act 2000 (FSMA) requires us to provide an opinion on whether the impact of proposed rules on mutual societies is significantly different to the impact on other authorised persons. While our proposed changes will impact mutual societies involved in mortgage lending covered under the MCD, we do not believe the changes in this consultation will have a significantly different impact on authorised persons who are mutual societies, in comparison with other authorised persons. Our proposals do not apply differently to authorised persons who are mutual societies in comparison with other authorised persons. Furthermore, we are not aware that there are mutual societies active in the markets that some of our rule changes affect, e.g. MCD lending not secured on the home and residential renovation agreements, so we do not think these changes will have a significant or immediate impact on mutual societies. We would welcome the feedback of any mutual societies in relation to this, or any of our other proposals.

20 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Compatibility statement 3.44 Section 138I(2)(d) of FSMA requires us to explain why we believe our proposed rules are compatible with our strategic objective, advance one or more of our operational objectives and have regard to the regulatory principles in section 3B of FSMA. 3.45 The proposals in this chapter are intended to advance our operational objective of securing appropriate levels of consumer protection by ensuring that our intended policy in implementing the MCD is achieved. We also consider that in preparing the proposals as set out in this chapter we have met our duty under section 1B(4) of FSMA, which provides that we must, so far as it is compatible with acting in a way that advances our consumer protection objective, carry out our general functions in a way that promotes effective competition in the interests of consumers. 3.46 As set out in the CBA above, we consider that the costs of our proposals are proportionate to the associated benefits. We have sought to ensure that our proposals are consistent with our overall approach to implementing MCD, which is to ensure the implementation is proportionate to the associated benefits for consumers and will product the least possible disruption for firms. Equality and diversity 3.47 We have considered the equality and diversity issues that may arise from the proposals and do not consider that these proposals raise any concerns. We believe that many of the changes detailed above will have a very limited effect on consumers in general and we do not consider that these proposals adversely impact any of the groups with protected characteristics, i.e. age, disability, gender, pregnancy and maternity, race, religion and belief, sexual orientation and transgender. 3.48 We will continue to consider the equality and diversity implications of the proposals during the consultation period, and will revisit them when publishing the final rules. In the interim, we welcome any input to this consultation on such matters.

Financial Conduct Authority September 2015 21 Quarterly Consultation No. 10 CP15/28 4. Changes to the Training and Competence sourcebook Introduction 4.1 The Training and Competence (TC) sourcebook sets out the qualification requirements for individuals carrying out certain retail activities. We consult for one month each time a new qualification is added, or when other minor changes are made, to the list of appropriate qualifications. 4.2 This chapter will be of interest to firms and individuals who are subject to our TC requirements. The text of the proposed amendments and the statutory powers they will be made under are set out in Appendix 4. Summary of proposals 4.3 We propose adding one new qualification and a new qualification provider to the appropriate qualifications list in TC. New qualification – and provider 4.4 In relation to TC activities 48 and 69 we propose to add: • University of South Wales – BSc (Hons) Financial Planning, Investment and Risk. Q4.1: Do you know of any reason why this qualification should not be added and/or amended on our appropriate qualifications? 4.5 These proposals are intended to help ensure that the relevant markets function well and to help secure an appropriate level of protection for consumers. In particular, they build on consumer protection provided by having competent advisers that keep our TC rules up to date through the addition of relevant new qualifications and changes to current qualifications. 8 TC activity 4 (Advising on retail investment products which are not broker funds). 9 TC activity 6 (Advising on friendly society tax-exempt policies (other than Holloway sickness policies where the Holloway policy special application conditions are met).

22 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Cost benefit analysis 4.6 Section 138I of the Financial Services and Markets Act (FSMA) requires us to perform a cost benefit analysis (CBA) of our proposed requirements and to publish the results, unless we consider the proposal will not give rise to any cost or to an increase in costs of minimal significance. This proposal does not incur any costs as it simply updates the list of appropriate qualifications. Compatibility statement 4.7 Section 1B of FSMA requires the FCA, when discharging its general functions, as far as is reasonably possible, to act in a way that is compatible with its strategic objective and advances one or more of its operational objectives. The FCA also needs to, so as far as is compatible with acting in a way that advances the consumer protection objective or the integrity objective, carry out its general functions in a way that promotes effective competition in the interests of consumers. 4.8 We are satisfied that these proposals are compatible with our general duties under section 1B of FSMA, having regard to the matters set out in 1C(2) FSMA and the regulatory principles in section 3B. 4.9 In preparing the proposals as set out in this consultation, we have considered the FCA’s duty to promote effective competition in the interests of consumers. It is our opinion that making changes to the appropriate qualifications lists has no impact on competition, as this simply increases the number of qualifications available. 4.10 The proposed changes are not expected to have a significantly different impact on mutual societies. Equality and diversity 4.11 We have considered the equality and diversity issues that may arise from these proposals. Overall, we do not consider that the proposals raise concerns with regards to equality and diversity issues. 4.12 We do not consider that the proposals in this consultation adversely impact any of the groups with protected characteristics, i.e. age, disability, sex, marriage or civil partnership, pregnancy and maternity, race, religion and belief, sexual orientation and gender reassignment. 4.13 We will continue to consider the equality and diversity implications of the proposals during the consultation period, and will revisit them when publishing the final rules. In the interim we welcome any feedback to this consultation on such matters.

Financial Conduct Authority September 2015 23 Quarterly Consultation No. 10 CP15/28 5. Consumer Redress Schemes: Updating our guidance on section 404 Introduction 5.1 Section 404 of the Financial Services and Markets Act 2000 (FSMA), which enables the FCA to implement a consumer redress scheme, came into force in 2010. A consumer redress scheme is a set of rules under which firms are required to take one or more of the following steps: • investigate whether, on or after a specific date, they have failed to comply with particular requirements that are applicable to an activity that they have been carrying on • determine whether the failure has caused (or may cause) loss or damage to consumers • determine what the redress should be in respect of the failure; and • make the redress to consumers 5.2 Section 404F(7) of FSMA makes clear that the FCA can vary the permission or authorisation of a single firm. We can also vary or impose a requirement on a single firm to establish or operate a scheme similar or corresponding to a consumer redress scheme under section 404. 5.3 The FSA previously published guidance on Consumer Redress Schemes10 (GN10) but the FSA was replaced by the FCA in April 2013 as the financial conduct regulator. We have reviewed this guidance and are proposing to update the guidance and make changes which will: • update our interpretation of the triggers for a consumer redress scheme • provide more detail about the role of the Financial Ombudsman Service (ombudsman service) in such schemes • set out our views about the use of section 404F(7) power to vary a person’s permission or authorisation in order to impose requirements on it to implement a scheme similar or corresponding to a section 404 consumer redress scheme • reflect the changes made to FSMA since 2010; and • incorporate the guidance into the CONRED part of our Handbook 5.4 We are also proposing to make a number of minor and editorial changes. 10 http://www.fsa.gov.uk/pubs/guidance/guidance10.pdf

24 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Summary of proposals Triggers for a consumer redress scheme 5.5 Before exercising the power in section 404 to establish a scheme, three conditions must be met: • it must appear to the FCA that there may have been a widespread or regular failure by relevant firms to comply with the requirements applicable to the carrying on by them of any activity • it must appear to the FCA that, as a result, consumers have suffered (or may suffer) loss or damage in respect of which, if they brought legal proceedings, a remedy or relief would be available in the proceedings; and • the FCA must consider that it is desirable to make rules for the purpose of securing that redress is made to the consumers in respect of the failure (having regard to other ways in which consumers may obtain redress) 5.6 The FSA previously set out its views on when a failure was widespread or regular, what sort of failures can be dealt with under a consumer redress scheme and the types of matters that it would take into account when considering whether it was desirable to make such a scheme. 5.7 We are proposing some changes to the guidance to clarify what we think is meant by ‘widespread or regular.’ We are also proposing to specify the evidence we will use to determine if we think that there may have been a failure. Widespread or regular 5.8 The previous guidance indicated that ‘widespread’ was a reference to the number of firms that have failed to comply with the requirements, as compared to the number of firms in the sector. The FSA described ‘regular failures’ as recurring failures, so action could be taken even if the failures were recurring but not widespread in the sector. 5.9 We have considered these tests further and believe that they draw an artificial distinction between the two concepts, and unnecessarily restrict the definitions in question. While we continue to believe that these tests are primarily directed at the volume of failings that have occurred, our assessment will need to consider the evidence available in each individual case. We have also clarified that the failures do not need to be in relation to a single rule or requirement and that the failures by firms could relate to a range of different requirements affecting the same activity. Evidence of a failure 5.10 We are proposing to clarify that when we look for relevant evidence to determine if the tests for a consumer redress scheme have been met, the evidence does not need to prove that all or most of the firms who may be subject to the scheme have, or may have, failed to meet the requirements in respect of all consumers. Q5.1: Do you have any comments on our proposed amendments to the guidance on the triggers for establishing a section 404 scheme? The role of the ombudsman service 5.11 The Alternative Dispute Resolution (ADR) for Consumer Disputes (Competent Authorities and Information) Regulations 2015, which implement the EU ADR Directive, made changes to

Financial Conduct Authority September 2015 25 Quarterly Consultation No. 10 CP15/28 section 404B of FSMA. Section 404B now sets out that if a consumer makes a complaint to the ombudsman service, and at the time the complaint is made the subject matter of the complaint falls to be dealt with (or has been dealt with) under a consumer redress scheme, the complaint is to be determined by what, in the opinion of the Ombudsman, the determination under the consumer redress scheme should have been had the complaint been assessed under the scheme (unless the firm and the consumer agree otherwise). (The same applies if a consumer is not satisfied with a determination made by a relevant firm under a consumer redress scheme or considers that the firm has failed to make a determination in accordance with the scheme.) 5.12 This means that, where a scheme is established and the complaint is to be determined by reference to what, in the opinion of the Ombudsman, the determination under the consumer redress scheme should be or should have been, the Ombudsman is bound to apply the requirements of the scheme, rather than the usual approach of determining what in the Ombudsman’s opinion is fair and reasonable in all the circumstances of the case (‘the fair and reasonable approach’). Where the scope of the scheme does not cover a certain matter or where the firm and the consumer agree that the complaint should not be determined by reference to what, in the opinion of the Ombudsman, the determination under the consumer redress scheme should be or should have been, the Ombudsman will take the fair and reasonable approach to resolving a complaint. 5.13 The proposed guidance explains how FSMA and the rules in the Dispute Resolution: Complaints sourcebook (DISP) work in the context of consumer redress schemes, and in particular, how the Ombudsman will deal with complaints received before a scheme is established, during the operation of a scheme and after a scheme has been ended. 5.14 Section 404B does not apply until a scheme has been established. If a scheme has not been established, the Ombudsman will deal with cases in accordance with the general fair and reasonable approach. 5.15 If the ombudsman service receives a complaint falling within the scope of the consumer redress scheme during the operation of a scheme, the Ombudsman will be required to determine the complaint by reference to what the determination under the scheme should be or should have been (unless the firm and the consumer agree that should not be the case). 5.16 If the complaint has not yet been dealt with by the firm and the time limit for dealing with it under the scheme has not yet expired, the Ombudsman will refer the cases back to the firm to deal with under the scheme (unless the firm and the consumer agree that the Ombudsman can consider the complaint). 5.17 If the Ombudsman considers it apparent, when the complaint is received, that the firm has issued a redress determination in accordance with the scheme, the Ombudsman may not charge a case fee in respect of that complaint (unless the complaint is one where the consumer and the firm agree that the complaint should not be determined by reference to what the determination under the scheme should be or should have been). 5.18 Any complaint that is outside the scope of the consumer redress scheme will be determined by the Ombudsman by reference to its usual fair and reasonable approach. 5.19 A scheme may carry on indefinitely or be set up for a limited period of time. If a scheme has ended and a consumer complains to the firm or attempts to opt in to the closed scheme, the Ombudsman’s approach will be determined by what the complaint is about.

26 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 5.20 Where the Ombudsman receives a complaint about a redress determination made by a firm under a consumer redress scheme but the complaint should have been dealt with outside the scope of the consumer redress scheme, the Ombudsman will apply the general fair and reasonable approach to that complaint. 5.21 The guidance has been updated to make this position clear. Q5.2: Do you have any comments on the proposed changes to the guidance relating to the role of the ombudsman service? Implementing a consumer redress scheme under section 404F(7) 5.22 We are proposing to add a new section to the guidance that deals with the FCA’s use of the power set out in section 404F(7). Under section 404F(7), the FCA is able to vary a permission or authorisation, or vary or impose a requirement, on a firm to establish and operate a scheme which corresponds to, or is similar to, a consumer redress scheme under section 404. We consider that it is useful for both consumers and firms that there is greater transparency about how such a scheme may be implemented. The proposed guidance also makes reference to section 234K, which requires the FCA, before using certain firm-specific FSMA powers, to consider whether it would be ‘more appropriate’ to proceed under the powers in the Competition Act 1998. 5.23 The proposed guidance sets out: • the triggers for imposing a consumer redress scheme under section 404F(7) • considerations regarding the role of the ombudsman service; and • other matters that are relevant to whether a consumer redress scheme under section 404F(7) is desirable to further the FCA’s operational objectives Triggers for a section 404F(7) scheme 5.24 The triggers to impose a consumer redress scheme under section 404F(7) are different to those required to establish a consumer redress scheme under section 404. This reflects the distinction that a section 404 scheme is a rule based tool that applies to any firm which is within the scope of those rules. A section 404F(7) scheme, however, only applies to the specific firm or firms that have had their permission or authorisation varied, or a requirement varied or imposed. To be clear, this would not prevent the FCA from imposing a section 404F(7) scheme on multiple firms but it would only be able to do so by taking action in relation to each firm individually. 5.25 The FCA may impose a section 404F(7) scheme on a firm for a variety of reasons but it is likely that the FCA will need to be satisfied that the scheme advances its operational objective of securing an appropriate degree of protection for consumers. The role of the ombudsman service 5.26 When imposing a scheme under section 404F(7), the FCA may decide to include provisions that bind the ombudsman service to determine complaints by reference to what the determination should be or should have been under the scheme. This does not happen automatically and we have set out in the guidance the types of considerations we will take into account when deciding whether or not to bind the ombudsman service. 5.27 It is our view that binding the ombudsman service in such a way is subject to the same triggers as those for imposing a section 404F(7) scheme. A key consideration is likely to be whether we consider that binding the ombudsman service is desirable in order to advance our consumer

Financial Conduct Authority September 2015 27 Quarterly Consultation No. 10 CP15/28 protection objective of securing an appropriate degree of protection for consumers. Our assessment will also depend on the circumstances of the case and the information available to us. We will also consider the regulatory principles in section 3B of FSMA and follow the normal principles of administrative law. 5.28 We have described in the guidance how we will work with the ombudsman service where we are considering binding them to a scheme under section 404F(7). In particular, the ombudsman service can supply useful information about its approach to any complaints it may have already received, its views about possible forecasts of complaints (that would likely fall within a scheme, if made) and any possible impact on their operational practice. 5.29 We have also set out the governance arrangements that would apply to proposals to bind the ombudsman service and the types of issues the FCA’s Executive Committee (or a sub￾committee) would consider when making such a decision. Other matters Consultation 5.30 The decision to impose a consumer redress scheme under section 404F(7) is a firm-specific action. As with any other supervisory or enforcement action we take against a specific firm, the FCA is not obliged to consult when considering such action. We will engage with the affected firm or firms about the use of this power. Consumer protection 5.31 As highlighted above, a key consideration will be whether a section 404F(7) will advance the FCA’s operational objective of securing an appropriate degree of protection for consumers. We have set out some of the factors that are likely to impact on our consideration in the guidance. These include the number of consumers affected by the relevant act or omission, the speed with which consumers would obtain redress, the possible impact on individual consumers and the level of complaints currently with the ombudsman service. Challenging a scheme 5.32 We have provided information in the guidance about how such schemes may be challenged. A firm can challenge a scheme in the Upper Tribunal which can either dismiss the challenge or require the FCA to reconsider its decision in accordance with the Tribunal’s findings. Q5.3: Do you have any comments on our proposed guidance regarding our use of consumer redress schemes under section 404F(7)? Electronic money issuers / concurrency 5.33 Following the publication of GN10, we took on responsibility for the regulation of electronic money issuers. The Electronic Money Regulations 2011 specifically amended section 404(2) of FSMA to allow the FSA to establish a consumer redress scheme relating to such firms. We are proposing to amend the guidance to clarify that it applies to the establishment and operation of consumer redress schemes for electronic money issuers. 5.34 We are not extending the remit of what a consumer redress scheme can cover. This change only updates the guidance to reflect the changes made to FSMA since 2010.

28 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 5.35 The Financial Services (Banking Reform) Act 2013 introduced a duty on the FCA in section 234K of FSMA to consider whether to exercise its powers under the Competition Act 1998 in specified circumstances (the primacy duty).11 When the FCA imposes a requirement on a firm under section 55L of FSMA, or of its own initiative varies a firm’s Part 4A permission under section 55J(2), the FCA must consider whether it would be more appropriate to proceed under the Competition Act 1998. The proposed guidance refers to this new duty in the context of consumer redress schemes imposed under section 404F(7) of FSMA. Q5.4: Do you have any comments on the reference to the new concurrency duty or on the proposed changes to the guidance to reflect the fact that consumer redress schemes may be made in relation to electronic money issuers? Incorporating guidance on consumer redress schemes into the Handbook 5.36 When the guidance was first published in 2010 the FSA had not made any rules establishing a consumer redress scheme. Since then, the FSA implemented its first consumer redress scheme (for consumers who were given unsuitable advice to invest in the CF Arch cru funds) and, in doing so, created CONRED (Consumer Redress Schemes sourcebook). 5.37 We intend to incorporate the guidance into a new chapter of CONRED. This will ensure that CONRED provides information about how and when we will make rules requiring firms to establish and operate consumer redress schemes under section 404, which can then be considered alongside any such schemes that are incorporated in CONRED in the future. 5.38 We are not proposing to make new rules in CONRED itself. We are proposing to issue guidance for CONRED under section 139A of FSMA. Q5.5: Do you agree with our proposal to incorporate the guidance on consumer redress schemes into CONRED? Minor and editorial changes 5.39 We are also proposing a number of minor and editorial changes to the current guidance to: • provide greater clarity about our processes • reflect the regulatory framework arising from the Financial Services Act 2012; and • convert GN10 into a format that is suitable for the Handbook 5.40 For example, where appropriate we have updated references from the FSA to the FCA. We have also clarified that when considering whether a remedy of relief would be available in legal proceedings, we would also need to consider issues of causation. Q5.6: Do you have any comments about any of the minor or editorial changes made to the guidance? 11 The FCA has published guidance on the primacy duty: http://www.fca.org.uk/your-fca/documents/finalised-guidance/fg15-08

Financial Conduct Authority September 2015 29 Quarterly Consultation No. 10 CP15/28 Cost benefit analysis 5.41 Section 138I of FSMA requires us to perform a cost benefit analysis (CBA) of our proposed requirements and to publish the results, unless we consider the proposal will not give rise to any cost or to an increase in costs of minimal significance. 5.42 The aim of the updates is to clarify to external stakeholders how consumer redress schemes are set up and how they work. This will in turn reduce the number of queries. The proposed updates do not impose incremental compliance costs on firms as the changes will not increase how often we decide to implement consumer schemes or the way that consumer redress schemes are set up and run. The proposed updates do not extend the remit of what a consumer redress scheme can cover. The proposed change to the guidance relating to changes in FSMA simply reflects the changes made to FSMA. Compatibility statement 5.43 Section 1B of FSMA requires the FCA, when discharging its general functions so far as is reasonably possible, to act in a way that is compatible with its strategic objective and advances one or more of its operational objectives. The FCA also needs to, so far as is compatible with acting in a way that advances the consumer protection or integrity objectives, carry out its general functions to promote effective competition in the interests of consumers. 5.44 Consumer redress schemes are one of the FCA’s regulatory tools for dealing with cases of mass detriment and can help us to further our consumer protection objective. 5.45 In preparing the proposals we have had regard to the FCA’s duty to promote effective competition in the interests of consumers. It is our opinion that updating the guidance on section 404 has no impact on competition, as the guidance simply explains how the consumer redress schemes are set up and work. The changes to our rules are intended to align with the changes in FSMA. We have also had regard to the regulatory principles set out in section 3B of FSMA and consider, in particular, that the proposed guidance will assist the FCA in exercising its powers as transparently as possible. Equality and diversity considerations 5.46 We have considered the equality and diversity issues that may arise from the proposals in this Consultation Paper (CP). Overall, we do not consider that the proposals in this CP raise concerns in terms of equality and diversity issues. We do not consider that the proposals in this consultation adversely impact any of the groups with protected characteristics i.e. age, disability, sex, marriage or civil partnership, pregnancy and maternity, race, religion and belief, sexual orientation and gender reassignment. 5.47 We will continue to consider the equality and diversity implications of the proposals during the consultation period, and will revisit them when publishing the final rules. In the interim we welcome any input to this consultation on such matters.

30 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 6. Changes to Consumer Credit, Retail Mediation Activity, Mortgage Second Charge Lending and Recovery and Resolution Reporting Introduction 6.1 This chapter sets out our proposals to make amendments to several parts of Chapter 16 of the Supervision manual (SUP). 6.2 The proposals will be of interest to firms who are required to: • complete consumer credit reporting data items • complete the RMA-C (client money and assets) data item • report their mortgage second charge lending data • submit their recovery and information for resolution plan data • submit Product Sales Data (PSD) items PSD001 and PSD007 • be registered on the GABRIEL system • complete the Mortgage Lending & Administration (MLA) data items MLA-L and MLA-M 6.3 The proposed amendments, and the statutory powers they will be made under, are set out in Appendix 6. Changes to Consumer Credit Reporting guidance notes 6.4 Under the consumer credit regime consulted on in CP13/1012 and confirmed in PS14/313, certain types of firms are required to submit information about their credit-related regulated activities to the FCA. Following feedback from firms who have already submitted the data items, we have taken the opportunity to improve the accompanying guidance notes to make the submission of the consumer credit data items easier for firms. Where specific questions have been raised by firms, we have sought to clarify the information required by the returns. 12 CP13/10 Detailed proposals for the FCA regime for consumer credit (October 2013) http://www.fca.org.uk/your-fca/documents/ consultation-papers/cp13-10 13 PS14/3 Detailed rules for the FCA regime for consumer credit (February 2014) http://www.fca.org.uk/your-fca/documents/policy￾statements/ps14-03

Financial Conduct Authority September 2015 31 Quarterly Consultation No. 10 CP15/28 In particular, we have rewritten the guidance notes for CCR007 (Consumer Credit data: Key data for credit firms with limited permissions) to try to prevent some of the issues which firms experience when trying to complete the data item. Q6.1: Do you agree with our proposals to amend the consumer credit guidance notes? Change to CCR007 6.5 The majority of firms with limited permissions for their credit-related regulated activities are required to submit the CCR007 (Consumer Credit data: Key data for credit firms with limited permissions) data item. Through firm feedback we have also discovered a discrepancy between the guidance notes and the data item CCR007. We propose to amend Question 5 of the data item to capture information from firms on the consumer credit activity which provides the highest amount of turnover. This will bring the data item into line with the guidance notes and provide us with the ability to monitor on an ongoing basis which credit-related regulated activities are generating the most revenue for limited permission firms. Q6.2: Do you agree with our proposal to amend Question 5 of CCR007? Changes to RMA-C 6.6 The FCA Handbook requires certain types of firms to submit data in respect of client money and assets. This requirement is set out in SUP 16.12. 6.7 We understand that there are variations of interpretation in some of the fields in the RMA-C data item which may mean inconsistent data is submitted to the FCA. Furthermore, the current questions relating to client money totals do not align to the requirements in the Client Assets sourcebook (CASS). 6.8 We are proposing to restrict the scope of RMA-C to money held in respect of insurance mediation activities by removing questions/fields relating to retail investments/mortgages. Data on money held in connection with MiFID business/designated investment business is gathered through alternative sources such as the Client Money and Asset Return (CMAR). We expect that this will reduce the reporting burden on firms. 6.9 We are also proposing to amend the questions in RMA-C so that the data submitted is better aligned to the CASS 5 requirements. 6.10 Additionally, we propose to include questions related to the client assets audit report. At present, auditors of insurance intermediaries must deliver a client assets report to the FCA only upon request. Q6.3: Do you agree with our proposals to amend RMA-C? Changes to mortgage second charge lending reporting forms 6.11 We consulted on a new reporting regime for second charge mortgages in CP14/2014 and the final rules were published in PS15/9.15 Following the publication of the policy statement, we are proposing some minor formatting amendments to the new data items, in order for them to be 14 CP14/20 Implementation of the Mortgage Credit Directive and the new regime for second charge mortgages (September 2014) http://www.fca.org.uk/your-fca/documents/consultation-papers/cp14-20 15 PS15/9 Implementation of the Mortgage Credit Directive and the new regime for second charge mortgages, feedback to CP14/20 and final rules (March 2015) http://www.fca.org.uk/your-fca/documents/policy-statements/ps15-09

32 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 effectively implemented into the GABRIEL system. There will be no change to the information firms are required to provide in the data items. Q6.4: Do you agree with our proposals to amend the mortgage second charge lending reporting forms? Changes to Product Sales Data (PSD) items guidance notes (PSD001 & PSD007) 6.12 PSD reporting applies to certain types of firms as specified in SUP 16.11.1R. We are proposing to make minor amendments to the accompanying guidance notes in SUP 16 Annex 21R to ensure that the guidance provided matches the data items. For field 36 of PSD001, firms have the option of selecting either ‘yes’ or ‘no’. The guidance notes refer to the options ‘Y’ or ‘N’; we will amend the notes accordingly to reflect the data item. 6.13 Further, we will make an amendment to the PSD007 data item guidance to clarify that for field 21 of the data item we do not require firms to report to two decimal places. This will bring the guidance notes into line with the reporting form which does not allow firms to report to two decimal places. Q6.5: Do you agree with our proposals to amend the Product Sales Data item guidance notes? Change to MLA-L and MLA-M notes in SUP 16.12.18B 6.14 We are proposing to make a minor amendment to note 3 of SUP 16.12.18B to state that the reporting requirement for MLA-L and MLA-M under Regulated Activity Group (RAG) 5 is only applicable to firms subject to MIPRU 4.2D in addition to the existing caveats in note 3. This amendment is intended to clarify exactly which firms these two data items apply to. No new firms will be scheduled these returns as a result of this clarification. Q6.6: Do you agree with our proposal to amend note 3 of SUP 16.12.18B? Changes in Recovery and Resolution plans submission method 6.15 The new reporting rules concerning recovery and resolution plans were consulted on in CP14/1516 and confirmed in PS15/217; these rules are set out in SUP 16.20. The changes proposed to SUP 16.20 in this consultation paper seek to clarify the method of submission for these reports, which will be through the GABRIEL system. To facilitate this method of reporting we propose to introduce two new data items, REP006 (Recovery Plans) and REP007 (Resolution Plans). These forms will allow firms to upload a pdf document of their plans, as well as providing information on which firms are being submitted on behalf of (if any). Q6.7: Do you agree with our proposal to clarify the recovery and resolution plan submission method? Change to standing data items 6.16 Firms are currently required to check annually that the information relating to them held by the FCA is accurate and up to date. We propose to extend the standing data that firms are required to keep up to date to include the firm’s principle user and the principle user’s email address on the GABRIEL system. This will help to ensure that any communications sent by the GABRIEL system are sent to the correct firm contacts. This will make the data collection process 16 CP14/15 Recovery and Resolution Directive (August 2015) http://www.fca.org.uk/your-fca/documents/consultation-papers/cp14-15 17 PS15/2 Recovery and Resolution Directive: Feedback on CP14/15 and final rules (January 2015) http://www.fca.org.uk/your-fca/ documents/policy-statements/ps15-02

Financial Conduct Authority September 2015 33 Quarterly Consultation No. 10 CP15/28 more efficient for firms, and enhance the ability of the FCA to issue communications about the GABRIEL system and data reporting to firms. Q6.8: Do you agree with our proposal to include a firm’s GABRIEL system principle user email address in the standing data items? Cost benefit analysis 6.17 Sections 138I and 138J of the Financial Services and Markets Act (FSMA) require us to publish a cost benefit analysis (CBA) when proposing draft rules. In particular, we are required to publish an analysis of the costs, the benefits and an estimate of those costs and benefits. This requirement does not apply if there will be no increase in costs or if any increase will be of minimal significance, as explained in more detail below. Changes to consumer credit reporting guidance notes 6.18 The changes to the consumer credit guidance notes are intended to clarify what information should be submitted by firms in the various reporting fields of the consumer credit returns. We expect that any increase in costs as a result of these changes will be of minimal significance as there is no change to the reporting population or any increase in the number of questions. Change to CCR007 6.19 We expect the amendment to question 5 of CCR007 to result in no increase in costs or an increase in costs of minimal significance. We expect that the information requested by this change in the question will be readily available to firms, and will not increase their reporting burden. Changes to RMA-C 6.20 We note that amending RMA-C to delete some fields and include new fields is likely to impose costs on firms. However, as the new questions included are aligned to the CASS rules, firms should already hold the data required in-house. Therefore, we expect any incremental compliance costs on firms will be of minimal significance. Changes to mortgage second charge lending reporting forms 6.21 The minor formatting amendments to the second charge lending reporting forms are not expected to result in any significant costs for firms. The information requested by the forms has not been amended and so there will be no additional reporting burden on firms. We expect that any further implementation costs as a result of the tweaks will be of minimal significance. Changes to Product Sales Data items guidance notes (PSD001 &PSD007) 6.22 We expect that amending the guidance notes for PSD001 and PSD007 will result in no increase, or an increase in costs of minimal significance. The information which firms are required to report in these data items has not been changed, so there will be no additional reporting burden. The formatting change in PSDS007 is already in place in the system and the change will align the guidance notes with the reporting form. Change to MLA-L and MLA-M notes in SUP 16.12.18B 6.23 The change to note 3 of SUP 16.12.18B will not result in any increase of costs for firms. This amendment is intended to clarify which firms are required to complete the MLA-L and MLA-M returns. Firms that are required to complete the returns are already being scheduled in the data

34 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 item correctly. The only impact would be to clarify for some firms that they are not in scope to complete MLA-L and MLA-M. Changes in recovery and resolution plans submission method 6.24 The change of submission method of the recovery and resolution plans information will make the collection of this data more efficient for both firms and the FCA. This change will require firms to submit this information through the GABRIEL system, a system firms required to complete the returns are familiar with. Change to standing data items 6.25 We expect that the incremental costs to firms as a result of the change to the standing data items will be of minimal significance. Firms are already required to check standing data annually for accuracy and the addition of checking a firm’s principal user on the GABRIEL system will not be overly burdensome. Q6.9: Do you have any questions or comments about our cost benefit analysis? Compatibility statement 6.26 Section 1B of FSMA requires us, when discharging our general functions, so far as is reasonably possible, to act in a way that is compatible with our strategic objectives and advances one or more of our operational objectives. We also need, so far as is compatible with acting in a way that advances the consumer protection objective or the integrity objective, to carry out our general functions in a way that promotes effective competition in the interests of consumers. 6.27 The proposed changes to SUP 16 listed in this chapter will allow the FCA to collect more accurate firm data and identify emerging risks. This will allow us to more effectively supervise firms and help us to advance our consumer protection objective. 6.28 We do not anticipate that making the proposed changes to the reporting required by SUP 16 will have an impact on competition. These changes are expected to impose minimal costs on firms and do not affect firms’ incentives or ability to compete in the market. 6.29 Our proposed changes are not expected to have any impact on mutual societies either. Equality and diversity considerations 6.30 We have conducted an equality impact assessment on the proposals in this chapter and we do not believe that our plans create any negative impacts on protected groups. As a result of the assessment we do not believe that there are any equality or diversity implications arising, but we would welcome your comments.

Financial Conduct Authority September 2015 35 Quarterly Consultation No. 10 CP15/28 7. Clarifying the complaints recording, reporting and publication rules Introduction 7.1 We are making further amendments to clarify our complaints handling requirements for firms. The following proposed amendments should be read in conjunction with the rules and policy made in PS14/30 and they apply to all firms that are subject to our complaints handling rules in the Dispute Resolution: Complaints sourcebook (DISP). 7.2 We are also proposing some changes to the Voluntary Jurisdiction of the Financial Ombudsman Service (ombudsman service). As the powers to make rules relating to the ombudsman service are shared between the FCA and the ombudsman service, this consultation is issued jointly by the FCA and the ombudsman service and the relevant amendments are highlighted below. Summary of proposals 7.3 We are proposing amendments to our DISP rules to make commencement dates for complaints reporting requirements more consistent and clear, as well as some amendments to make it clearer for firms how to send written communications to complainants. We also propose some minor corrections to the complaints return and guidance. Re-making of the complaints recording and complaints reporting rules 7.4 The FCA (and previously the FSA) is required to specify the provisions under which rules in a rule-making instrument are made. 7.5 In addition to its general rule-making power in section 137A of the Financial Services and Markets Act 2000 (FSMA) and paragraph 13 of Schedule 17 to FSMA, the FCA has two further specific powers relating to complaints recording and complaints reporting. 7.6 These two powers are in paragraph 15 of FSMA (Transitional Provisions) (Ombudsman Scheme and Complaints Scheme) Order 2001 and paragraph 9 of FSMA (Transitional Provisions) (Complaints relating to General Insurance and Mortgages) Order 2004. 7.7 Paragraph 15 of the 2001 Order gives the FCA an express power to make rules applying to authorised persons regarding the keeping of records and the making of complaints in relation to ‘relevant complaints’ under that Order (i.e. complaints about activities that occurred before 1 December 2001). Paragraph 9 of the 2004 Order gives the FCA an express power to make rules applying to authorised persons regarding the keeping of records and the making of reports in relation to ‘relevant transitional complaints’ under that Order ( i.e. certain complaints about pre-regulation mortgage and insurance business).

36 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 7.8 The Complaints Handling and Call Charges Instrument 2015 did not cite these two powers and so we are proposing that the rules and guidance relating to complaints reporting are re-made. 7.9 In addition, to ensure that the position is now regularised, we are also proposing to remake all of the current rules and guidance in the complaints recording and complaints reporting chapters of DISP (DISP 1.9 and DISP 1.10) and accompanying Complaints Return form in DISP 1 Annex 1R and the Illustration of the Online Reporting Requirements in DISP 1 Annex 1CR. We propose to re-make these rules, guidance and forms as they currently appear in the online version of the Handbook. Clarifying the disapplication of the complaints data publication rules for Voluntary Jurisdiction participants 7.10 The ombudsman service is consulting on a minor change to the standard terms for Voluntary Jurisdiction participants to clarify that the complaints data publication rules do not apply to them. This is already the effect of the rules so the proposed changes are for clarification only. This proposed change is contained in Part 2 of the Annex to the draft instrument. Changes to commencement dates for complaints reporting and publication 7.11 We are proposing to change the date on which the rules on complaints reporting and publication in DISP 1.10 and 1.10A and the associated annexes come into force. We will also clarify how those rules and annexes apply to different reporting periods (Part 2 of the Annex). 7.12 In particular, we propose that the new complaints reporting and publication rules come into force on 1 January 2016. (The commencement date for these rules was previously 30 June 2016 but would apply to reporting periods which started on 1 January 2016). This will clarify the commencement of the complaints reporting and publication rules; however, the effect of the rules will remain substantively the same. 7.13 We will require firms to use our new complaints return and report all complaints, for reporting periods which commence on or after 1 January, subject to certain modifications. The precise modifications depend upon whether the firms reports on a six-month or twelve-month basis. Firms with six-month reporting periods 7.14 For six-month reporting periods commencing on or before 31 December 2015, the current complaints reporting, complaints publication, and related forms continue to apply. Therefore, firms will not be required to report or publish information about all complaints received (including those resolved by next business day). 7.15 For six-month reporting periods commencing between 1 January and 29 June 2016, firms will have to report and publish information about all complaints received (including those resolved by close of the next business day), but will not be required to report and publish information about the percentage of complaints closed or resolved within three days, or closed after three days but within eight weeks. This means that firms will not have to report or publish such information in advance of the introduction of our new rules on resolving complaints by the close of the third business day. 7.16 For six-month reporting periods beginning on or after 30 June 2016, firms will be required to provide all the information in the new complaints reporting and publication rules and forms. A new form will be available on the GABRIEL online reporting system as of March 2016.

Financial Conduct Authority September 2015 37 Quarterly Consultation No. 10 CP15/28 Firms with twelve-month reporting periods 7.17 For twelve-month reporting periods starting between 1 January and 31 December 2015, the current complaints reporting, complaints publication, and related forms continue to apply. Therefore, firms will not be required to report or publish information about all complaints received (including those resolved by next business day). 7.18 For twelve-month reporting periods commencing on or after 1 January but before 29 June 2016, firms will have to report and publish information about all complaints received (including those resolved by close of the next business day), but will not be required to publish information about the percentage of complaints closed or resolved within three days, or closed after three days but within eight weeks (Part B of the Complaints Return form is not being amended and does not require information on the speed with which complaints are dealt with). This means firms will not have to publish such information in advance of the introduction of our new rules on resolving complaints by the close of the third business day. 7.19 For twelve-month reporting periods commencing on or after 30 June 2016, firms will have to report and publish information about all complaints received (including those resolved by close of the next business day) and will be required to publish information about the percentage of complaints closed or resolved within three days, or closed after three days but within eight weeks. 7.20 By way of summary, the following table illustrates the effect of the commencement of the reporting rules for firms with different reporting periods: Length of Reporting Period Start of Relevant Reporting Period Application of Relevant Rules1 Six months Between 1 July 2015 and 31 December 2015 As they stand at the start of the relevant reporting period Between 1 January 2016 and 29 June 2016 As they stand on 1 January 2016, with modifications relating to report￾ing and publication of the timeframe in which complaints are resolved From 30 June 2016 As they stand on 30 June 2016, with no modifications Twelve months Between 1 January 2015 and 31 December 2015 As they stand at the start of the relevant reporting period Between 1 January 2016 and 29 June 2016 As they stand on 1 January 2016, with modifications relating to pub￾lication of the timeframe in which complaints are resolved From 30 June 2016 As they stand on 30 June 2016, with no modifications Complaints resolved by close of the third business day and the summary resolution communication 7.21 In relation to complaints which are resolved by the close of the third business day, following the day on which they are received, we propose to remove the application of DISP 1.6.1R(1) (Keeping the complainant informed). This rule requires respondents to send a complainant a prompt written acknowledgement providing early reassurance that it has received the complaint and is dealing with it, and ensuring the complainant is kept informed. However, given the short

38 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 timeframe in which complaints are resolved (by the close of the third business day) and the additional requirement that respondents should send a summary resolution communication to the complainant in writing, we believe it is unnecessary for firms to also have to send a written acknowledgement. This reflects the position as it currently exists under the ‘next business day rule’ (DISP 1.5). 7.22 DISP 1.5.4R concerns complaints which are resolved by the close of the third business day following the day on which they are received. It requires that, where a respondent considers a complaint to be resolved under this section, the respondent must send the complainant a ‘summary resolution communication’. Within this written communication, the respondent must provide the complainant with information about their right to refer a complaint to the ombudsman service. We propose to amend this rule to clarify that the respondent must send the summary resolution communication promptly (after the complaint has been resolved). In making this rule, we did not previously specify a timeframe in which a summary resolution communication has to be sent and we wish to clarify this. 7.23 As noted above, the powers to make rules relating to the ombudsman service are shared between the FCA and the ombudsman service. The FCA propose to make these amendments in relation to complaints falling under the compulsory jurisdiction (CJ) of the ombudsman service. The ombudsman service proposes to make equivalent amendments to the rules governing complaints falling under the voluntary jurisdiction (VJ). Complaints reporting form and guidance 7.24 We have made some minor typographical corrections to the names of products in the complaints reporting form and have also amended guidance to reflect changes to the categories. Cost-benefit analysis 7.25 Section 138I of the Financial Services and Markets Act 2000 (FSMA) requires us, when making rules, to undertake a cost benefit analysis of our proposed requirements and to publish the result. 7.26 In relation to regularising the position in respect of the rules and guidance in DISP 1.9, DISP 1.10, the Complaints Return form (DISP 1 Annex 1R) and the Illustration of the Online Reporting Requirements (DISP Annex 1CR), we do not consider that this change will give rise to any additional costs for firms as the online version of the FCA Handbook already shows the rules and guidance in the form in which they are to be re-made. The benefit of re-making these provisions is to regularise the position for the future. In the circumstances, it is not possible to estimate the costs and benefits of this aspect of the proposals. 7.27 For the other proposals, we undertook a full cost benefit analysis of the proposals to which these rule changes relate, which is published in CP14/30, and this is not affected by re-making the rules and now citing the powers in the 2001 and 2004 Orders, the omission of which was an oversight. 7.28 We consider that these changes will not give rise to any additional costs for firms. By delaying the requirement to report certain timeframes over which complaints are resolved, and removing the requirement to send a written acknowledgement as well as a summary resolution communication, we would expect these proposals to reduce the cost of implementation for firms, although we do not believe the costs and benefits can be reasonably estimated. This will benefit firms in terms of compliance costs.

Financial Conduct Authority September 2015 39 Quarterly Consultation No. 10 CP15/28 Compatibility statement 7.29 Section 1B of FSMA requires the FCA, when discharging its general functions, so far as reasonably possible, to act in a way that is compatible with its strategic objective and advances one or more of its operational objectives. The FCA also needs to, so far as is compatible with acting in a way that advances the consumer protection objective or integrity objective, carry out its general functions to promote effective competition in the interests of consumers. 7.30 We consider that complaints reporting and complaints data publication by firms advances our consumer protection objective by giving the FCA and consumers more information about the complaints received by firms and how they are resolved. We have had regard to the duty to promote effective competition and it is our opinion that the proposals may allow firms to compete to a greater extent on how far their services generate complaints and their complaints handling arrangements. 7.31 We have had regard to the regulatory principles and consider the proposals to be compatible. In particular, we consider that the proposals assist the FCA in exercising its functions transparently. 7.32 Section 138K(2) of FSMA requires the FCA to state our opinion about the impact of the proposed rules on mutual societies. The proposed changes are not expected to have a significantly different impact on mutual societies, compared to the impact on other authorised persons (although it is noted that the complaints reporting and complaints data publication rules do not apply to credit unions). Equality and diversity 7.33 These changes mainly concern the commencement of the rules and we do not anticipate that they have any implications for equality and diversity issues. The remaining changes are intended to add further clarity to the operation of the rules.

40 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 8. Changes to the requirements on cancellation of listing, audit committees and other changes to LR, DTR, PR, GENPRU, SUP and the Glossary Introduction 8.1 In this chapter we are proposing some minor changes to various parts of the FCA Handbook, as listed below: • Listing Rules sourcebook (LR) • Disclosure Rules and Transparency Rules sourcebook (DTR) • Prospectus Rules sourcebook (PR) • General Prudential sourcebook (GENPRU) • Supervision manual (SUP), and • Glossary 8.2 This chapter will be of interest to: • UK and overseas issuers with UK listed securities • UK and overseas issuers of transferable securities, and other persons who make public offers of transferable securities or seek admission of transferable securities to regulated markets in the UK • issuers of transferable securities admitted to trading on a regulated market where the UK acts as home or host Member State and the FCA’s DTRs apply • firms advising issuers • firms advising persons investing or dealing in listed securities or transferable securities • firms or persons investing or dealing in listed securities or transferable securities • authorised firms, and • auditors who are preparing client assets reports 8.3 The proposed amendments, and statutory powers they will be made under, are set out in Appendices 8A and 8B.

Financial Conduct Authority September 2015 41 Quarterly Consultation No. 10 CP15/28 Summary of proposals 8.4 This chapter of the consultation paper is divided into five sections in which we set out the following proposals: • Proposed modifications to the Listing Rules sourcebook (LR) that apply to the cancellation of listing of securities following a takeover offer. The aim of these modifications is to resolve disparity in terms of outcome with the procedures that apply in respect of a decision on cancellation by a premium listed issuer following a vote by shareholders. • How we propose to implement certain parts of Directive 2014/56/EU (Statutory Audit Amending Directive (SAAD)). In particular, we are consulting on the implementation of the changes to the requirements for public interest entities’ (PIEs)18 audit committees introduced by the Statutory Audit Amending Directive. • Our proposals to amend the corporate governance rules in the Disclosure Rules and Transparency Rules sourcebook (DTR) to reflect the transposition of the Accounting Directive 2013/34/EU which repeals and replaces the Fourth Company Law Directive 78/660/EEC (FCLD) and Seventh Company Law Directive 83/349/EEC (SCLD). • How we propose to bring references to the former operating subsidiaries of the Financial Reporting Council (FRC) up to date, so as to refer only to the FRC itself, and to make some other minor changes to LR and DTR. • Small changes that we are proposing in order to align the Prospectus Rules sourcebook (PR) with regulatory technical standards (RTS) on the Prospectus Directive 2003/71/EC (PD) arising from the Omnibus II Directive 2014/51/EU (OD2). Cancellation provisions in the Listing Rules Background 8.5 In CP12/2519 and CP13/1520 (‘Enhancing the effectiveness of the Listing Regime’) we set out a package of measures designed to strengthen minority shareholder rights and protections where they are at risk of being abused. The measures were particularly intended to deal with cases when a controlling shareholder does not maintain an appropriate relationship with a premium listed company. Our final measures were presented in PS14/821 and were implemented in May 2014. 8.6 In developing the final package, we identified that the question of cancellation of a listing where a controlling shareholder is present raised important concerns about appropriate levels of investor protection within the premium listing segment of the market. At the same time, we also recognised the need to avoid situations where a small minority of holders could frustrate the legitimate actions of the large majority. Therefore, we recognised a need to revisit the cancellation provisions in completing an appropriate package of safeguards. 18 The Statutory Audit Amending Directive defines public interest entities as 1) entities governed by the law of a Member State whose transferable securities are admitted to trading on a regulated market of any Member State, 2) credit institutions, 3) insurance undertakings or 4) any entity so designated by a Member State. 19 CP12/25 Enhancing the effectiveness of the Listing Regime and feedback on CP12/2 (October 2012) www.fca.org.uk/static/pubs/cp/ cp12-25.pdf 20 CP 13/15 Enhancing the effectiveness of the Listing Regime: feedback to CP12/25 and further consultation on related issues (November 2013) www.fca.org.uk/static/documents/consultation-papers/cp13-15.pdf 21 PS 14/8 Response to CP13/15 – Enhancing the effectiveness of the Listing Regime (May 2014) www.fca.org.uk/static/documents/ policy-statements/ps14-08.pdf

42 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 8.7 The key enhanced protection we introduced, following consultation, is the requirement for a majority of votes of independent shareholders to support an application for a cancellation in cases where the company has a controlling shareholder (LR 5.2.5R(2)(b)). This is in addition to the requirement under LR 5.2.5R(2)(a), originally introduced in July 2005, that the support of 75% of votes cast in general meeting must also be gained. 8.8 Under these rules, where a controlling shareholder (instead of seeking shareholder approval) makes a takeover offer to buy out minority shareholders, separate arrangements apply under LR 5.2.10R to LR 5.2.12R. These are based on the same principle, i.e. if acceptances of the offer (or votes in favour of the proposed cancellation in the case of a shareholder vote) are received from independent shareholders which represent a minority of the voting rights held by independent shareholders and also the total voting rights held post the offer by the controlling shareholder or offeror (or exercised in the case of a shareholder vote) exceed 75%, the cancellation will be effective. 8.9 LR 5.2.11AR contains the key provisions relevant to companies where the offeror is interested in more than 50% of the voting rights before announcing its firm intention to make the offer. 8.10 In this situation, if the proportion of voting share capital held by the controlling shareholder post the offer exceeds 80%, the requirement in LR 5.2.11AR(3) for acceptances to have been received from independent shareholders which represent a majority of voting rights held by independent shareholders is disapplied under LR 5.2.11DR. 8.11 We introduced this disapplication because, in formulating the relevant rule governing cancellations following a takeover offer, we were resistant to the notion of allowing a company to remain listed on the Official List and of tolerating the resultant low level of free float where an offer was successful except for its failure to meet the independent shareholder acceptance threshold. Since we introduced the disapplication, however, we have become more conscious that in some specific situations there could be a different outcome under the two routes, with potentially significant consequential and unintended implications for investor protection. 8.12 In normal circumstances, where a minimum free float of 25% is required for listing22, a controlling shareholder would not be able to hold more than 75% of the share capital. If the controlling shareholder of a 75% controlled company subsequently made an offer for the remaining shares they would still need to clear the material hurdle of acquiring, in this case, a further 5% of the voting share capital by way of the offer. 8.13 However, if a company were, at the outset, permitted exceptionally to list with an 80% controlling shareholder and a 20% free float this would mean that a takeover offer could, at a subsequent time, be made on terms that garnered no acceptances but where the controlling shareholder could then procure a delisting. There would then be no indication arising from decisions made by some shareholders to accept the offer, of whether the terms provide fair compensation for those independent shareholders who would not wish, or be able, to hold the shares once unlisted. Possible options 8.14 We have considered the following broad approaches for resolving this problem. (a) Introduce new guidance on decisions to extend waivers on allowable free float on admission and on an ongoing basis or further rules for applicants with controlling shareholders. We have 22 Consolidated Admissions and Reporting Directive: Directive of the European Parliament and of the Council on the admission of securities to official stock exchange listing and on information to be published on those securities (No 2001/34/EC).

Financial Conduct Authority September 2015 43 Quarterly Consultation No. 10 CP15/28 considered expanding the guidance in LR 6.1.20AG (waiver of the free float requirement) to allow the FCA to take into account whether a company has a controlling shareholder. We have also considered including a new premium listing eligibility condition in LR 6 for applicants with a controlling shareholder (and a corresponding continuing obligation in LR 9). Such approaches might then help identify at an earlier stage those actual or prospective listed companies that could pose a greater risk of future problems. However, we have always stressed throughout our work on minority shareholder protection that the free float requirements are about determining liquidity, rather than acceptable governance standards. Accordingly, and in consistency with our stance as outlined in CP12/223, we do not propose to use the free float requirements in response to wider governance concerns. (b) Limit the scope of action of the controlling shareholder by expanding the list of mandatory independence provisions included in the agreement between a company and its controlling shareholder(s) in LR 6.1.4DR. For example, a new independence provision could be introduced to require a controlling shareholder, if it makes a takeover offer for the company, to include a non-waivable condition in the terms of the offer that the offer will be declared unconditional in all aspects only if acceptances of the offer are received from independent shareholders which represent a majority of voting rights held by independent shareholders. However, introducing a provision of this nature into the agreement may be inconsistent with the principle we have followed that the agreement should do no more than codify existing market practice. Moreover, we believe that provisions of this nature would be disproportionate and possibly ineffective. (c) Maintain the current rules but seek to exercise discretion on an application to cancel the listing on a case-by-case basis. However, this would remove the implication of an assurance that the 80% control provision in LR 5.2.11DR would be effective. (d) Delete the 80% control provision contained in LR 5.2.11DR. This would require a controlling shareholder to obtain acceptances of their offer from independent which represent a majority of voting rights held by independent shareholders for a cancellation request to be made. 8.15 Given the difficulties of the options in (a) and (b) above, and the fact that it is the introduction of LR 5.2.11DR that has, in mitigating one difficulty, created another of potentially greater significance in terms of investor protection, we are proposing to follow approach (d), i.e. to delete LR 5.2.11.DR. The draft instrument text containing the proposed Handbook changes is provided in Appendix 8A. 8.16 In proposing this change we wish to emphasise that this should not be seen to imply a more general tolerance of low free floats. We still retain the ability, on a case-by-case basis, to initiate delisting where the remaining free float proves too small to support adequate liquidity. Q8.1: Do you agree that deletion of LR 5.2.11DR, together with consequential amendments to LR 5.2.11AR and LR 5.2.11CR, would be the most appropriate way to resolve the disparity in the approaches to cancellation and maintain investor protection? 23 CP 12/2 Amendments to the Listing Rules, Prospectus Rules, Disclosure Rules and Transparency Rules (January 2012) http://www.fca.org.uk/your-fca/documents/consultation-papers/fsa-cp122

44 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Changes to requirements on audit committees 8.17 The EU Council of Minsters (the Council) adopted the Statutory Audit Directive (2006/43/EC) (SAD) in 2006. This sets out various requirements relating to the statutory audit of annual accounts and consolidated accounts. The requirements of the SAD relating to audit committees were implemented in the UK through corporate governance rules included in the Disclosure Rules and Transparency Rules sourcebook (DTR) made under Part VI of the Financial Services and Markets Act 2000 (FSMA). The SAD was amended in May 2014, when the European Parliament and Council adopted the SAAD and Regulation (EU) No. 537/2014 (the Regulation) – both relate to statutory audits and their oversight in the EU. The SAAD and the Regulation aim to strengthen the EU framework of standards and public oversight for the audit profession. 8.18 The Department for Business, Innovation and Skills (BIS)24 and the FRC25 consulted on the implementation of the SAAD in December 2014. Following those consultations, BIS have requested that we amend the existing rules in DTR on audit committees to reflect the revised provisions contained in the SAAD in relation to PIEs with transferable securities admitted to trading on a regulated market. BIS have asked the Prudential Regulation Authority (PRA) to update its Rulebook as well, to reflect requirements in the SAAD on audit committees for credit institutions and insurance undertakings. Respondents to this consultation should note that, because of the approach to the implementation that the PRA intends in the UK, credit institutions and insurance undertakings with transferable securities admitted to trading on a regulated market will be subject to requirements for audit committees both under DTR and under the PRA’s rules. 8.19 We now wish to consult on our proposals for implementing the revised provisions in the SAAD. Our proposed changes are shown in Appendix 8B. The PRA will carry out a separate consultation in mid-September covering the requirements for those entities within its remit. 8.20 In addition, the FRC is responsible for the UK Corporate Governance Code which includes requirements for audit committees for listed companies. The FRC will also be consulting later in the year on possible changes to the Code, and to its associated Guidance on Audit Committees, which may be necessary following the implementation of the SAAD. We may need to make further amendments to our rules to reflect changes which are made to the Code. Changes to the Statutory Audit Directive introduced by the Statutory Audit Amending Directive 8.21 This section explores the changes which the SAAD makes to chapter 10 of the SAD. The SAAD replaces existing article 41 of the SAD with a new article 39. The SAD gave each Member State the ability to decide how audit committees are composed (article 41(1)). The options were that audit committees be composed of: • non-executive members of the administrative body of the audited entity and/or • members of the supervisory body of the audited entity and/or • members appointed by the general meeting of shareholders of the audited entity The SAAD (in new article 39(1)) permits Member States to allow issuers to choose between options rather than providing for Member States to decide which option(s) to apply in their 24 The BIS Discussion Document can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/ file/400231/bis-14-1285-auditor-regulation-discussion-document-on-implications-of-eu-and-wider-reforms.pdf 25 The FRC consultation paper can be found at https://www.frc.org.uk/Our-Work/Publications/Audit-and-Assurance-Team/Consultation-Auditing-and-ethical-standards-implem-File.pdf

Financial Conduct Authority September 2015 45 Quarterly Consultation No. 10 CP15/28 jurisdiction. The following table sets out the principal differences between existing article 41 and the new article 39. SAD provisions Changes made by the SAAD One member of the audit committee must be independent (art 41(1)). A majority of the members of the audit committee must be independent (art 39(1)). Committee members as a whole must have competence relevant26 to the sector in which the audited entity is operating (art 39(1)). Chairman of the audit committee must be independent of the audited entity and appointed by committee members or by the supervisory body of the audited entity (art 39(1)) Duties of the audit committee are (art 41(2)) to monitor: • the financial reporting process • the effectiveness of the company’s internal control, internal audit (where applicable) and risk management systems • the statutory audit of the annual and consolidated accounts • review and monitor the independence of the statutory auditor, especially any additional services provided to the audited entity Further responsibilities added (art 39(6)) for the audit committee to: • inform the administrative or supervisory body of the audited entity of the outcome of the statutory audit and explain how it contributed to the integrity of financial reporting and the committee’s role in the process • submit recommendations or proposals to ensure the integrity of the financial reporting process • while monitoring the audit, take into account any findings and conclusions by the competent authority resulting from inspections of previous audits Member States had the option to provide an exemption from the requirement to have an audit committee (art 41(6)(b)) for certain collective investment undertakings as defined in art 1(2) of Directive 85/611/EEC Extends this exemption to alternative investment funds (AIFs) as defined in (art 4(1)(a)) of Directive 2011/61/EU (art 39(3)(b)) 8.22 In addition, the SAAD clarifies duties of the audit committee that already existed under the SAD as follows:26 • The audit committee must monitor the effectiveness of the undertaking’s internal quality control and risk management systems as well as, where applicable, the internal audit. Responsibilities of the audit committee to monitor the effectiveness of the undertaking’s internal quality control and risk management systems as well as, where applicable, the internal audit, need only cover those aspects relating to financial reporting and only in so far as would not breach the committee’s independence. • The audit committee must review and monitor the independence of the statutory auditor. However, this must be done in accordance with the enhanced requirements on auditor independence in the SAAD and the Regulation which, in particular, places certain further responsibilities on audit committees relating to non-audit services. 26 We consider competence relevant to the sector to be broader than knowledge of the sector. We do not intend to prescribe how this requirement may be interpreted.

46 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 • The audit committee must also now be responsible for the procedure for the selection of the statutory auditor and recommend the statutory auditor to be appointed in accordance with the Regulation. Proposed changes to the Handbook 8.23 Reflecting the changes introduced by the SAAD, we are proposing to make the following changes to DTR 7.1 and, as set out under ‘Member State options’, to DTR 1B.1.3R. We propose to amend DTR 7.1.1R and introduce a new rule, DTR 7.1.1AR. The effect of this would be to: • extend the independence requirement from at least one member to a majority of the members of the relevant body and include this requirement in new DTR 7.1.1AR • include in new DTR 7.1.1AR the requirement that at least one member of the relevant body must have competence in accounting and/or auditing (previously this requirement was contained in DTR 7.1.1R), and • require the members of the body as a whole to have competence relevant to the sector in which the issuer is operating 8.24 Further, we propose to insert a new rule, DTR 7.1.2AR, to require that the chairman of the relevant body is independent and must be appointed by the members of the relevant body or by the administrative or supervisory body of the issuer. 8.25 We also propose to amend DTR 7.1.3R, which sets out the responsibilities of the relevant body, to reflect the amended scope of responsibilities, as set out above. 8.26 Finally, we propose to delete DTR 7.1.4R which requires a proposal to appoint a statutory auditor to be based on a recommendation by the relevant body. This requirement is now included in the list of responsibilities of the audit committee by the SAAD (and so should now be reflected in the revised DTR 7.1.3R) and in art 16(5) of the Regulation. Q8.2: Do you agree with or have any comments on our proposed approach to the implementation of the SAAD as set out above? Changes that we do not propose to reflect in our Handbook 8.27 The SAAD also makes changes to article 45 of the SAD which sets out requirements for the registration and oversight of the auditors of third-country issuers. The most significant change is to raise the denomination threshold for defining an issuer of debt securities of large denomination, above which the issuer is outside the scope of the EU regulatory requirement to use a registered third-country auditor. This brings the definition of a large denomination debt securities issuer into line with similar ones in the PD and the Transparency Directive 2004/109/ EC (TD) which have been used in exemptions for large denomination debt securities issuers. DTR 4.4.2R was amended in 2012 to implement changes made to the TD by the PD Amending Directive 2010/73/EU so our rules already reflect the revised TD threshold. 8.28 BIS is proposing to amend regulation 43 of the Statutory Auditors and Third Country Auditors Regulations 2007 (SI 2007/3494) to reflect the revised denomination threshold for a large debt securities issuer. Regulation 43 of the 2007 Regulations sets out an exclusion from the definition of ‘UK-traded non-EEA company’ set out in section 1241 of the Companies Act 2006 for large debt securities issuers. Amending regulation 43 to reflect the revised denomination threshold for large denomination debt securities issuers will mean that more issuers will fall within the definition of ‘UK-traded non-EEA company’. DTR 4.1.7R(4) includes requirements in

Financial Conduct Authority September 2015 47 Quarterly Consultation No. 10 CP15/28 respect of the audit of annual financial statements for issuers which are a ‘UK-traded non-EEA company’ within the meaning of section 1241 of the Companies Act 2006. Although these amendments do not require us to make changes to the DTRs, the scope of issuers caught by DTR 4.1.7R(4) may alter as a result. 8.29 We have liaised with BIS and it is our understanding that they intend to amend the application of Part 42 of the Companies Act 2006 so that further entities may be brought into the statutory requirement for their auditors to be regulated under that Part. If those entities have transferable securities admitted to trading on a regulated market then DTR 7.1 will also apply and, subject to any applicable exemptions, the entities will be required to appoint an audit committee or have a body performing equivalent functions. Again we would wish to alert stakeholders to the possibility that the scope of the issuers to which DTR 7.1 applies may be extended as a result of BIS’s proposals. Depending on the changes proposed by BIS we may need to make further changes to DTR in due course. 8.30 The SAAD now requires the audit committee to be composed of non-executive members of the administrative body, members of the supervisory body and/or members appointed by the general meeting of the shareholders of the audited entity (or, for those entities without shareholders, by an equivalent body). This choice was previously expressed as a Member State option in the SAD although when implementing the SAD into our rules we left the choice of composition of that body to issuers and their shareholders or members. Our rules also reflected the Member State option in article 41(5) of the SAD to allow an issuer not to have an audit committee if it had a body performing equivalent functions. This Member State option is retained in new article 39(4) as set out in the SAAD. 8.31 We have no evidence that this decision not to implement specific rules on audit committee composition has disadvantaged issuers or led to problems. We believe that our original policy choice reflects the options now offered by the SAAD. Therefore, we do not intend to amend our DTR in this area. Q8.3: Do you agree with our decision not to include specific requirements on audit committee composition in DTR? 8.32 Given our previous decision to implement the broad exemption in article 41(5) of the SAD (now in new article 39(4)), that an issuer need not have an audit committee if it has a body performing equivalent functions, we do not now intend to adopt the narrower Member State option contained in the first paragraph of new article 39(2) set out in the SAAD for PIEs that meet the criteria in the PD to be recognised as small or medium-sized entities or companies with reduced market capitalisation. These PIEs do not need to have a separate audit committee if the administrative or supervisory body as a whole performs that function (which is an extension of an existing Member State option in article 41(1) of the SAD which we also did not take). By the same logic, we do not intend to take the new Member State option in the second paragraph of new article 39(2) set out in the SAAD which exempts an issuer from having a separate audit committee if the administrative or supervisory body performs the functions of the audit committee for the purpose of the obligations in the SAD (as amended by the SAAD) and in the Regulation. Q8.4: Do you agree that it is unnecessary to adopt the two Member State options contained in new article 39(2) set out in the SAAD because the wider exemption we have already adopted caters for the specific situations indicated?

48 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Member State options 8.33 The changes introduced in the SAAD also include some new Member State options and extend some existing options. Our approach to those options is as follows. 8.34 We propose not to adopt an option to require annual election by shareholders of the audit committee chairman. Making annual election of the chairman obligatory through DTR could be a significant burden for some small businesses. Q8.5: Do you agree that we should not require annual election of chairmen of audit committees by shareholders? 8.35 We intend to adopt a revised option to provide an exemption for alternative investment funds (AIFs), as well as for undertakings for collective investment in transferable securities (UCITS) that are PIEs, from having an audit committee. As a result, we propose to amend DTR 1B.1.3R to exempt AIFs and UCITS from the requirement to appoint an audit committee. 8.36 The exemption for collective investment undertakings in article 41(6)(b) of the SAD was not included as an explicit exemption in DTR when the SAD was transposed, on the basis that there was no specific requirement in the Companies Act 2006 for auditors appointed by collective investment undertakings to be regulated under Part 42 of that Act. However, some, but not all, UCITS are incorporated and so fall within the Companies Act requirements to appoint a statutory auditor who would be regulated in this way. As a result, not all UCITS are subject to the same requirements. The SAAD expands the exemption for UCITS to AIFs on the basis that UCITS and AIFs (as well as their management companies) operate in a strictly defined regulatory environment and are subject to specific governance mechanisms. BIS are now proposing to include a specific requirement for auditors of UCITS and AIFs to be regulated under the Companies Act as part of the SAAD implementation. Consequently, we propose to include an explicit exemption from the requirement to have an audit committee for both UCITS and AIFs in DTR 1B.13R to preserve a level playing field, as per our original policy intention. Q8.6: Do you agree with our proposal to exempt AIFs and UCITS from the requirement to have an audit committee? 8.37 We propose not to adopt a new Member State option to exempt all the members of an audit committee and/or the chairman of the committee from the independence requirements where all members of the committee are also members of the administrative or supervisory body of the audited entity. 8.38 The SAAD requires a majority of the members of the committee and the chairman to be independent, whereas the SAD requirement has been for at least one member of the committee to be independent. In line with the policy decision taken on implementation of the SAD (CP07/2427 and PS08/628), we do not propose to change our rules or to implement the Member State exemption. We do not intend to take the Member State option to exempt all members of the audit committee and/or the chairman from being independent as it is our view that taking this option would be a retrograde step compared to current UK best practice. Q8.7: Do you agree with our proposal not to exempt the chairman and members of the audit committee from the revised independence requirements set out in the Statutory Audit Amending Directive? 27 CP07/24 Implementation of the 8 Company Law Directive (December 2007) http://www.fsa.gov.uk/pubs/cp/cp07_24.pdf 28 PS08/6 Implementation of the 8th Company Law Directive: Feedback on CP07/24 and final rules (June 2008) http://www.fsa.gov.uk/pubs/policy/ps08_06.pdf

Financial Conduct Authority September 2015 49 Quarterly Consultation No. 10 CP15/28 Timing and transition 8.39 The provisions of the SAAD must be implemented in the UK by 17 June 2016. Subject to this consultation, we anticipate that our proposed new rules will come into effect in June 2016 for financial reporting periods beginning on or after 17 June 2016. 8.40 To assist issuers to prepare to meet the new requirements, we propose that the changes to DTR 1B and DTR 7.1 to implement the provisions of the SAAD in respect of audit committees would apply to financial years starting after the date of application of the new EU regulatory framework, i.e. for financial years beginning on or after 17 June 2016. This means that issuers with a financial year starting on or after 17 June 2016 will be subject to the new DTR requirements, whereas issuers with financial years beginning before 17 June 2016 will be subject to the existing DTRs until the end of that financial year. Accordingly, we have proposed transitional provisions in DTR. Q8.8: Do you agree with our proposed transitional provisions in DTR? Q8.9: Do you have any comments you would like to make on other items in this section on audit committees? Accounting Directive transposition – DTR changes 8.41 BIS implemented the Accounting Directive 2013/34/EU (AD) earlier this year through the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980) which came into force on 6 April 2015. These regulations amend the law in the UK relating to the preparation of the annual accounts of companies (and partnerships all of whose members have limited liability) and related matters. The amendments made by the new regulations apply to financial years beginning on or after 1 January 2016.  8.42 The AD repeals and replaces the existing Fourth Company Law Directive 78/660/EEC (FCLD) and Seventh Company Law Directive 83/349/EEC (SCLD) which are referenced in the FCA’s Disclosure Rules and Transparency Rules sourcebook (DTR). Consequently, some minor consequential changes are required to update DTR to align with the AD. The draft instrument text containing the proposed Handbook changes is provided in Appendix 8A 8.43 We propose to amend DTR 1B.1.4G to delete the reference to the Fourth Company Law Directive and the Seventh Company Law Directive and instead reference the Accounting Directive. Q8.10: Do you agree with the proposal to amend DTR 1B.1.4G? 8.44 DTR 4.1.11R currently reflects the requirements in article 46 of the FCLD concerning certain information which the management report published as part of the annual financial statements must give an indication of, including any important events that have occurred since the end of the financial year. Article 19 of the AD is now the correlating provision and replaces article 46 of the FCLD. Article 46(2) has been replaced by article 19(2) but differs in one respect; the requirement to give an indication of any important events that have occurred since the end of the financial year has been deleted from the AD. 8.45 This requirement has therefore also been deleted from the Transparency Directive 2004/109/EC (TD). Article 4(5) of the TD cross refers to the FCLD and states that a ‘management report shall

50 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 be drawn up in accordance with Article 46 of Directive 78/660/EEC’ and going forward this cross reference is automatically updated to article 19 of the AD by virtue of article 52 of the AD. 8.46 However, article 17(1)(q) of the AD requires ‘the nature and the financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account or balance sheet’ to be included in the notes to the accounts. Although this is a change from the previous requirement to include this information in the management report, it means that issuers within scope of the AD will continue to provide the current level of information. 8.47 By contrast, the TD does not make any similar provision, which means that TD issuers who are out of scope of the AD may not be required to disclose any material post-balance sheet events, either in the management report or in the notes to the accounts. This inconsistency of information provided to investors by different issuers could potentially be misleading. Therefore, we propose retaining DTR 4.1.11R(1) which sets out the previous TD requirement to disclose important post balance sheet events in the management report. Retaining this rule will ensure that all entities provide the same information to investors. We appreciate that issuers subject to both AD and TD requirements may still have to repeat the information disclosed in the notes to their accounts and in their management report but we consider there is a benefit to investors receiving information from all issuers. Q8.11: Do you agree with the proposal to retain DTR 4.1.11R(1) despite this requirement being removed from the TD? 8.48 Currently, DTR 7.2.10R refers to the SCLD requirement to report on the main features of the group’s internal control and risk management systems in relation to the process for preparing consolidated accounts. The AD, however, uses different wording and requires a report on the main features of the internal control and risk management systems in relation to the financial reporting process for the undertakings included in the consolidation, taken as a whole. Although there is a change in wording, we consider that the underlying requirement has not changed. Therefore, we propose changing the wording of DTR 7.2.10R to reflect the revised AD wording but would not expect any change to the current practice under DTR 7.2.10R. Q8.12: Do you agree with the proposal to amend DTR 7.2.10R and agree with our analysis that the substance of the requirement under the rule will not change following the amendment? 8.49 Article 36(2)(f) of the SCLD provided that an issuer who elects to include its corporate governance statement in a separate report must provide the information required by DTR 7.2.10R in that report. We have implemented this in DTR 7.2.11R. Although the explicit requirement has been omitted from the text in the AD, we consider that the underlying requirement remains unchanged. Consequently, we propose retaining DTR 7.2.11R and amending it to refer to DTR 7.2.9R(2) as well as DTR 7.2.9R(1). Q8.13: Do you agree with the proposal to retain DTR 7.2.11R and to amend it to refer also to DTR 7.2.9R(2)? 8.50 In addition, we propose some minor changes to DTR 7.2.2R, DTR 7.2.3R and DTR 7.2.9R to reflect the revised wording contained in the text of the AD. Q8.14: Do you agree with the minor changes we propose to DTR 7.2.2R, DTR 7.2.3R and DTR 7.2.9R?

Financial Conduct Authority September 2015 51 Quarterly Consultation No. 10 CP15/28 8.51 We also propose updating the notes in DTR 1B, DTR 4.2 and DTR 7.2 which refer to the FCLD and the SCLD to replace references to articles in the FCLD and the SCLD with references to the relevant articles in the AD. 8.52 We are of the view that no transitional provisions are required in the DTRs as a result of the proposed changes to reflect the replacement of the FCLD and the SCLD by the AD. Q8.15: Do you agree with our analysis that no transitional provisions are required as a result of the proposed changes to reflect the replacement of the FCLD and the SCLD by the AD? The FRC and its constituents (predecessor bodies) references in the Handbook and other minor changes to LR and DTR 8.53 We are also consulting on some proposed changes to the Listing Rules sourcebook (LR), Disclosure Rules and Transparency Rules sourcebook (DTR), General Prudential sourcebook (GENPRU) and the Supervision manual (SUP) to update a number of references in our Handbook that are out of date. The draft instrument text containing the proposed Handbook changes is provided in Appendix 8A. 8.54 In March 2012, the FRC and BIS consulted on proposals to update the FRC’s internal structure to align it more closely with the FRC’s two key roles of standard setting and oversight of UK accounting, auditing and actuarial practice. These proposals were subsequently implemented with the effect of abolishing the statutory bodies that previously constituted the FRC, in particular the Accounting Standards Board (ASB) and the Auditing Practices Board (APB). As a result, we are proposing to amend our Handbook to remove all references to these Boards, replacing them with references to the FRC. 8.55 We are proposing to update: • the references to the APB in DTR 4.2.9R and SUP 3.10.5BG • the references to the ASB in DTR 4.2.10R and GENPRU 1.3.4R • the reference to the relevant Auditing Practices Board Practice Note contained in GENPRU 2.2.103G to refer to relevant guidance issued by the FRC 8.56 Between November 2012 and March 2014, following earlier consultation, the FRC issued Financial Reporting Standards 100, 101, 102 and 103 which effectively repealed and replaced all previous accounting standards constituting UK Generally Accepted Accounting Practice (UK GAAP) for accounting periods beginning on or after 1 January 2015. 8.57 As a result of these changes we now propose to update our rules to remove all references to previous UK GAAP Financial Reporting Standards or Statements of Standard Accounting Practice issued by the ASB. Consequently, we are proposing to delete the reference to Statements of Standard Accounting Practice in GENPRU 1.3.4R. 8.58 In March 2015, following earlier consultation, the FRC issued Financial Reporting Standard 104 on interim financial reporting which replaced the previous pronouncement by the ASB on interim financial reporting, the Reporting Statement: Half-yearly financial reports.

52 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 8.59 We are therefore proposing to update the reference to pronouncements on interim reporting in DTR 4.2.10R(4)(b) to refer to Financial Reporting Standard 104: Interim Financial Reporting. 8.60 In 2013 the UK legislation giving effect to the requirement to maintain a list of third-country auditors for the purposes of the SAD was amended and updated. We consequently propose to update our Handbook reference in DTR 4.1.7R(4)(a) from regulation 34 of the Statutory Auditors and Third Country Audit Regulations 2007 (SI 2007/3494) to regulation 6 of the Statutory Auditors and Third Country Auditors Regulations 2013 (SI 2013/1672). 8.61 In 2012 the Second Company Law Directive 77/91/EEC was recast by Directive 2012/30/EU so we propose to update references in LR9.3.12R and DTR 4.1.11R(4) from the old directive to the new one. Q8.16: Do you agree with these proposed amendments to DTR 4.1.7R, DTR 4.1.11R, DTR 4.2.9R, DTR 4.2.10R, LR 9.3.12R, GENPRU 1.3.4R, GENPRU 2.2.103G and SUP 3.10.5BG? Prospectus Rules amendments pursuant to regulatory technical standards 8.62 In this section we are consulting on making some small amendments to the Prospectus Rules sourcebook (PR) in line with the draft regulatory technical standards (RTS) on the Prospectus Directive (PD) arising from the Omnibus II Directive (OD2), which were published by ESMA on 25 June 2015.29 8.63 The draft RTS are potentially subject to change and have not yet been adopted by the Commission. It is possible that the RTS may take effect as early as Autumn 2015. We are therefore consulting now on the basis of the draft RTS, so that we may be in a position to amend the PR, to ensure that they are compatible with the RTS provisions, at the time the RTS take effect. Should any changes be made to the draft RTS, we will consider what impact this may have on our proposals. Background to the draft RTS 8.64 The OD2 made changes to the PD. It required the European Securities and Markets Authority (ESMA) to submit, following public consultation, draft RTS to the Commission by 1 July 2015. 8.65 ESMA’s draft RTS cover: • approval of the prospectus • publication of the prospectus, and • advertisements 8.66 After its consultation, ESMA decided not to draft RTS on incorporation by reference, which had also been included in the OD2 mandate.30 29 Final Report Draft RTS on prospectus related issue under the Omnibus II Directive (ESMA/2015/1014; 25 June 2015) 30 Paragraph 57, ibid.

Financial Conduct Authority September 2015 53 Quarterly Consultation No. 10 CP15/28 8.67 The Commission are required to decide whether to endorse ESMA’s draft RTS within three months of receiving them. If endorsed, the final RTS would come into force 20 days after their appearance in the Official Journal of the European Union in the form of a Commission delegated regulation supplementing the PD. Reflecting the regulatory technical standards in PR 8.68 PR reproduces extracts from UK and EU legislation for the convenience of the reader. Such material appears in shaded text boxes accompanied by an icon – a Union Jack or an EU flag. When, in 2014, the Commission made its first set of PD regulatory technical standards (which arose from the Omnibus I Directive (2010/78/EU) and related to supplementary prospectuses) we reproduced extracts in PR 3.4.4 EU. This was done without consultation, as no changes to the FCA’s substantive rules in the PR were made. 8.69 Similarly, we will be including, for the convenience of the reader, extracts of the RTS, arising from the OD2, in our PR. These will be made in PR 3.1 (for approval of the prospectus), PR 3.2 (for publication of the prospectus) and PR 3.3 (for advertisements). The draft RTS also delete a number of articles from the PD Regulation. We will also delete these from the PR (where they are currently reproduced). For completeness, we have included these changes in the draft instrument text (see Appendix 8A). However, we are not consulting on these changes as the affected text only reproduces, for the convenience of the reader, directly applicable EU legislation. 8.70 We do need to consult, however, on some consequential changes to the PR because the draft RTS address areas where the PR currently makes provisions. 8.71 Our proposed changes to the PR on which we are consulting are as follows: • Amend the defined term ‘Prospectus RTS Regulation’, to reflect the arrival of a second RTS regulation, and update references to this term in PR 1.1.6G, PR 1.1.7G and PR 1.1.8G. • Amend PR 2.2.9R(1)(b) to make a more general reference to PR 3.2, which will contain the RTS’s requirements regarding making final terms available to the public. • Amend PR 2.5.3R to reflect article 2(2)(b) of the draft RTS. • Delete PR 3.1.1R as the requirements are generally dealt with in article 2 of the draft RTS. • Add PR 3.1.1AR. Due to the proposed deletion of PR 3.1.1R(3), which exercises a Member State option, we need to retain this provision. To provide clarity over the nature and EU origins of this provision, we have added a non-legislative ‘note’ which cross refers to articles 25(4) and 26(3) of the PD Regulation. • Delete PR 3.1.2G. Instead, we have added a non-legislative note under PR 3.1.3R(1)(b) to highlight the location of the relevant fees provisions. • Amend PR 3.1.3R, primarily to take into account the provisions in article 2 of the draft RTS (in relation to the draft prospectus and additional information) and article 4 of the draft RTS (in relation to final form documents). Applicants currently submit a range of forms to the UKLA alongside the first draft of the prospectus and we propose including these forms within the scope of PR 3.1.3R. The current versions of these forms are available on the UKLA section of the FCA website and appear in Appendix 8C.

54 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 • Delete PR 3.1.4R and PR 3.1.5R as a result of the draft RTS, which specifically address the prospectus review process. • Delete PR 3.1.6G as a result of article 3.2(c) of the draft RTS which addresses passporting requests. • Delete PR 3.1.8G as a result of article 4 of the draft RTS. • Add PR 3.1.17R to reflect that Regulation 7 of the Financial Services and Markets Act 2000 (Service of Notice Regulations) 2001 (SI 2001/1420) will need to be disapplied, in acknowledgement that article 2 of the draft RTS mandates the electronic submission of prospectuses to the FCA. • Amend PR 3.2.7G as a result of article 10 of the draft RTS, which addresses how prospectuses are made available and where they can be obtained. 8.72 The above changes appear in the attached draft instrument in Appendix 8A. 8.73 We have reduced the consultation period from the normal two months to one month, so that we are best positioned to amend the PR in Autumn 2015, should this be required. Q8.17: Do you agree with our proposals to make these miscellaneous changes to the Handbook? Cost benefit analysis (CBA) 8.74 Section 138I of FSMA requires us to publish a cost benefit analysis (CBA) when proposing draft rules unless we consider the proposals will not give rise to any increase in costs or the increase in costs will be of minimal significance. 8.75 The rule changes on which we are consulting seek to ensure that: • the tension between LR provisions on cancellation of premium listing following a takeover offer and the procedures that apply in respect of a decision by a premium listed issuer following a vote by shareholders is reduced or resolved • the proposed changes to DTR implement relevant EU directive requirements in a manner that avoids disproportionate burdens on issuers • the other proposed changes to LR, DTR, GENPRU and SUP update references as a result of statutory changes or changes to EU directives, and • PR is compatible with, and its relevant provisions are not more onerous than, the draft RTS provisions 8.76 We believe that our proposals regarding cancellation of premium listing in the context of takeover offers would increase costs only for affected listed companies in circumstances where, and to the extent that, independent and unconflicted shareholders judge that listing of the shares of those companies continues to be of commensurate or greater value.

Financial Conduct Authority September 2015 55 Quarterly Consultation No. 10 CP15/28 8.77 The proposal to maintain the DTR 4.1.11R(1) requirement will not impose any new costs on issuers. The information required has previously been provided under this rule and systems are already in place to identify and prepare it. Removing the requirement might result in a marginal decrease in costs to issuers who are no longer required to produce this information under the TD. However, the benefit of maintaining this rule is to retain transparency and consistency of information provided to investors. 8.78 We do not believe our proposals regarding other elements of EU directive transposition to LR and DTR and other affected sourcebooks will add significant costs. In particular, for the proposed changes on audit committees, we have sought to ensure that in deciding whether to exercise member state options we have balanced cost effectiveness against the flexibility already present in the UK regime. 8.79 We do not consider that any of the miscellaneous changes relating to the designation of the FRC will have any impact on any of the firms we regulate as they do not impose any extra compliance requirements or costs. 8.80 Our proposed PR changes will not add significant costs to the prospectus approval process. Compatibility with the FCA’s general duties 8.81 When consulting on new rules, we are required by section 138I of FSMA to include an explanation of why we believe the proposed rules are compatible with our strategic objective, advance one or more of our operational objectives and have regard to the regulatory principles in section 3B of FSMA. We are also required by section 138K(2) of FSMA to state our opinion on whether the proposed rules will have a significantly different impact on mutual societies as opposed to other authorised persons. The FCA’s objectives and regulatory principles 8.82 The proposals set out in this chapter of the Consultation Paper are compatible with our strategic objective of ensuring that the relevant markets function well and are primarily intended to advance our operational objectives, as set out below. • Enhancing market integrity – by protecting and enhancing the integrity of the UK financial system, through ensuring that the Listing Rules (LR), the Disclosure Rules and Transparency Rules (DTR), the corporate governance rules, the Prospectus Rules (PR), General Prudential sourcebook (GENPRU) and Supervision manual (SUP) remain proportionate and effective. • Delivering consumer protection – maintaining and securing an appropriate degree of protection for consumers, including by ensuring that an appropriate level of information continues to be made available to investors. 8.83 In preparing our proposals, we have considered the regulatory principles in section 3B of FSMA. In particular: The desirability of exercising our functions in a way that recognises differences in the nature and objectives of businesses carried on by different persons We do not believe that our proposals discriminate against any particular business model or approach.

56 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 The principle that we should exercise our functions as transparently as possible We believe that by consulting on our proposals we are acting in accordance with this principle. The need to use our resources in the most efficient and economic way The proposals in this chapter of the Consultation Paper will have minimal impact on our resources. The principle that a burden or restriction should be proportionate to the benefits We believe the proposals in this chapter of the Consultation Paper are proportionate to the benefits. The desirability of publishing information relating to persons We believe that our proposals do not undermine this principle. Expected effect on mutual societies 8.84 Section 138K of FSMA requires us to state whether, in our opinion, our proposed rules have a significantly different impact on authorised persons who are mutual societies, in comparison with other authorised persons. 8.85 The relevant LR, DTR, PR, and SUP provisions that we propose to delete, amend or include, apply equally to relevant issuers, offerors, persons requesting admission to trading on a regulated market, auditors and authorised persons, regardless of whether they are an authorised person which is a mutual society or another authorised person. The amendments to GENPRU do not apply to mutual societies. 8.86 We believe that the impact of our proposals, in terms of their relevance to mutuals, will not significantly differ depending on whether the person to whom the rule applies is an authorised person which is a mutual society or another authorised person. Equality and diversity 8.87 We have considered the equality and diversity issues that may arise from the proposals in this chapter of the CP. We do not consider that these proposals raise any concerns. Moreover, we do not consider that the proposals adversely impact any of the groups with protected characteristics, i.e. age, disability, sex, pregnancy and maternity, race, religion and belief, marriage/civil partnership, sexual orientation and transgender. 8.88 We will continue to consider the equality and diversity implications of the proposals during the consultation period, and will revisit them when publishing the final rules. In the interim, we welcome any feedback to this consultation.

Financial Conduct Authority September 2015 57 Quarterly Consultation No. 10 CP15/28 9. Technical amendments to GEN Introduction 9.1 In CP12/2431, the FSA consulted on a number of rule changes to help users understand how provisions that appear in both the FCA and PRA Handbooks will apply and how they should be interpreted. The final rules were published in FSA PS13/532. 9.2 The PRA is in the process of deleting its Handbook and replacing it with a Rulebook. As a result, some technical amendments need to be made to ensure that the FCA’s Handbook continues to work effectively. We are therefore consulting on the following: • an amendment to GEN to help ensure that cross references continue to work, including cross references to PRA provisions that are now deleted by the PRA • an amendment to GEN to help ensure that the provisions in the FCA’s Handbook continue to be within its regulatory scope Summary of proposals Cross references to deleted PRA provisions 9.3 In FSA CP12/24 the FSA proposed a number of new provisions designed to ensure that the new regulators’ Handbooks continued to work effectively. We confirmed that we would proceed with that approach in FSA PS13/5. 9.4 Our final rules included a new provision (GEN 2.2.13AR) to ensure that cross references continued to work where a reference might need to be made to the PRA’s Rulebook. As the PRA continues to construct its new Rulebook and deletes provisions from its Handbook, it is necessary to amend the wording of GEN 2.2.31AR to reflect the fact that the FCA Handbook may include cross references to a provision made by the PRA which the PRA has now deleted. Where this happens, the provision being referred to will be treated as having been made by the FCA (but only to the extent needed to ensure that the cross reference works). Q9.1: Do you have any comments on our amendment to GEN 2.2.13AR? 31 FSA CP12/24 Regulatory reform: PRA and FCA regimes relating to aspects of authorisation and supervision (September 2012) http://fca.org.uk/your-fca/documents/consultation-papers/fsa-cp1224 32 PS15/9 The new FCA Handbook – feedback on Regulatory Reform proposals relating to the FCA Handbook, including final Handbook rules (March 2013) http://fca.org.uk/your-fca/documents/policy-statements/fsa-ps-13-05

58 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Application of provisions made by both the FCA and the PRA 9.5 Our final rules in FSA PS13/5 included provisions (GEN 2.2.23R to GEN 2.2.25G) to ensure that provisions carried over by the FCA and PRA were within their respective regulatory scope. 9.6 Some provisions were adopted from the FSA’s former Handbook by both the PRA and the FCA. At adoption, these provisions appeared identically in each regulator’s Handbook. However, some elements of these identical provisions were only relevant to the PRA’s regulatory scope, and were therefore applied only by the PRA. Some other elements were only relevant to the FCA’s regulatory scope, and were applied by the FCA only. As a result, GEN 2 was amended to explain that these provisions must be interpreted by a firm as applying only to the extent that they are within each regulator’s powers. 9.7 We propose to amend GEN 2.2.23R to make it clear that it covers the scenario where the PRA has deleted Handbook provisions but those deleted provisions are still set out in the FCA’s Handbook. 9.8 GEN 2.2.25G sets out some examples of rules being interpreted as cut back by GEN 2.2.23R. One such example uses COMP 5.2.1R for illustrative purposes. The PRA has removed COMP from its Rulebook, so this example is being amended to avoid confusion for users. Q9.2: Do you have any comments on our amendment to GEN 2.2.23R and GEN 2.2.25G? Cost benefit analysis 9.9 Section 138l of the Financial Services and Markets Act 2000 (FSMA) requires us, when we are making rules, to perform a cost benefit analysis of our proposed requirements and to publish the result, unless we consider the proposal will not give rise to any cost or to an increase in cost of minimal significance. 9.10 We are consulting on minor, technical amendments to the FCA’s Handbook as a result of the PRA’s deletion of its Handbook. We consider that our proposals will not give rise to any increased costs or, if there are any additional costs, that they would be of minimal significance. Accordingly, we are providing no cost benefit analysis in relation to our proposals. Compatibility statement 9.11 Section 138I(2)(d) of FSMA requires us to explain why we believe our proposed rules are compatible with our strategic objective, advance one or more of our operational objectives, and have regard to the regulatory principles in section 3B of FSMA. In addition, section 138K(2) of FSMA requires us to state whether the proposed rules will have a significantly different impact on mutual societies as opposed to other authorised persons. 9.12 We believe that the proposals in this chapter are compatible with our strategic objective, and advance our operational objectives, particularly our consumer protection and integrity objectives, because they help ensure that the FCA’s Handbook continues to be effective. The proposals demonstrate regard to the regulatory principle of the need to use the FCA’s resources in the most efficient and economic way in particular.

Financial Conduct Authority September 2015 59 Quarterly Consultation No. 10 CP15/28 9.13 The proposed rules will not have a significantly different impact on mutual societies as opposed to other authorised persons. Equality and diversity 9.14 We have considered the equality and diversity issues that may arise from the proposals and do not consider that these proposals raise any concerns. We do not consider that these proposals adversely impact any of the groups with protected characteristics, i.e. age, disability, gender, pregnancy and maternity, race, religion and belief, sexual orientation and transgender. 9.15 We will continue to consider the equality and diversity implications of the proposals during the consultation period, and will revisit them when publishing the final rules. In the interim, we welcome any input to this consultation on such matters.

60 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Appendix 1 List of questions Q2.1: Do you agree that consumers who have purchased an offshore life insurance bond should have access to the Financial Ombudsman Service and the protection of the COBS suitability rules when receiving advice or a discretionary investment management service in relation to assets within the bond? If not, please give your reasons. Q2.2: Do you have any comments on our proposed changes to COBS and DISP relating to offshore life insurance bonds? Q2.3: Do you agree that any additional costs for firms as a result of giving consumers with offshore life insurance bonds access to the Financial Ombudsman Service and the protection of the COBS suitability rules are likely to be small? If not, please give your reasons and details of estimated costs. Q3.1: Do you agree with our proposed approach to knowledge and competency for incoming passporting firms? Q3.2: Do you have any comments on the proposed new passporting forms? Q3.3: Do you have any comments on the proposed glossary change to reflect the treatment of equitable mortgage bridging loans? Q3.4: Do you have any comments on the proposed change to the definition of ‘credit-related regulated activity’ to include advising on MCD lending not secured on the home? Q3.5: Do you have any comments on the proposal not to confer cancellation rights for an MCD loan not secured on the home which is a distance contract? Q3.6: Do you have any comments on the proposed changes to PERG and CONC to reflect the treatment of investment property loan brokers and introducers under the RAO?

Financial Conduct Authority September 2015 61 Quarterly Consultation No. 10 CP15/28 Q3.7: Do you have any comments on the proposed amendments to CONC to reflect the treatment of residential renovation agreements under the MCD? Q3.8: Do you have any comments on the proposed changes to MCOB 5 Annex 1R? Q3.9: Do you have any comments on the proposed amendment to MCOB 7.6? Q4.1: Do you know of any reason why this qualification should not be added and/or amended on our appropriate qualifications? Q5.1: Do you have any comments on our proposed amendments to the guidance on the triggers for establishing a section 404 scheme? Q5.2: Do you have any comments on the proposed changes to the guidance relating to the role of the ombudsman service? Q5.3: Do you have any comments on our proposed guidance regarding our use of consumer redress schemes under section 404F(7)? Q5.4: Do you have any comments on the reference to the new concurrency duty or on the proposed changes to the guidance to reflect the fact that consumer redress schemes may be made in relation to electronic money issuers? Q5.5: Do you agree with our proposal to incorporate the guidance on consumer redress schemes into CONRED? Q5.6: Do you have any comments about any of the minor or editorial changes made to the guidance? Q6.1: Do you agree with our proposals to amend the consumer credit guidance notes? Q6.2: Do you agree with our proposal to amend Question 5 of CCR007? Q6.3: Do you agree with our proposals to amend RMA-C? Q6.4: Do you agree with our proposals to amend the mortgage second charge lending reporting forms? Q6.5: Do you agree with our proposals to amend the Product Sales Data item guidance notes?

62 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Q6.6: Do you agree with our proposal to amend note 3 of SUP 16.12.18B? Q6.7: Do you agree with our proposal to clarify the recovery and resolution plan submission method? Q6.8: Do you agree with our proposal to include a firm’s GABRIEL system principle user email address in the standing data items? Q6.9: Do you have any questions or comments about our cost benefit analysis? Q8.1: Do you agree that deletion of LR 5.2.11DR, together with consequential amendments to LR 5.2.11AR and LR 5.2.11CR, would be the most appropriate way to resolve the disparity in the approaches to cancellation and maintain investor protection? Q8.2: Do you agree with or have any comments on our proposed approach to the implementation of the SAAD as set out above? Q8.3: Do you agree with our decision not to include specific requirements on audit committee composition in DTR? Q8.4: Do you agree that it is unnecessary to adopt the two Member State options contained in new article 39(2) set out in the SAAD because the wider exemption we have already adopted caters for the specific situations indicated? Q8.5: Do you agree that we should not require annual election of chairmen of audit committees by shareholders? Q8.6: Do you agree with our proposal to exempt AIFs and UCITS from the requirement to have an audit committee? Q8.7: Do you agree with our proposal not to exempt the chairman and members of the audit committee from the revised independence requirements set out in the Statutory Audit Amending Directive? Q8.8: Do you agree with our proposed transitional provisions in DTR? Q8.9: Do you have any comments you would like to make on other items in this section on audit committees? Q8.10: Do you agree with the proposal to amend DTR 1B.1.4G?

Financial Conduct Authority September 2015 63 Quarterly Consultation No. 10 CP15/28 Q8.11: Do you agree with the proposal to retain DTR 4.1.11R(1) despite this requirement being removed from the TD? Q8.12: Do you agree with the proposal to amend DTR 7.2.10R and agree with our analysis that the substance of the requirement under the rule will not change following the amendment? Q8.13: Do you agree with the proposal to retain DTR 7.2.11R and to amend it to refer also to DTR 7.2.9R(2)? Q8.14: Do you agree with the minor changes we propose to DTR 7.2.2R, DTR 7.2.3R and DTR 7.2.9R? Q8.15: Do you agree with our analysis that no transitional provisions are required as a result of the proposed changes to reflect the replacement of the FCLD and the SCLD by the AD? Q8.16: Do you agree with these proposed amendments to DTR 4.1.7R, DTR 4.1.11R, DTR 4.2.9R, DTR 4.2.10R, LR 9.3.12R, GENPRU 1.3.4R, GENPRU 2.2.103G and SUP 3.10.5BG? Q8.17: Do you agree with our proposals to make these miscellaneous changes to the Handbook? Q9.1: Do you have any comments on our amendment to GEN 2.2.13AR? Q9.2: Do you have any comments on our amendment to GEN 2.2.23R and GEN 2.2.25G?

64 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Appendix 2 Offshore bonds instrument

Appendix 2 OFFSHORE BONDS INSTRUMENT 2016 Powers exercised by the Financial Ombudsman Service Limited A. The Financial Ombudsman Service Limited makes the rules, and fixes and varies the standard terms for Voluntary Jurisdiction participants relating to the Voluntary Jurisdiction as set out in Annexes A and C of this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”): (1) section 227 (Voluntary jurisdiction); (2) paragraph 18 (Terms of reference to the scheme) of Schedule 17; and (3) paragraph 22 (Consultation) of Schedule 17. B. The making of voluntary jurisdiction rules and the fixing and variation of the standard terms in Annexes A and C by the Financial Ombudsman Service Limited is subject to the approval of the Financial Conduct Authority. Powers exercised by the Financial Conduct Authority C. The Financial Conduct Authority makes this instrument in the exercise of the powers and related provisions in or under: (1) the following sections of the Act: (a) section 137A (The FCA’s general rules); (b) section 137T (General supplementary powers); (c) section 139A (Power of the FCA to give guidance); and (d) section 226 (Compulsory Jurisdiction); and (2) the other powers and related provisions listed in Schedule 4 (Powers exercised) to the General Provisions of the Handbook. D. The rule-making powers listed above are specified for the purpose of section 138G (Rule-making instruments) of the Act. E. The Financial Conduct Authority approves the voluntary jurisdiction rules made, and the standard terms fixed and varied, by the Financial Ombudsman Service Limited. Commencement F. This instrument comes into force on [date]. Amendments to the Handbook G. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes to this instrument listed in column (2) below:

Appendix 2 Page 2 of 6 (1) (2) Glossary of definitions Annex A Conduct of Business sourcebook (COBS) Annex B Dispute Resolution: Complaints sourcebook (DISP) Annex C Citation H. This instrument may be cited as the Offshore Bonds Instrument 2016. By order of the Board of the Financial Ombudsman Service Limited [date] By order of the Board of the Financial Conduct Authority [date]

Appendix 2 Page 3 of 6 Annex A Amendments to the Glossary of definitions In this Annex, all text is new and is not underlined. Insert the following new definition in the appropriate alphabetical position. relevant offshore bond a contract of insurance which has the following features: (a) the contract is carried out by an insurance undertaking that does not carry on its activities, or offer to do so, from a permanent place of business maintained by it in the United Kingdom; (b) the contract provides exposure to the performance of one or more assets which are not owned (legally or beneficially) by the policyholder; (c) the insurance undertaking that carries out the contract is a client of a firm at least for the purposes of that firm advising on investments or managing investments, or both; and (d) that firm is instructed by the insurance undertaking to engage directly with the policyholder in relation to the provision of that firm’s service.

Appendix 2 Page 4 of 6 Annex B Amendments to the Conduct of Business sourcebook (COBS) In this Annex, underlining indicates new text and strike through indicates deleted text, unless stated otherwise. Insert the following new section after COBS 18.11. This text is not underlined. 18.12 Offshore bonds Application 18.12.1 R This section applies to a firm with respect to a service provided to an insurance undertaking where: (1) the service comprises at least advising on investments or managing investments, or both; (2) the firm is aware that the service is provided to the insurance undertaking in relation to a relevant offshore bond; and (3) the firm is instructed by the insurance undertaking to engage directly with the policyholder in relation to the provision of the firm’s service. Disclosure of complaints process 18.12.2 R The firm must disclose: (1) the process by which the policyholder of the relevant offshore bond can complain to the firm; and (2) the circumstances in which the policyholder of the relevant offshore bond can refer the matter to the Financial Ombudsman Service; to the policyholder of the relevant offshore bond in writing, in good time before the provision of the service to which this section applies. Modification of suitability rules 18.12.3 R The firm must apply the suitability rules in COBS 9 as if the policyholder of the relevant offshore bond were its client. 18.12.4 G The effect of COBS 18.12.3R is that the firm must ensure that any personal recommendation or decision to trade is suitable for the policyholder of the relevant offshore bond, rather than for the provider of the relevant offshore bond, and the remainder of COBS 9 must be applied accordingly. …

Appendix 2 Page 5 of 6 Amend the following text as shown. TP 2 Other Transitional Provisions (1) (2) (3) (4) (5) (6) Material to which the transitional provision applies Transitional provision Transitional provision: dates in force Handbook provisions: coming into force … 2.8E … … … … … 2.8EA COBS 18.12.2R R A firm is not required to comply with COBS 18.12.2R. Until [date six months after date in force] [date] …

Appendix 2 Page 6 of 6 Annex C Amendments to the Dispute Resolution: Complaints sourcebook (DISP) In this Annex, underlining indicates new text. 2.7.6 R To be an eligible complainant a person must also have a complaint which arises from matters relevant to one or more of the following relationships with the respondent: … (15) the complainant is either a borrower or a lender under a P2P agreement and the respondent is the operator of an electronic system in relation to lending; (16) the complainant is the policyholder of a relevant offshore bond in relation to which the respondent provides the services of advising on investments, managing investments, or both, and any services provided in connection with them but only to the extent that: (a) the respondent engages directly with the policyholder; or (b) the respondent is instructed by the insurance undertaking to engage directly with the policyholder but fails to do so.

Financial Conduct Authority September 2015 65 Quarterly Consultation No. 10 CP15/28 Appendix 3 Mortgage Credit Directive: Minor changes to our rules and guidance

Appendix 3 MORTGAGE CREDIT DIRECTIVE (AMENDMENT NO 2) INSTRUMENT 2015 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (‘the Act’): (1) section 137A (The FCA’s general rules); (2) section 137T (General supplementary powers); and (3) section 139A (Power of the FCA to give guidance). B. The rule-making powers listed above are specified for the purpose of section 138G (Rule-making instruments) of the Act. Commencement C. This instrument comes into force on 21 March 2016 immediately after the Mortgage Credit Directive Instrument 2015 comes fully into force. Amendments to the FCA Handbook D. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes to this instrument listed in column (2) below: (1) (2) Glossary of definitions Annex A Training and Competence sourcebook (TC) Annex B Mortgage and Home Finance: Conduct of Business sourcebook (MCOB) Annex C Supervision manual (SUP) Annex D Consumer Credit sourcebook (CONC) Annex E Amendments to material outside the Handbook E. The Perimeter Guidance manual (PERG) is amended in accordance with Annex F to this instrument. Notes F. In the Annexes to this instrument, the “notes” (indicated by “Note:”) are included for the convenience of readers but do not form part of the legislative text.

Appendix 3 Page 2 of 22 Citation G. This instrument may be cited as the Mortgage Credit Directive (Amendment No 2) Instrument 2015. By order of the Board of the Financial Conduct Authority [date]

Appendix 3 Page 3 of 22 Annex A Amendments to the Glossary of definitions In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. Insert the following new definition in the appropriate alphabetical position. This text is not underlined. residential renovation agreement an unsecured credit agreement the purpose of which is the renovation of residential property, as described in paragraph 2a of article 2 of the Consumer Credit Directive. Amend the following definitions as shown. credit-related regulated activity (1) (except in FEES) (in accordance with section 22 of the Act (the classes of activity and categories of investments)) any of the following activities specified in Part 2 or 3A of the Regulated Activities Order (Specified Activities): … (ga) advising on regulated credit agreements for the acquisition of land (article 53DA); … (2) (in FEES) (in accordance with section 22 of the Act (the classes of activity and categories of investments)) any of the following activities specified in Part 2 or 3A of the Regulated Activities Order (Specified Activities): (a) the activities in (1)(a) - (m); and (b) advising on regulated credit agreements for the acquisition of land (article 53DA); which is carried on by way of business and relates to a specified investment applicable to that activity or, in the case of (j) and (k) listed in (1), relates to information about a person’s financial standing. [deleted] customer … (5) (in relation to a credit-related regulated activity, other than in relation to an MCD credit agreement) an individual who enters, may enter or has entered into a credit agreement or a consumer hire agreement; and:

Appendix 3 Page 4 of 22 … regulated mortgage contract (a) (in relation to a contract) a contract which: … (ii) is not a home purchase plan, a limited payment second charge bridging loan, a second charge business loan, an investment property loan, an exempt consumer buy-to-let mortgage contract, an exempt equitable mortgage bridging loan or a limited interest second charge credit union loan within the meaning of article 61A(1) or (2) of the Regulated Activities Order.

Appendix 3 Page 5 of 22 Annex B Amendments to the Training and Competence sourcebook (TC) In this Annex, underlining indicates new text and striking through indicates deleted text. 2.1 Assessing and maintaining competence … Knowledge and competence requirements before starting MCD credit agreement activities … 2.1.5F G …Additionally, firms will need to meet the separate requirements in this sourcebook such as the assessment of competence in TC 2.1.1R any other requirements in this or other sourcebooks that are applicable, taking into account the employee’s role and responsibilities. . … App 2.1 Territorial scope subject to the limitation in TC Appendix 3 App 2.1.1 R UK domestic firm Incoming EEA firm Overseas firm (other than an incoming EEA firm) Regulated mortgage activity and reversion activity Mortgage activities and reversion activities numbers 20, 20A, 21, 21A, 21B, 22 and 23 in TC App 1.1.1R; and MCD credit agreement activities numbers 23A to 23E in TC App 1.1.1R TC applies if the customer is resident and located in the United Kingdom at the time the regulated mortgage activity or reversion activity activity is carried on; and TC also applies if the customer is resident and located in another EEA State (at the time that the activity is carried on) but only if the Same as for UK domestic firm except that: if the firm carries on the activity from an establishment maintained by the firm or its appointed representative in the United Kingdom and the customer is resident and located in another EEA State when the activity is carried on, TC does not apply; and Same as for UK domestic firm

Appendix 3 Page 6 of 22 activity is carried on from an establishment maintained by the firm or its appointed representative in the United Kingdom. [Note: article 9(3)(ii) of the MCD] if the firm carries on the activity from an establishment maintained by the firm in another EEA State (and the customer is resident and located in the United Kingdom when the activity is carried on), the following provisions of TC apply: TC 2.1.5A R; TC 2.1.5B R(2), (3), (5) and (6); TC 2.1.5C R; TC 2.1.5D G; TC 2.1.5E R; and TC 2.1.5F G. [Note: article 9(3) of the MCD] Any other activity in Appendix 1 … … [Note: article 9(3)(i) of the MCD] …

Appendix 3 Page 7 of 22 Annex C Amendments to the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB) In this Annex, underlining indicates new text and striking through indicates deleted text. 5 Pre-application disclosure … 5 Annex 1R The mortgage illustration: table of contents, prescribed text and prescribed section headings and subheadings. … […]. Where can you get more information about mortgages? The Money Advice Service publishes useful guides on choosing a mortgage. These are available free through its website: www.moneyadviceservice.org.uk, or by calling 0300 500 5000. The website also provides Comparative Tables to help you shop around. … … 7.6 Mortgages: event-driven information … Further advances 7.6.7 R Before a customer submits an application to a firm for a further advance on an existing regulated mortgage contract or for a further advance that is a new regulated mortgage contract, if the further advance requires the approval of the mortgage lender, the firm must provide the customer with an illustration that complies with the requirements of MCOB 5 (Pre￾application disclosure) and MCOB 7.6.9R to MCOB 7.6.17R for the further advance, unless an illustration has already been provided or the regulated mortgage contract is for a business purpose or to a high net worth mortgage customer and the firm has chosen to comply with the tailored provisions for regulated mortgage contracts for a business purpose or loans to high net worth mortgage customers (see MCOB 7.7 (Business loans and loans to high net worth mortgage customers: tailored provisions)).either (1) an illustration that complies with the requirements of MCOB 5 (Pre￾application disclosure) and MCOB 7.6.9R to MCOB 7.6.17R; or

Appendix 3 Page 8 of 22 (2) an ESIS that complies with MCOB 5A (MCD pre-application disclosure) and MCOB 7B.1.4R (MCD: further advances) unless (3) such an illustration or ESIS has already been provided; or (4) the regulated mortgage contract is for a business purpose and the firm has chosen to comply with the tailored provisions for regulated mortgage contracts for a business purpose; or (5) the regulated mortgage contract is with a high net worth mortgage customer and the firm has chosen to comply with the tailored provisions for loans to high net worth mortgage customers; (see MCOB 7.7 (Business loans and loans to high net worth mortgage customers: tailored provisions)). 7.6.8 G …the illustration or ESIS required by MCOB 7.6.7R. 7.6.9 R The An illustration provided in accordance with MCOB 7.6.7R(1) must: … … 7.6.14 R (1) The illustration provided in accordance with MCOB 7.6.7R(1) may diverge… (2) The ESIS provided under MCOB 7.6.7R(2) may diverge from the requirements of MCOB 5A where it is necessary to do so to reflect that the ESIS is being provided for a further advance. … 7.6.16 R (1) … (2) (In all other cases the case of any other illustration), MCOB 5.6.16R is replaced… 7.6.17 R (1) … (a) may, instead of providing an illustration or ESIS in accordance with MCOB 7.6.7R… … … …

Appendix 3 Page 9 of 22 Annex D Amendments to the Supervision manual (SUP) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. 13 Annex 1R Notification under SUP 13.5.1R … Filling in the Form … 3. All firms should answer sections 1, 2 and 11 12. Sections 3 - 10 11 refer to specific directives... … 11 Mortgage Credit Directive (‘MCD’) 11.1 1 Type of notification □ First notification □ Change to previous notification 2 Name of MCD credit intermediary ………………………………………… 3 If MCD credit intermediary is a natural person, date of birth 4 Head office address ………………………………………….. ………………………………………….. 5 E-mail ………………………………………….. 6 Telephone number ………………………………………….. 7 Fax number 8 Branch e-mail ………………………………………….. 9 Name(s) and dates of birth of natural person(s) managing the branch ………………………………………….. …………………………………………..

Appendix 3 Page 10 of 22 11.2 You must select those activities that you wish to carry out under MCD as listed in article 4(5) or 4(21) of MCD. offers/presents credit agreements assists in preparatory/pre-contractual administration work concludes credit agreements provides advisory services Tied credit intermediary □ Yes □ No In case of a tied credit intermediary: a) Identification of creditors or groups to which it is tied in the host Member State (name and type, including their registration number(s)) b) Whether the MCD credit intermediary is exclusively tied to only one creditor (name and type including their registration number) c) Confirmation the creditors take full and unconditional responsibility for the MCD credit intermediation activities a) ……………………….. b) ……………………….. c) ………………………… 11 12 Declaration … I enclose the following sections (mark the appropriate section) … Section 11 – Mortgage Credit Directive □ Section 11 12 – Declaration (mandatory) … …

Appendix 3 Page 11 of 22 After SUP 13 Annex 8 insert the following new Annex. The text is not underlined. 13 Annex 9R Notification under SUP 13.5.2R(7) [see next page]

EEA IMD Cross Border Services Form FCA  Passporting Cross border Version 1 April 2013 page 12 Notice of intention to provide cross border services in another EEA state in accordance with the Mortgage Credit Directive (MCD) FIRM NAME: FRN:

Purpose of this form You should complete this form if you are a UK firm that wishes to exercise a passport right to provide cross border services in another EEA State under the MCD. Important information you should read before completing this form A UK firm can only use this form if it is entitled to provide cross border services into another EEA State subject to the conditions of the MCD (see Schedule 3A of the Financial Services and Markets Act 2000 (FSMA)). By completing this form, you are confirming this is the case. UK firms should consult the legislation or take legal advice both in the UK and in the relevant EEA State(s) if they are in any doubt. We give guidance on this in the Supervision manual (SUP). In particular, a UK firm that wants to exercise an EEA right must have the specific activity included in its Scope of Permission. Filling in the form

1. If you are using your computer to complete the form, use the TAB key to move from question to question and press SHIFT TAB to move back to the previous question. Once completed, print the relevant sections and sign the declaration in section 4.
2. If you are filling in the form by hand, use black ink, write clearly and, once you have completed the relevant sections, sign the declaration in section 4.
3. All firms should answer sections 1, 2 and 3.
4. Please e-mail this form to passport.notifications@fca.org.uk Please send to: : Financial Conduct Authority 25 The North Colonnade Canary Wharf London E14 5HS

EEA Mortgage Credit Directive (MCD) Cross Border Services Form Passporting Cross border  Version 2  September 2014 page 13 1 Contact details 1.1 Details of the person at the firm we should contact about this notification Firm reference number Title Contact name Address Line 1 Address Line 2 Postcode Country Telephone number Fax number Email address

EEA Mortgage Credit Directive (MCD) Cross Border Services Form Passporting Cross border  Version 2  September 2014 page 14 2 Details of the services to be provided 2.1 Please indicate the EEA State(s) into which services are to be provided. States required Austria Belgium Bulgaria Cyprus Croatia Czech Republic Denmark Estonia Finland France Germany Gibraltar Greece Hungary Iceland Italy Ireland Latvia Liechtenstein Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Romania Slovak Republic Slovenia Spain Sweden All States 2.2 Tell us the proposed date for the business to start . Date dd/mm/yy 3 Mortgage Credit Directive (MCD) 3.1 1 Name of MCD credit intermediary

 There may be restrictions on the date which business can start which arise from EU law. We will notify you if this applies. Note to Question 2.1 UK firms have the right to provide cross border services to Gibraltar. So, references in this form to an EEA State include references to Gibraltar (see the Financial Services and Markets Act (Gibraltar) Order

EEA Mortgage Credit Directive (MCD) Cross Border Services Form Passporting Cross border  Version 2  September 2014 page 15 2 Type of notification (first/change) 3 Head office address 4 If MCD credit intermediary is a natural person, date of birth 5 E-mail 6 Telephone number 7 Fax number 8 Services to be provided by the MCD credit intermediary in the host Member State offers/presents credit agreements assists in preparatory/pre￾contractual administration work concludes credit agreements provides advisory services 9 Tied MCD credit intermediary Yes No In case of a tied MCD credit intermediary: a) Name and registration number of the creditor(s) or groups to which the intermediary is tied in the host Member State b) Whether the MCD credit intermediary is exclusively tied to only one creditor (name and type including their registration number) c) Confirmation the creditors take full and unconditional responsibility for the activities of the tied MCD credit intermediary a) ………………………………………………… b) ..................................................... c) .....................................................

EEA Mortgage Credit Directive (MCD) Cross Border Services Form Passporting Cross border  Version 2  September 2014 page 16 4 Declaration It is a criminal offence to knowingly or recklessly give us information that is false or misleading. If necessary, please seek appropriate professional advice before supplying information to us. There will be a delay in processing the notification if any information is inaccurate or incomplete. And failure to notify us immediately of any significant change to the information provided may result in a serious delay in the notification process.  I understand it is a criminal offence knowingly or recklessly to give the FCA/PRA information that is false or misleading in a material particular.  I confirm that the information in this form is accurate and complete to the best of my knowledge and belief.  I confirm that I am authorised to sign on behalf of the firm. Name Position Signature Date dd/mm/yy I enclose the following sections (mark the appropriate section) Section 1 – Contact details Section 2 – Details of the services Section 3 – Mortgage Credit Directive Section 4 – Declaration Note to Declaration If you are submitting this notification electronically you do not need to provide a signature here. However, you still need to have the authority to make this notification on behalf of the firm.

Appendix 3 Page 17 of 22 Amend the following as shown. 16.12 Integrated Regulatory Reporting … Regulated Activity Group 12 16.12.29B G SUP 16.12.29CR does not apply: … (2A) to a firm if the only credit-related regulated activity it carries on is advising on regulated credit agreements for the acquisition of land; … … 16 Annex 38B NOTES FOR COMPLETION OF THE DATA ITEMS RELATING TO CONSUMER CREDIT ACTIVITIES G … Scope 7. The credit-related regulated activities are: … (ga) advising on regulated credit agreements for the acquisition of land (article 53DA); …

Appendix 3 Page 18 of 22 Annex E Amendments to the Consumer Credit sourcebook (CONC) In this Annex, underlining indicates new text and striking through indicates deleted text. 4 Pre-contract requirements … 4.2 Pre-contract disclosure and adequate explanations Application 4.2.1 R This section, unless otherwise stated in or in relation to a rule: … (3) does not apply to an agreement under which the lender provides the customer with credit which exceeds £60,260, unless the agreement is a residential renovation agreement; … 4.3 Adequate explanations: P2P agreements Application … 4.3.2 R This section (apart from CONC 4.3.6R) does not apply to: (1) an agreement under which the lender provides the prospective borrower with credit which exceeds £60,260, unless the agreement is a residential renovation agreement; or … 11 Cancellation 11.1 The right to cancel … 11.1.3 G Section 66A of the CCA (right to withdraw) does not apply to an agreement for credit exceeding £60,260 (unless the agreement is a residential renovation agreement), an agreement secured on land, a restricted-use

Appendix 3 Page 19 of 22 credit agreement to finance the purchase of land or an agreement for a bridging loan in connection with the purchase of land. … … 11.2 Right of withdrawal: P2P agreements Application … 11.2.2 R This section does not apply to a P2P agreement under which credit exceeding £60,260 is, was or would be provided unless the agreement is a residential renovation agreement. … 15 Second charge lending 15.1 Application … 15.1.2 G Firms which carry on consumer credit lending or credit broking should comply with all rules which apply to that regulated activity in CONC and other parts of the Handbooks. For example, CONC 7 applies to matters concerning arrears, default and recovery (including repossession) and applies generally to agreements to which this chapter applies. This chapter sets out specific requirements and guidance that apply in relation to agreements secured on land. Certain arranging and introducing activities in relation to investment property loans (as defined by article 61A of the Regulated Activities Order), Regulated regulated mortgage contracts and home purchase plans are not regulated credit agreements and are excluded, to the extent specified in article 36E of the Regulated Activities Order, from credit broking.

Appendix 3 Page 20 of 22 Annex F Amendments to the Perimeter Guidance manual (PERG) In this Annex, underlining indicates new text and striking through indicates deleted text. 2 Authorisation and regulated activities … 2.7 Activities: a broad outline … High net worth exemption 2.7.19J G A credit agreement is an exempt agreement if: … (3) the agreement is either: (a) secured on land; or (b) for credit which exceeds £60,260 and for a purpose other than (i) for a purpose other than the renovation of residential property, or (ii) … … 2.8 Exclusions applicable to particular regulated activities … Credit broking 2.8.6C G The following activities are excluded from the regulated activity of credit broking: … Activities in relation to certain agreements relating to land (article 36E of the Regulated Activities Order) (3A) Activities carried on with a view to an individual entering into an investment property loan (within the meaning of article 61A of the Regulated Activities Order) are excluded from credit broking.

Appendix 3 Page 21 of 22 (3B) The regulated activities of arranging (bringing about) regulated mortgage contracts, making arrangements with a view to regulated mortgage contracts, arranging (bringing about) a home purchase plan and making arrangements with a view to a home purchase plan are excluded from credit broking. (3C) Also excluded from credit broking, when not excluded by (3A) or (3B), are activities which consist of effecting an introduction with a view to an individual entering into regulated mortgage contract or a home purchase plan, if the person to whom the introduction is made is an authorised person who has permission to: (a) enter into such an agreement as lender or home purchase provider; or (b) make an introduction to an authorised person who has permission to enter into such an agreement as lender or home purchase provider. (4) Activities carried on with a view to an individual entering into a regulated mortgage contract are excluded from credit broking if the person carrying on the activity is an authorised person who has permission to: (a) enter into a regulated mortgage contract as lender (see PERG 4.7); or (b) make an introduction to an authorised person who has permission to enter into a regulated mortgage contract as lender (see PERG 4.5 on arranging regulated mortgage contracts). [deleted] (5) Activities carried on with a view to an individual entering into a home purchase plan are excluded from credit broking if the person carrying on the activity is an authorised person who has permission to: (a) enter into a home purchase plan as home purchase provider (see PERG 14.4); or (b) make arrangements for a client to enter into a home purchase plan as home purchaser by introducing the client to an authorised person who has permission to a home purchase plan as home purchase provider (see PERG 14.4). [deleted] … 2.9 Regulated activities: exclusions applicable in certain circumstances …

Appendix 3 Page 22 of 22 2.9.24 G … (3) The exclusion relating to entering into a regulated credit agreement as lender and exercising, or having the right to exercise, the lender's rights and duties under a regulated credit agreement applies only to credit agreements of a kind to which the Consumer Credit Directive does not apply under article 2(2) of that Directive. In summary, these include credit agreements: … (c) involving a total amount of credit less than £160 or more than £60,260, except where the agreement is a residential renovation agreement; … 2 Annex 2 Regulated activities and the permission regime G … Table 1: Regulated Activities (excluding PRA-only activities) [See note 1 to Table 1] … Regulated home finance activity … (xa) advising on regulated credit agreements for the acquisition of land (article 53DA) [deleted] … regulated mortgage contract (article 88), except for (xa), see note 11 to table 1 Credit-related regulated activity … (zx) advising on regulated credit agreements for the acquisition of land (article 53DA) … Rights under a credit agreement (article 88D) (see note 9 to Table 1), except for (zx): see note 11 to Table 1

66 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Appendix 4 Changes to the Training and Competence sourcebook

Appendix 4 TRAINING AND COMPETENCE SOURCEBOOK (QUALIFICATIONS AMENDMENTS NO 13) INSTRUMENT 2015 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”): (1) section 137A (The FCA’s general rules); (2) section 137T (General supplementary powers); and (3) section 138C (Evidential provisions). B. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule-making instruments) of the Act. Commencement C. This instrument comes into force on [date]. Amendments to the Handbook D. The Training and Competence sourcebook (TC) is amended in accordance with the Annex to this instrument. Citation E. This instrument may be cited as the Training and Competence Sourcebook (Qualifications Amendments No 13) Instrument 2015. By order of the Board of the Financial Conduct Authority [date]

Appendix 4 Annex Amendments to the Training and Competence sourcebook (TC) In this Annex, underlining indicates new text. Appendix 4.1.1E Appropriate Qualification tables Part 2: Appropriate Qualifications Tables Qualification provider Qualification Activity Number(s) Key … University of Northampton … … … University of South Wales BSc (Hons) Financial Planning, Investment and Risk 4 and 6 a University of Stirling … … … …

Financial Conduct Authority September 2015 67 Quarterly Consultation No. 10 CP15/28 Appendix 5 Consumer Redress Schemes changes to section 404

Appendix 5 CONSUMER REDRESS SCHEMES (GENERAL MATERIAL) INSTRUMENT 2015 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the power in section 139A(1) (Guidance) of the Financial Services and Markets Act 2000. Commencement B. This instrument comes into force on [date]. Amendments to the Handbook C. The Consumer Redress Schemes sourcebook (CONRED) is amended in accordance with the Annex to this instrument. Citation D. This instrument may be cited as the Consumer Redress Schemes (General Material) Instrument 2015. By order of the Board of the Financial Conduct Authority [date]

Appendix 5 Page 2 of 28 Annex Amendments to the Consumer Redress Schemes sourcebook (CONRED) In this Annex, striking through indicates deleted text, unless otherwise stated. 1 General [To follow] The following text is new and is not underlined. 1.1 Introduction 1.1.1 G This part of the FCA Handbook relates to consumer redress schemes. For these purposes, a consumer redress scheme is a set of rules under which a firm is required to take one or more of the following steps: (1) investigate whether, on or after a specified date, the firm has failed to comply with particular requirements that are applicable to an activity it has been carrying on; (2) determine whether the failure has caused (or may cause) loss or damage to consumers; and (3) if the firm determines that the failure has caused (or may cause) loss or damage to consumers, the firm must: (a) determine what the redress should be in respect of the failure; and (b) make the redress to the consumers. 1.1.2 G Chapter 1 contains guidance on consumer redress schemes in general and explains what they are and the circumstances in which the FCA may impose a requirement to establish and operate a consumer redress scheme. The rules and guidance relating to particular consumer redress schemes are set out in the remainder of the sourcebook. 1.1.3 G Chapter 1 is relevant to current and former authorised persons, electronic money issuers and payment service providers. Except where otherwise specified, it uses “firm” to refer to all such persons. 1.1.4 G CONRED 1.2 to 1.7 explain the power in section 404 of the Act which enables the FCA to make rules requiring firms to establish and operate consumer redress schemes. Unless the context otherwise requires, references to consumer redress scheme in CONRED 1.2 to1.7 are

Appendix 5 Page 3 of 28 references to a scheme established under section 404 of the Act (that is, a scheme falling within paragraph (a) of the Glossary definition) and references to a “scheme” in those sections should be read accordingly. 1.1.5 G CONRED 1.8 explains the circumstances in which the FCA can impose a requirement on a firm under section 404F(7) to establish and operate a scheme that corresponds to or is similar to a scheme under section 404 of the Act. References to consumer redress scheme in CONRED 1.8 are (unless the context otherwise requires) references to a scheme established under section 404F(7) of the Act (that is, a scheme falling within paragraph (b) of the Glossary definition) and references to a “scheme” in that section should be read accordingly. 1.1.6 G The term “consumer” has a number of different meanings both in the Glossary and in the Act. For this reason, except where indicated, CONRED does not use the term as defined in the Glossary. However, CONRED 1.4.6G to 1.4.14G explains which consumers can be covered by a consumer redress scheme established under section 404 of the Act. 1.2 Process for making a consumer redress scheme Consultation 1.2.1 G The power in section 404 of the Act is a rule-making power. Rules made by the FCA under this power will be subject to a formal public consultation, including a cost-benefit analysis (CBA). The consultation paper will fully and clearly explain the rules of the scheme and set out the sources of evidence upon which the scheme is based. The consultation period will usually be three months long. Although there is an exemption from the FCA consultation requirements for cases where the FCA considers that the delay would be prejudicial to the interests of consumers, this is very unlikely to be applicable in relation to consumer redress schemes. This is because the importance of consulting to ensure a scheme is appropriate and workable in practice would be likely to outweigh any prejudice that delay from the consultation process may bring. 1.2.2 G The FCA must have regard to any representations made to it during the consultation process. The FCA will issue a statement following the consultation which will explain how the FCA has taken these into account in formulating the final rules. A further cost-benefit analysis will be provided if the final rules differ significantly from the consultation draft. In addition, an explanation of any differences between the rules consulted on and the final rules made will be provided. 1.2.3 G All FCA rules are made by the FCA Board. The Treasury appoints the FCA Board and the majority of Board members are non-executive. Pre-consultation 1.2.4 G The FCA will actively seek to engage in discussions with the industry

Appendix 5 Page 4 of 28 and consumer groups about the issue. This process will assist in the consideration of all the available options and, if it is ultimately decided to pursue a scheme in order to address the issue, will ensure the FCA has a clear understanding of the issues that will need to be addressed in the formal consultation. 1.2.5 G This discussion process will allow the particular nature of the issue in relation to which a scheme is proposed to already be visible to key stakeholders. In addition, the issue may have been publicised more widely through comment and action by the FCA (e.g. the FCA may have published the findings of thematic projects, mystery shopping exercises or enforcement actions). 1.2.6 G The FCA will also consult with the Financial Services Practitioner Panel, the Smaller Businesses Practitioner Panel, the Financial Services Consumer Panel, the Financial Services Compensation Scheme Limited and the Financial Ombudsman Service Limited before issuing a formal consultation. 1.3 Trigger for making a consumer redress scheme 1.3.1 G The trigger is set out in section 404(1) of the Act. It states that the power can be used if: (1) it appears to the FCA that there may have been a widespread or regular failure by relevant firms to comply with requirements applicable to the carrying on by them of any activity; (2) it appears to the FCA that, as a result, consumers have suffered (or may suffer) loss or damage in respect of which, if they brought legal proceedings, a remedy or relief would be available in the proceedings; and (3) the FCA considers that it is desirable to make rules for the purpose of securing that redress is made to consumers in respect of the failure (having regard to the other ways in which consumers may obtain redress). Meaning of “widespread or regular” failure 1.3.2 G There is no further explanation in the Act of what is meant by “widespread or regular”. The FCA’s view is that the phrase is primarily directed at the volume of failings that have occurred. However, we do not think the test is subject to further precise definition. Rather, we think the test is a matter for regulatory judgement, to be interpreted in the round with reference to all the relevant evidence. 1.3.3 G The FCA will not need to have specific evidence of failure by each of the firms subject to the scheme. The FCA will be entitled to extrapolate reasonably from the evidence it has to determine whether the failure appears to be “widespread or regular”.

Appendix 5 Page 5 of 28 1.3.4 G Section 404(1)(a) of the Act refers to “failure…to comply with requirements”. The reference to “requirements” rather than “requirement” means that there does not have to be evidence of widespread or regular failure for each requirement covered by a scheme. Rather, the failure may exist in relation to different requirements affecting the same type of activity. 1.3.5 G The FCA will only proceed if it has robust evidence to support its view that it appears there may have been a widespread or regular failure. Sources of evidence which the FCA might use and extrapolate from include the results of the FCA’s thematic work, enforcement investigations, mystery shopping, complaints to the FCA, firms or to the Financial Ombudsman Service, and information from consumer groups and reports from skilled persons. 1.3.6 G However, it is important to understand that the purpose of section 404(1)(a) is to require the FCA to establish whether there may have been a widespread or regular failure. The purpose is not to prove that all or most relevant firms have failed (or may have failed) to comply with requirements in respect of all or most relevant consumers. Failures that can be dealt with under a consumer redress scheme 1.3.7 G The requirements that can be included in a consumer redress scheme include both FCA rules and the general law (e.g. the tort of negligence or the Unfair Terms Regulations – see section 404F(3) and (4) of the Act). 1.3.8 G The failures that the FCA can take into account in deciding if the trigger is satisfied are those where, as a result of the failure, consumers have suffered (or may suffer) loss or damage in respect of which, if they brought legal proceedings, a remedy or relief would be available in the proceedings (see section 404(1)(b) of the Act). The relevance of the “may suffer” wording is that it makes clear that schemes may cover cases where loss is foreseeable but may not yet have crystallised (e.g. pensions mis-selling cases where the loss may not crystallise until retirement). 1.3.9 G The FCA will be able to give examples of things done or omitted to be done that are to be regarded as constituting a failure to comply with a requirement. However, the FCA can only give examples that have been, or would be, held by a court or tribunal to constitute a failure (see section 404A(2) of the Act). 1.3.10 G So in other words, the section 404 power is limited so that the only failures a consumer redress scheme can address are those that a court or tribunal would find to have been failures at the time the activities were carried on (rather than through a subjective assessment by the FCA of the reasonableness of a firm’s actions). Consumers will not need to have actually brought an action forward for the FCA to be able to make a scheme.

Appendix 5 Page 6 of 28 1.3.11 G Deciding whether a particular act or omission constitutes a failure will necessarily involve the FCA interpreting its rules and the general law. If the law is unclear in a particular area, the FCA will have two broad options available to it. It may decide either: (1) not to develop a scheme, having regard to the other ways in which consumers can seek redress, including through the courts; or (2) to take steps to clarify the law. 1.3.12 G The FCA will seek an opinion from a Queen’s Counsel for any consumer redress scheme it proposes in relation to the question of whether the failures proposed to be addressed by a scheme are those that a court or tribunal would find to constitute as failures to comply with a requirement. If stakeholders disagree with the FCA’s interpretation of the law as expressed in the draft scheme rules, they will be able to say so during the consultation process. Any representations made will be carefully considered by the FCA as set out in CONRED 1.2. 1.3.13 G In addition, the FCA has the option of seeking a court declaration to clarify the law (the bank charges test case brought by the Office of Fair Trading which the FCA supported with a waiver of certain DISP rules is an example of this sort of approach). 1.3.14 G The process of interpreting what the FCA’s rules require will involve the usual process of analysing relevant surrounding materials (e.g. consultation papers) as is the practice when interpreting any piece of legislation. Other FCA rules and guidance may also be relevant to interpreting what a particular rule requires. The FCA’s rules are given a purposive interpretation (see GEN 2.2.1R). The purpose of a rule is gathered predominantly from the text of the rule itself as well as its context among other relevant rules. 1.3.15 G The FCA will not be able to impose higher requirements on firms retrospectively. The requirements to be applied by the FCA will be those in force at the time of the relevant act or omission, not current or later requirements. 1.3.16 G Consumer redress schemes can only be used to require redress in relation to those failures in respect of which a remedy or relief would be available in legal proceedings. A consumer redress scheme could not, therefore, be used to require redress for: (1) breaches of the Principles (FCA rules currently provide that breaches of the Principles do not give rise to a right of action in court under section 138D of the Act – a change to this would be subject to the consultation requirements under the Act in the usual way); or

Appendix 5 Page 7 of 28 (2) breaches of any other FCA rules where the right of action under section 138D of the Act has been switched off in the rules (e.g. the rules in the SYSC sourcebook); or (3) departure from FCA guidance; or (4) non-compliance with any non-binding code of practice (e.g. industry guidance confirmed by the FCA). 1.3.17 G The fact that a consumer redress scheme cannot be used to require redress in relation to breaches of the Principles would not prohibit a consideration of the Principles for the purposes of interpreting one of the FCA’s more detailed rules. This is because the FCA believes that a court would also take into account surrounding legislative provisions when seeking to interpret a particular piece of law. However, this does not mean that the scheme could be based on the Principles: there always needs to be a legally-actionable failure. 1.3.18 G Finally, it is necessary that the loss or damage which was suffered (or may be suffered) is as a result of the failure. As part of this, the FCA will need to consider whether any indirect or consequential loss is recoverable under the applicable law. ‘Desirability’ of making a consumer redress scheme 1.3.19 G The FCA will be required to make an objective, evidence-based judgement on the overall appropriateness of a consumer redress scheme as a remedial tool. Cost-benefit analysis (CBA) is likely to be a key part of this decision. An important characteristic of a consumer redress scheme is that it can ensure consumers obtain redress without the FCA having to first identify every individual firm specifically involved. CBA will necessarily rely in part upon the FCA’s judgement as to how widespread or regular the failure is. 1.3.20 G A comparison of the advantages and disadvantages of a consumer redress scheme against other available tools will form part of the decision-making process. The Act provides a range of other tools (e.g. imposition of requirements on a firm under section 55L to take remedial action in respect of past conduct) and the FCA will need to consider which power is most appropriate in the circumstances. 1.3.21 G As a public body, the FCA will also have regard to general administrative law principles such as proportionality and reasonableness. For example, the extent to which firms have already provided redress will be a factor to which the FCA will have regard (e.g. following enforcement action or the implementation of a voluntary industry redress scheme). See also CONRED 1.5.25G. 1.3.22 G Lastly, the FCA’s operational objectives (particularly its consumer protection objective), together with the regulatory principles in section 3B of the Act, will also be relevant. For example, the Act requires the

Appendix 5 Page 8 of 28 FCA to have regard to the principle that a burden or restriction which is imposed on a person should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction. 1.4 Scope of a consumer redress scheme The financial services that a consumer redress scheme can apply to 1.4.1 G In accordance with section 404E(2) of the Act, a consumer redress scheme can secure redress for consumers of services provided by: (1) authorised persons in carrying on regulated activities; (2) authorised persons in carrying on a consumer credit business in connection with the accepting of deposits (in so far as section 404E relates to, or applies for the purposes of, anything done under the Act concerning things done (or not done) before 1 April 2014); (3) authorised persons in communicating, or approving the communications by others of, invitations or inducements to engage in investment activity; (4) authorised persons who are investment firms, or credit institutions, in providing relevant ancillary services; (5) persons acting as appointed representatives; (6) payment service providers in providing payment services; and (7) electronic money issuers in issuing electronic money. 1.4.2 G A scheme could apply to all authorised persons, electronic money issuers or payment service providers or to a specified description of authorised person, electronic money issuer or payment service provider. This means the FCA could create a scheme that applied to a named list of firms. Given that a scheme can apply to authorised persons, it could also apply to incoming EEA firms that are authorised under Schedule 3 to the Act. However, the FCA would need to consider on a case-by-case basis the extent to which this was both practicable and appropriate (bearing in mind the division of responsibilities between Home and Host State regulators under the various EU Directives that apply to financial services firms). 1.4.3 G The FCA will be able to determine, on reasonable grounds, how to characterise the particular activity that a scheme applies to. This will enable the FCA to ensure that a scheme is appropriately focused (e.g. limited to activities carried on in relation to particular products or sectors of the market in question, during specified periods of time). It is possible that a scheme could be combined with the use of other regulatory tools (i.e. a package of measures would be put in place to ensure an issue was

Appendix 5 Page 9 of 28 addressed comprehensively). Should this be the case, the FCA will clearly set out in its consultation paper how the different elements of the package inter-relate. 1.4.4 G Where the financial services to which a scheme applies are those provided by authorised persons in carrying on regulated activities, the limitation to ‘regulated activities’ means that a consumer redress scheme cannot apply to services that were provided before the activity in question first became regulated by the FSA or FCA (e.g. the start date of a scheme applying to general insurance mediation could not be earlier than 14 January 2005, which was the commencement of regulation of general insurance mediation). 1.4.5 G That said, it would be possible for the Treasury by order to widen the type of financial services that a consumer redress scheme can cover in order to encompass pre-regulation activities (see section 404G of the Act). Consumers that can be covered by a consumer redress scheme 1.4.6 G For the purposes of a scheme, a consumer can be any person who has used, or may have contemplated using, any of the financial services listed in section 404E(2) of the Act (see CONRED 1.4.1G), or have relevant rights or interests in relation to any of those services. As such, the section 404 power is not limited to retail customers only. 1.4.7 G That said, a consumer redress scheme can only be used to secure redress for consumers who have a legal cause of action. In some cases, the cause of action is limited to private persons in any event. For example, rights of action in respect of breaches of FCA rules are generally limited to private persons, and the Unfair Terms Regulations are limited to individuals acting outside their trade, business or profession. In contrast, claims for misrepresentation can be brought under the general law by all types of person. 1.4.8 G In addition, the FCA may choose to focus a scheme on retail customers, having regard in particular to the fact that they tend to have less experience and expertise. However, the FCA will also have regard to the fact that many retail customers are also investors in, or beneficiaries of, funds and pension schemes which may have incurred loss from the failure. It may be that the inclusion of such funds or pension schemes amongst those to whom redress ought to be given will bring benefit to the underlying retail customers. 1.4.9 G The section 404 power could be used in relation to non-UK consumers if they are protected by the underlying law (e.g. some FCA rules apply to UK firms doing business in another EEA State). 1.4.10 G The fact that a consumer “who may have contemplated using” a relevant financial service can be covered by a consumer redress scheme is unlikely to catch many cases in practice. One example of a case where it

Appendix 5 Page 10 of 28 might be used is where there has been widespread discrimination: the section 404 power could be used to ensure redress for consumers who were unlawfully denied access to a financial service contrary to any relevant equality legislation. All the restrictions and evidence requirements explained in CONRED 1 would apply equally to any scheme developed in this sort of area. 1.4.11 G The Treasury may by order widen (or cut back) the type of consumers that a consumer redress scheme can cover (see section 404G of the Act). Applicability of a scheme to other situations 1.4.12 G The limits of a consumer redress scheme’s application will be clearly defined within the scheme rules and a scheme will only bind those firms to which it applies. Firms that are unsure whether or not a scheme applies to their activities are encouraged to raise the issue with their supervisor in the normal way. 1.4.13 G It is possible that the approach taken by the FCA in a particular scheme could influence its approach to other situations. The FCA will aim to be consistent in its regulatory approach where possible. 1.4.14 G For example, the FCA could put in place a scheme in relation to unfair variation terms in regulated mortgage contracts. The underlying reasons for the FCA’s decision that a variation term in a regulated mortgage contract is unfair could potentially apply to a variation term in an insurance contract that fell outside the scope of the scheme. However, the Unfair Terms Regulations expressly state that all the circumstances attending the conclusion of the contract must be taken into account when assessing the unfairness of a contractual term. Therefore, if the FCA wanted to take action in relation to the term in the insurance contract using its other regulatory powers, it would need to ensure that it had considered all the relevant issues separately to those considered as part of the scheme for regulated mortgage contracts. 1.5 Operation of a consumer redress scheme Investigation of cases under a consumer redress scheme 1.5.1 G Firms will be responsible for investigating individual cases, within the framework set out by the FCA. The FCA will have a number of options when formulating a scheme. For example, the FCA could: (1) require firms to undertake a proactive file review of all cases falling within the period covered by the scheme; (2) require firms to contact their customers individually to ask whether they wish their cases to be investigated under the scheme and only investigate the cases of those customers who opt-in; (3) require firms to publicise the existence of the scheme (e.g.

Appendix 5 Page 11 of 28 through newspaper advertisements) and only investigate the cases of those customers who opt-in; or (4) publicise the existence of the scheme through an FCA publicity campaign and require firms to investigate the cases of those customers who subsequently opt-in. 1.5.2 G It would also be possible to require a combination of these methods within a scheme (e.g. for different types of case). The choice of investigation method would be one of the issues on which the FCA would consult and perform cost-benefit analysis (CBA). In doing so, the FCA will have to consider the likely effectiveness of consumer contact exercises. 1.5.3 G In the event that a scheme required customers to ‘opt-in’ by a specified date, the FCA would ensure that the scheme covered how to deal with customers who nevertheless contacted firms after that date. 1.5.4 G In some cases, the FCA (or someone acting on its behalf) may carry out the investigation under the scheme instead of the relevant firm (see section 404A(1)(k) of the Act). The scheme rules may provide for this in relation to, for instance, a firm which was refusing to operate a scheme. Another example is provided in CONRED 1.5.6G in relation to formerly authorised persons. 1.5.5 G The FCA will be mindful of issues relating to professional indemnity insurance when making rules in this area. For example, the FCA is aware that certain policies prohibit admissions of liability without the written consent of the insurer. Firms that are no longer authorised by the FCA or have transferred their business to another firm 1.5.6 G The FCA has a number of options for dealing with firms that have ceased to be authorised. For example: (1) Where the firm continues to exist and still has assets, the scheme could still apply to that firm (see section 404F(5)(a) of the Act). Alternatively, the scheme rules could provide for the FCA itself (or a third party acting on its behalf) to investigate the cases of formerly authorised persons. (2) Where the firm has ceased to exist, cannot readily be traced or has no assets, the FSCS could declare the firm in default. See CONRED 1.6.23G for details of how the FSCS will deal with cases that fall within a scheme. 1.5.7 G Where there has been a transfer of business, the FCA can apply the scheme to the successor firm if it has assumed liability (e.g. where there has been a transfer of a banking business under Part VII of the Act or a firm is otherwise legally liable for the failures of another firm – see

Appendix 5 Page 12 of 28 section 404F(5)(b) of the Act). Where the successor firm has no legal liability for the failures, the scheme itself could not apply to the successor firm (and so redress would need to be obtained through the options set out above). It may be the case, however, that the successor firm has access to information that may assist in the investigation of persons who have ceased to be authorised. The FCA will be mindful of this. 1.5.8 G In these sorts of cases it would be for either the FCA, the third party acting on its behalf, the FSCS or the successor firm (as relevant) to contact affected consumers. The FCA and the FSCS will work together closely to ensure all relevant firms are captured. Other matters that may be included in the rules of a consumer redress scheme 1.5.9 G Section 404A of the Act sets out an illustrative list of particular matters that the FCA may cover in the rules of a scheme. 1.5.10 G One of the most important areas where the FCA may be likely to make rules is to set out examples of things done or omitted to be done that are to be regarded as constituting a failure to comply with a requirement (see section 404A(1)(b) of the Act). However, as explained in CONRED 1.3.7G to 1.3.18G, the FCA can only give examples that have been, or would be, held by a court or tribunal to constitute a failure. 1.5.11 G Giving examples that are clear and sufficiently comprehensive will be an area to which the FCA pays particular attention, both in its work leading up to a consultation and during the consultation process itself. The FCA will work with relevant stakeholders to ensure the final scheme rules give examples which provide clarity and certainty as to how a firm is expected to operate under the scheme. 1.5.12 G Another important area where the FCA can make rules concerns setting out matters to be taken into account, or steps to be taken, by firms for the purpose of: (1) assessing evidence as to a failure to comply with a requirement; or (2) determining whether such a failure has caused (or may cause) loss or damage to consumers (see section 404A(1)(c) of the Act). Again, the FCA will only be able to do this if the matters set out have been, or would be, taken into account by a court or tribunal for the purpose mentioned. In particular, the FCA cannot disregard the normal legal rules on causation or remoteness of loss. The reference to ‘matters’ is to legally relevant considerations, not to any procedural steps which firms may be required to take. For example, firms may be required to gather certain categories of evidence. Examples of ‘steps’ would be requiring firms to gather evidence by specified methods or to record their decision making in a certain form.

Appendix 5 Page 13 of 28 1.5.13 G A third significant area relates to the period under review. The consumer redress scheme rules will specify a start date (referred to as the ‘specified date’ in section 404(3) of the Act) and most likely also an end date (see section 404A(1)(f) of the Act) for the activities and sales to be reviewed. This will limit the scope of a firm’s investigations under a scheme. 1.5.14 G A fourth area that could be covered in consumer redress scheme rules is the content of a firm’s communication to consumers about the outcome of their investigation under a scheme. Detailing the content of the communications that consumers can expect to receive will ensure consistency across firms as well as clarity for consumers. It will also be of benefit to firms should complaints subsequently be referred to the Financial Ombudsman Service. This is because a comprehensive communication may help to make it apparent to the Ombudsman at the outset that a firm has undertaken its investigation in accordance with the scheme. Firms may also be required to draw the scheme to the attention of the Financial Ombudsman Service in any individual cases that are referred to it. As such, the FCA will consult the Financial Ombudsman Service on the content of such communications. 1.5.15 G Fifthly, the scheme rules could require firms to provide information to the FCA (e.g. information about how they are conducting their investigations under the scheme, how many consumers have opted to have their cases reviewed, etc.). Issues that come to light during the period in which the scheme is running 1.5.16 G The FCA will monitor schemes whilst they are running. If it became apparent during the operation of a scheme that it would be desirable for the scheme rules to cover other issues (e.g. if firms or consumer groups informed the FCA that it would be helpful if further examples of failures pursuant to section 404A(1)(b) of the Act were given), the FCA would be able to amend the rules accordingly. Any such amendments would be subject to the usual consultation process as set out in CONRED 1.2. 1.5.17 G Alternatively, the FCA could give general or individual guidance to firms on issues that arise during the operation of a scheme. General guidance would also be subject to the consultation process. Types of redress a firm can be required to make under a consumer redress scheme 1.5.18 G The FCA is able to set out in scheme rules the kinds of redress that are to be made to consumers. The only kinds of redress the FCA can secure in this way are those which it considers to be just (see section 404A(4) and section 404F(1) of the Act). For example, instead of providing cash compensation, the FCA could require firms to top-up pensions or offer to alter the terms of a contract.

Appendix 5 Page 14 of 28 1.5.19 G That said, the FCA is required to have regard to the nature and extent of the losses or damage in question (see section 404A(5) of the Act) and so will take into account the type of relief that a court would grant. 1.5.20 G Redress made under a consumer redress scheme may include interest (see section 404F(1) of the Act). Decisions regarding the rate of interest and the basis for calculation will be made on a scheme-by-scheme basis and will be subject to the consultation process. 1.5.21 G A consumer redress scheme cannot extend normal limitation periods. Under the Limitation Act 1980, the general position regarding time limits for bringing a claim in England and Wales is as follows: (1) 6 years from the event for claims in contract and claims in tort concerning non-latent damages; and (2) 3 years from actual or constructive awareness for claims in tort concerning latent damages until 15 years from the event at which point (for most cases) the right to claim expires irrespective of any awareness considerations. Note that this is only a summary of the position and the legislation itself should be consulted when determining the limitation period applicable to any particular case. It should also be noted that the position under the law in Scotland and Northern Ireland is different. 1.5.22 G Firms may only be required to make redress to consumers who are within the limitation period for bringing their case to court at the time the FCA makes the rules (see section 404(8) of the Act). In other words, once a scheme has been made the ‘clock will stop’ on the relevant limitation period. For example, if a scheme began in July 2015 and the limitation period for a consumer to take their case to court would have expired in September 2015, the firm would still need to deal with the consumer’s case under the scheme, even if it did not investigate that consumer’s particular case until, for example, November 2015. 1.5.23 G The FCA will endeavour to provide as much direction as possible in the scheme rules as to how redress is to be calculated (e.g. by setting out a formula or other methodology) in order to assist both firms and the Ombudsman. 1.5.24 G The section 404 power does not in itself remove a consumer’s right to take a case to the courts. However, any redress received in court proceedings would be discounted from compensation payable under a consumer redress scheme and vice versa. Scheme rules would also deal with the situation where a consumer had previously received redress from the Financial Ombudsman Service.

Appendix 5 Page 15 of 28 Waivers or modifications of the scheme rules 1.5.25 G Firms can apply for a waiver or modification of the scheme rules. For example, if a firm believes that it has already provided redress to relevant customers through a voluntary past business review it can apply to the FCA for a waiver from, or modification of, the rules in the usual way (see section 138A of the Act). 1.5.26 G The FCA may not give a waiver or modification unless it is satisfied that: (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 or modification would not adversely affect the advancement of any of the FCA’s operational objectives. 1.5.27 G The FCA may impose conditions on a waiver or modification (e.g. additional reporting requirements). Dealing with complaints when a consumer redress scheme is in place 1.5.28 G To avoid the risk of potential overlaps between the rules in DISP and the operation of any consumer redress scheme, the FCA has switched off the complaints resolution rules, the complaints time limit rules, the complaints record rules and the complaints reporting rules in relation to complaints where the subject matter falls to be dealt with (or has been dealt with) under a consumer redress scheme. Complaints which fall outside the scope of a scheme will continue to be subject to DISP in the usual way. 1.5.29 G The FCA will also consider whether it is appropriate to grant a waiver or modification of the DISP rules whilst a scheme is being consulted on. As set out in CONRED 1.5.27G, the FCA may impose conditions on a waiver or modification (e.g. conditions relating to handling complaints from complainants who claim to be in financial difficulty). Non-compliance with the consumer redress scheme rules 1.5.30 G The FCA has a variety of tools at its disposal if a firm does not comply with a scheme. For example, the FCA will be able to take disciplinary action if a firm is failing to operate a scheme properly (see Part XIV and section 404C of the Act). The FCA is also able to take over the conduct of the investigation required under the scheme, or appoint a third party to do so (see section 404A(1)(k) of the Act). Publication of the existence of a scheme 1.5.31 G The FCA will apply the approach to transparency it has set out in its ‘Transparency discussion paper: Summary of feedback and our

Appendix 5 Page 16 of 28 response’ (FS13/1) at https://www.fca.org.uk/static/fca/documents/feedback-statements/fca￾transparency-framework.pdf. The FCA has a presumption in favour of transparency, unless there are compelling regulatory, legal or other reasons to the contrary, when considering whether, when and how to publicise a scheme or proposed scheme, over and above its publicity obligations under the Act. 1.5.32 G As set out in CONRED 1.2.4G, the FCA would be likely to publicise the work it has been doing in the run up to the launch of a formal consultation paper. The consultation paper itself will be available on the FCA’s website. 1.5.33 G Assuming the scheme rules are made following consultation, the final rules will also be available on the FCA’s website. The rules will clearly set out the type of firms and activities to which the scheme applies. The information available on the website will enable third parties such as consumer groups to disseminate information about the scheme. 1.5.34 G The FCA will also be able to go further than this in appropriate cases and run its own publicity campaign. This might include newspaper or radio advertisements designed to increase awareness of the scheme amongst consumers. Such advertisements would aim to make clear the scope of the scheme (e.g. the types of products and services the scheme covers) and any action that consumers need to take (e.g. the extent to which they need to contact their firm directly or whether their case will automatically be investigated by the firm without the need for any action on their part). 1.5.35 G In addition, the FCA has the option to include in the scheme rules a requirement on firms to publicise the scheme themselves. 1.5.36 G In considering whether to publish the names of individual firms that are subject to a scheme, the FCA will also have regard to the FCA’s transparency framework, and in particular its confidentiality restrictions, the extent to which naming firms will enable consumers to make informed judgments (e.g. it may not always be possible to ensure that the list of firms subject to a scheme is exhaustive), as well as relevance and timeliness (e.g. the extent to which consumers will be made aware of the firms involved in a scheme through any customer contact exercise prescribed in the scheme). 1.6 Role of the Financial Ombudsman Service and the Financial Services Compensation Scheme How the Financial Ombudsman Service will deal with complaints where there is a relevant consumer redress scheme 1.6.1 G Complaints about: (1) an act or omission of a firm where the subject matter of the

Appendix 5 Page 17 of 28 complaint falls to be dealt with (or has properly been dealt with) under a consumer redress scheme; or (2) a determination made by a firm under a consumer redress scheme; or (3) a failure by a firm to make a determination under a consumer redress scheme; will all fall within the compulsory jurisdiction of the Financial Ombudsman Service (see section 404B(11) of the Act). 1.6.2 G Whether the Ombudsman will, or will not, consider a complaint and, if so, on what basis will depend on the circumstances of the complaint, including in particular on when the complaint is received by the Financial Ombudsman Service and also on whether the firm and consumer agree that the complaint should not be determined by reference to what, in the opinion of the Ombudsman, the determination under the consumer redress scheme should be or should have been (see section 404B(1A) and (2B) of the Act). Complaints received by the Financial Ombudsman Service before a scheme comes into effect 1.6.3 G A scheme must be established by the FCA in accordance with the FCA’s rule-making processes, including consultation and cost-benefit analysis (CBA). Publicity in the run-up to formal consultation may lead to a rapid rise in the number of complaints to the Financial Ombudsman Service about the issue in question. Alternatively, the Financial Ombudsman Service may already have received a number of complaints about the issue for which a scheme is being developed to address. 1.6.4 G As these are complaints that were referred to the Financial Ombudsman Service before the scheme came into effect, the Ombudsman would have to determine the complaint on the usual fair and reasonable basis under section 228 of the Act. Complaints received by the Financial Ombudsman Service whilst a consumer redress scheme is in effect 1.6.5 G Where the complaint is about the subject matter of a scheme or a failure by a firm to make a determination under a scheme (where the firm has not yet dealt with it because the time limit for the firm to deal with cases under the scheme has not expired) under DISP 3 the Ombudsman will (unless DISP 2.8.1.R(4) applies) refer the complaint back to the firm to be dealt with in accordance with the scheme. 1.6.6 G In other cases the Ombudsman may have to consider the merits. However, the complaint will be determined by reference to what, in the opinion of the Ombudsman, the determination under the consumer redress scheme should be or should have been (unless the firm and

Appendix 5 Page 18 of 28 consumer agree that the complaint should not be so determined – see CONRED 1.6.7G). Examples would be where: (1) the firm does not offer redress in the determination, or makes no determination within the time limit for doing so, and the consumer claims that (under the terms of the scheme) the firm should have done so; or (2) the scheme provides for different forms of redress depending on the circumstances of the case, but the firm has offered one form of redress and the consumer claims that (under the terms of the scheme) the firm should have offered another form of redress. 1.6.7 G Where the firm and the consumer agree that the complaint should not be determined by reference to what, in the opinion of the Ombudsman, the determination under the consumer redress scheme should be or should have been (see section 404B(1A) and (2B) of the Act), the Ombudsman will determine the complaint by reference to what is fair and reasonable in all the circumstances of the case (see DISP 3.6). Complaints received by the Financial Ombudsman Service after a consumer redress scheme has ended 1.6.8 G If a complaint is about: (1) a firm’s determination under the scheme (or failure to make a determination in accordance with the scheme); or (2) an act or omission the subject matter of which has been dealt with under the scheme; the complaint will be determined by reference to what, in the opinion of the Ombudsman, the redress determination under the consumer redress scheme should have been, rather than by reference to what is ‘fair and reasonable’ (unless the firm and the consumer agree otherwise – see CONRED 1.6.7G). 1.6.9 G The point at which a scheme ends will be set out in the scheme and some schemes may be of indefinite duration. In relation to an ‘opt-in’ scheme, the FCA would ensure that the scheme covers how to deal with customers who nevertheless contacted firms after that date. 1.6.10 G The Financial Ombudsman Service may also receive complaints about cases that have been dealt with by a firm under a consumer redress scheme when the firm should have dealt with the issue under the normal complaints process in DISP. In such cases the Ombudsman will determine the complaint in accordance with its usual ‘fair and reasonable’ jurisdiction and the usual DISP rules will apply. DISP seeks to clarify this point by referring (in appropriate places) to complaints that have properly been dealt with under a consumer redress scheme. It is important to note that “properly” here refers to the scope of the scheme

Appendix 5 Page 19 of 28 (i.e. should the complaint have been dealt with under the scheme at all?) rather than the way in which the scheme has been applied in a particular case (i.e. the complaint did fall within the scheme but the firm applied the scheme incorrectly). Non-consideration and dismissal of complaints by the Ombudsman 1.6.11 G The relevant DISP provisions provide that the Ombudsman can usually (unless the firm and the consumer consent) only consider a complaint which falls to be dealt with under a consumer redress scheme if the firm has already provided a redress determination (akin to a final response) or failed to do so within the time limits specified in the scheme (see DISP 2.8.1R). 1.6.12 G DISP sets out the circumstances in which the Ombudsman may dismiss a complaint. There are no express rules which allow the Ombudsman to dismiss a complaint which falls to be dealt with (or has been dealt with) under a consumer redress scheme (see DISP 3.3.4AR). Whether a complaint which falls to be dealt with (or has been dealt with) under a consumer redress scheme should be dismissed is a matter for the Ombudsman to decide. Case fees 1.6.13 G The definition of chargeable case contains an exception which provides that a case fee may not be charged where the Ombudsman considers it apparent from the complaint, when it is received, and from any redress determination issued by the firm, that the firm has reviewed the subject matter of the complaint and issued a redress determination in accordance with the terms of the consumer redress scheme. However, this exception does not apply where the complainant and the respondent agree that the complaint should not be dealt with by the Ombudsman in accordance with the consumer redress scheme. 1.6.14 G If it is not apparent to the Ombudsman from the complaint when it is received, and from any redress determination issued by the firm, that the firm has reviewed the subject matter of the complaint and issued a redress determination in accordance with the terms of the consumer redress scheme, a case fee will be chargeable. It will therefore be in firms’ interests to ensure that a redress determination clearly sets out the outcome of their investigation under the scheme as well as the basis for it. Time limits 1.6.15 G Similar time limits will apply to complaints to the Financial Ombudsman Service about the outcome of a firm’s investigation under a scheme as currently apply to other complaints referred to the Financial Ombudsman Service. 1.6.16 G Consumers will have six months from the date on which the firm sent

Appendix 5 Page 20 of 28 them a redress determination to complain to the Financial Ombudsman Service. If a firm has failed to provide a redress determination (e.g. because it omitted to deal with a particular consumer’s case under the scheme), consumers will have the longer of six years from the event complained of and three years from the date on which the consumer became aware (or ought reasonably to have become aware) that they had cause for complaint, to complain to the Financial Ombudsman Service (in accordance with the existing standard time limits in DISP 2.8). A firm cannot consent to the Ombudsman considering the complaint outside these standard time limits where the complaint is a “relevant complaint” within the meaning of section 404B(3) of the Act. However, the Ombudsman can consider complaints outside of these standard time limits where, in the view of the Ombudsman, the consumer’s failure to comply with the time limits was as a result of exceptional circumstances. Awards 1.6.17 G Where a consumer redress scheme is in place, money awards and directions will reflect what, in the opinion of the Ombudsman, the outcome of the firm’s investigation should be (or should have been) under the consumer redress scheme (see section 404B(5) and section 404B(8) of the Act). This applies unless the firm and the consumer agree that the complaint should not be determined in this way (see section 404B(1A), (2B) and (3) of the Act). 1.6.18 G The money award may specify the date by which the amount awarded is to be paid and may provide for interest to be payable, at a rate specified in the award, on any amount not paid by that date (see section 404B(7) of the Act). 1.6.19 G The cap on the maximum money award the Ombudsman can make will also apply in relation to consumer redress schemes (see section 404B(5) of the Act). Even so, when making scheme rules, the FCA may decide to specify a different monetary limit in relation to complaints falling within the scope of the scheme (see section 229(7) of the Act). Such a rule would normally be subject to consultation before the scheme takes effect (see CONRED 1.2.1G). As is usual practice, the Ombudsman will be able to recommend that the firm pay a larger amount than the cap (but this will not be binding on firms in any way). This does not mean that the Ombudsman can recommend a larger amount than should be paid under the scheme. Firm-by-firm past business reviews that have already been agreed by a firm before a consumer redress scheme is made 1.6.20 G If a firm had fairly reached a voluntary settlement with its consumers on a full and final settlement basis, the Financial Ombudsman Service would not usually look to re-open this.

Appendix 5 Page 21 of 28 Waivers of the scheme rules for particular firms 1.6.21 G If a firm is granted a waiver of the scheme rules as a whole, the consumer redress scheme will not apply to that firm. Consequently, any complaints about the firm that are referred to the Financial Ombudsman Service will be dealt with in accordance with the Ombudsman’s usual approach of determining what is, in their view, fair and reasonable in all the circumstances of the case. Failures by firms that span the period before and after an activity became regulated by the FCA 1.6.22 G In this situation, the Act would require the Financial Ombudsman Service to decide complaints within the scope of a scheme by applying the scheme (unless the relevant firm and consumer otherwise agreed – see section 404B of the Act) and complaints outside the scope of a scheme on the basis of its usual approach (section 228 of the Act). However, as explained in CONRED 1.4.5G, it would be possible for the Treasury by order to widen the type of financial services that consumer redress schemes can cover in order to encompass the pre-regulation activities (see section 404G of the Act). The FSCS 1.6.23 G The FSCS will consider claims that fall within the scope of a consumer redress scheme in accordance with the scheme (see COMP 12.4.22R). However, the FSCS has discretion to depart from the terms of the scheme where it considers it essential in order to provide the claimant with fair compensation. An example might be the FSCS paying compensation in cash rather than augmenting a consumer’s current pension plan (as the FSCS is not in a position to advise the consumer to set up a new, or amend an existing, pension plan in the way that a firm may be able to). 1.6.24 G The FSCS’s limits on the amount of compensation it can pay in the event of a claim will apply. 1.7 Challenging a consumer redress scheme Method of challenge 1.7.1 G Any person (e.g. firms, consumers or their representatives) may apply to the Upper Tribunal for a review of any rules made (see section 404D of the Act). The contact details for the Upper Tribunal are as follows: The Upper Tribunal (Tax and Chancery Chamber) 5th floor, Rolls Building 7 Rolls Buildings

Appendix 5 Page 22 of 28 Fetter Lane London EC4A 1NL Tel: 020 7612 9730 Email: uttc@hmcts.gsi.gov.uk 1.7.2 G The Upper Tribunal is independent of the FCA. Its usual role in relation to financial services is to hear references arising from decision notices or supervisory notices issued by the FCA. However, it has also been given a special role in relation to consumer redress schemes. 1.7.3 G The judge presiding at consumer redress scheme proceedings in the Upper Tribunal will be a judge of the High Court, the Court of Appeal or Court of Session (or such other person as may be agreed by the Lord Chief Justice, the Lord President or the Lord Chief Justice of Northern Ireland; and the Senior President of Tribunals) (see section 404D(12) of the Act). Dealing with consumer redress scheme cases 1.7.4 G The general rule is that, in determining an application, the Upper Tribunal will apply the principles applicable on an application for judicial review (see section 404D(5) of the Act). Therefore, the Tribunal will consider issues such as: (1) whether the FCA has acted within its powers; (2) whether the FCA has followed a fair process; (3) whether the FCA has specified kinds of redress that are ‘just’; and (4) whether the FCA has acted irrationally or unreasonably (e.g. is the amount of time in which firms are given to conduct an investigation unreasonable?). 1.7.5 G Nonetheless, in relation to two particular aspects of a consumer redress scheme, the Upper Tribunal will be able to conduct a full merits review to consider whether the FCA’s interpretation of the law was correct (see section 404D(6) and (7) of the Act). These two aspects are: (1) any examples that the FCA has set out in the scheme rules of things done, or omitted to be done, that are to be regarded as constituting a failure to comply with a requirement; and (2) any matters to be taken into account, or steps to be taken, that the FCA has set out in the scheme rules for the purposes of: (a) assessing evidence as to a failure to comply with a requirement; or

Appendix 5 Page 23 of 28 (b) determining whether such a failure has caused (or may cause) loss or damage to consumers. 1.7.6 G In relation to these two aspects, the FCA is restricted to what a court or Tribunal would do. As such, the Upper Tribunal’s role will be to check whether the FCA came to the correct view. Procedure in the Upper Tribunal 1.7.7 G The detailed rules that govern the practice and procedure to be followed in the Upper Tribunal are available on the Government’s website (https://www.gov.uk/government/publications/upper-tribunal-procedure￾rules) and are subject to periodic revision. Possible outcomes of an application to the Upper Tribunal 1.7.8 G The Upper Tribunal may: (1) dismiss the application (so that the scheme rules will stand); or (2) make an order quashing any rules made under section 404 or any provision of those rules (see section 404D(2) of the Act). 1.7.9 G The Upper Tribunal may also award damages to the applicant (see section 404D(10) of the Act). 1.7.10 G It is possible to appeal an Upper Tribunal decision to the Court of Appeal on a point of law. 1.8 Imposing a consumer redress scheme on a firm under section 404F(7) of the Act Triggers that must be met before the FCA can impose a consumer redress scheme under section 404F(7) 1.8.1 G Section 404F(7) of the Act empowers the FCA to require a firm “to establish and operate a scheme which corresponds to, or is similar to, a consumer redress scheme” established under section 404 of the Act (see CONRED 1.2 to 1.7). 1.8.2 G The process by which the FCA may vary the authorisation of a payment service provider or electronic money issuer is not specifically addressed in this guidance. 1.8.3 G The relevant triggers for determining whether the FCA can require an authorised person with a permission to establish and operate a scheme which corresponds to, or is similar to, a consumer redress scheme are different to those that apply for an ‘industry wide’ consumer redress scheme established under section 404 of the Act. Rather than considering the test set out in section 404(1) of the Act, the FCA has to consider the relevant legal triggers for varying a permission or varying or imposing a

Appendix 5 Page 24 of 28 requirement on a firm (see sections 55H, 55J and 55L of the Act). 1.8.4 G However, before the FCA varies a firm’s permission under section 55J(2) of the Act on its own initiative, or imposes a requirement on a firm under section 55L of the Act, the FCA must consider whether it would be ‘more appropriate’ to proceed under the Competition Act 1998. If the FCA considers that it would be more appropriate to proceed under the Competition Act 1998, the FCA must not exercise its powers under sections 55J(2) or 55L of the Act (see section 234K of the Act). In the remainder of this section, it is assumed that the FCA considers that it is able to exercise its powers under the Act rather than under the Competition Act 1998. 1.8.5 G The FCA may vary a firm’s permission under section 55J of the Act or impose or vary a requirement under section 55L of the Act, on its own initiative, if it appears to the FCA that: (1) the firm is failing, or likely to fail, to satisfy the threshold conditions for which the FCA is responsible; (2) the firm has failed, for at least a year, to carry on a regulated activity to which its permission relates; or (3) it is desirable to exercise the power in order to advance one or more of the FCA’s operational objectives, for example, its consumer protection objective of securing an appropriate degree of protection for consumers. 1.8.6 G Further information about varying a firm’s permission or varying or imposing requirements on the FCA’s own initiative under section 55J or section 55L of the Act is set out in EG 8. 1.8.7 G The FCA has no power to accept an application from an authorised person to vary its permission where the authorised person is a PRA￾authorised person (see sections 55H and 55I of the Act). For all other firms, an authorised person with a permission can voluntarily apply to the FCA to vary its permission under section 55H of the Act. The FCA may refuse the application if it appears to the FCA that it is desirable to do so in order to advance any of its operational objectives, for example, its consumer protection objective (see section 55H(4) of the Act). The FCA also has the power to impose or vary a requirement under section 55L of the Act, in order to establish and operate a scheme which corresponds to, or is similar to, a scheme established under section 404 of the Act. However, where the authorised person is a PRA-authorised person (or is a member of a group which includes a PRA-authorised person), the FCA must consult the PRA (see section 55L(7) of the Act). As with voluntary applications to vary a permission, the FCA may refuse an application to voluntarily impose, vary or cancel a requirement if it appears to the FCA that it is desirable to do so in order to advance any of its operational objectives (see section 55L(5) of the Act).

Appendix 5 Page 25 of 28 1.8.8 G Further information about the voluntary variation of a permission or the voluntary imposition or variation of a requirement is set out in SUP 6. Consultation 1.8.9 G The decision to require a firm to establish and operate a scheme pursuant to section 404F(7) affects a firm, or a small number of firms, each individually rather than the whole industry or sector of the industry. As with any supervisory or enforcement action it takes against a specific firm, the FCA is not obliged to consult before deciding to vary a firm’s permission or impose or vary a requirement. Circumstances in which the FCA will engage section 404B 1.8.10 G As already explained, when determining whether to vary a firm’s permission under sections 55H or 55J or to impose a requirement under section 55L to establish and operate a scheme pursuant to section 404F(7), the FCA will need to consider whether the statutory tests referred to in CONRED 1.8.5G (for own initiative action) and CONRED 1.8.7G (where a firm applies voluntarily) have been met. This will often involve a consideration of the FCA’s operational objectives and, in particular, the consumer protection objective. The FCA will also consider the regulatory principles in section 3B of the Act and follow the normal principles of administrative law. 1.8.11 G This exercise will be undertaken on a case-by-case basis and in the round by looking at all of the proposed terms, including any terms which have been included to make provision corresponding to section 404B (under section 404F(7)(b)). It is important to note that engaging section 404B will not automatically or always advance one or more of the FCA’s operational objectives, for example its consumer protection objective, even if the other terms of the proposed scheme do. 1.8.12 G If section 404B is engaged then broadly the Ombudsman is normally required to decide a complaint referred to the Financial Ombudsman Service after the scheme comes into effect on the basis of what, in the opinion of the Ombudsman, the determination under the scheme should be (or should have been). This will mean that the Ombudsman will not determine the complaint by reference to what in their view they consider to be fair and reasonable in all the circumstances of the case. To assist the Financial Ombudsman Service in identifying relevant cases, firms may be required to draw the scheme to the attention of the Financial Ombudsman Service in any individual cases that are referred to it. However, if the firm and the consumer agree that the complaint should not be determined by reference to what, in the opinion of the Ombudsman, the determination under the consumer redress scheme should be or should have been, or if the subject matter of the complaint does not fall to be dealt with under the scheme (or part of it does not) then the Ombudsman may determine the complaint (or that aspect of the complaint) in accordance with what they consider to be fair and

Appendix 5 Page 26 of 28 reasonable in the usual way. 1.8.13 G It is likely that many section 404F(7) schemes will be set up because, in the FCA’s view, it is desirable to advance the consumer protection objective of securing an appropriate degree of protection for consumers. In determining what is desirable to advance that objective, the FCA will have regard to a wide range of factors. Many of these are likely to be interdependent considerations rather than standalone issues. These may include (but are not limited to): (1) how many consumers have been (or may be) affected by the act or omission to which the proposed scheme relates. It will normally only be appropriate to consider engaging section 404B where the issue affects a large number of consumers; (2) whether engaging section 404B would result in higher or faster redress for consumers (whether or not they have complained individually) than would otherwise be the case. In other words, the extent of any difference in redress between the proposed scheme and what consumers may receive through the Financial Ombudsman Service or the courts; (3) the extent to which the overall effect of the proposed scheme provides a fair and reasonable outcome for individual consumers, having regard to the desired outcome for the group of affected consumers overall; (4) whether the Financial Ombudsman Service has had a material number of complaints about the act or omission, has an established approach to dealing with them and the extent to which the proposed scheme aligns with this approach. Consultation with the Financial Ombudsman Service when the FCA is considering engaging section 404B 1.8.14 G Where the FCA is considering engaging section 404B, it will consult with the Financial Ombudsman Service at an early stage and allow time for a fully-considered, written response. The Financial Ombudsman Service is in a position to say: (1) whether it has already received cases about the particular firm and acts/omissions, whether any cases have been decided and (if so) what the outcomes were; (2) insofar as the acts/omissions are not fact-specific, whether it has previously considered similar cases and has adopted a particular approach; (3) the sorts of complaints it can foresee might be made in future by consumers about the firm in relation to the acts/omissions concerned;

Appendix 5 Page 27 of 28 (4) how the outcomes of cases decided by the Ombudsman, or the Ombudsman’s approach to similar cases, would compare to the outcomes under the proposed scheme; and (5) if the Financial Ombudsman Service is likely to encounter any practical issues in implementing the proposed scheme. 1.8.15 G The Financial Ombudsman Service is impartial between consumers and firms. The FCA will not treat the Financial Ombudsman Service’s input as a proxy for input on behalf of consumers. 1.8.16 G The Financial Ombudsman Service cannot lawfully guarantee how it will decide cases that fall outside the scope of the scheme (e.g. pre￾regulation cases or those referred to the Financial Ombudsman Service before the scheme came into effect). It may, however, be willing to describe its general approach to such cases. Internal process to be followed if the FCA proposes to engage section 404B 1.8.17 G Where the proposal is to engage section 404B, the FCA will apply the following governance procedure in addition to its usual processes: (1) all decisions to engage section 404B will be taken by the FCA’s Executive Committee or a sub-committee; (2) the committee/sub-committee will need to be satisfied that there has been adequate consultation internally to ensure full consideration of consumers’ interests; (3) the committee/sub-committee will consider written views from the Financial Ombudsman Service before reaching a decision; and (4) if section 404B is engaged, the document outlining the terms of the scheme will be published on the FCA website, either in the FCA Register or (with cross-reference from the FCA Register) in a register of such schemes. Challenging a consumer redress scheme imposed under section 404F(7) 1.8.18 G If the firm has voluntarily applied to establish and operate the scheme, it is unlikely to challenge the FCA for accepting its application. If the FCA proposes to refuse a firm’s application for a section 404F(7) scheme, the FCA must give the firm a warning notice (section 55X(2)). If, after consideration by the FCA’s decision maker, the FCA decides to refuse the application, the FCA must give the firm a decision notice (section 55X(4)). The firm would be able to challenge the decision notice by referring the FCA’s decision to the Upper Tribunal (section 55Z(3)). 1.8.19 G If the consumer redress scheme was imposed on the FCA’s own initiative, the FCA must give the firm a supervisory notice (section 55Y).

Appendix 5 Page 28 of 28 The firm would be able to challenge the supervisory notice by referring the FCA’s decision to the Upper Tribunal (section 55Z(3)). The Tribunal may dismiss the reference or remit the matter to the FCA with a direction to reconsider and reach a decision in accordance with the Tribunal’s findings (section 133(6) of the Act).

68 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Appendix 6 Changes to SUP

Appendix 6 SUPERVISION MANUAL (AMENDMENT NO 21) INSTRUMENT 2015 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”): (1) section 137A (The FCA’s general rules); (2) section 137T (General supplementary powers); and (3) section 139A (Power of the FCA to give guidance); and (4) the other rule and guidance making powers listed in Schedule 4 (Powers exercised) to the General Provisions of the FCA’s Handbook. B. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule-making instruments) of the Act. Commencement C. (1) Part 1 of the Annex to this instrument comes into force on 31 December 2015. (2) Part 2 of the Annex to this instrument comes into force on 21 March 2016. (3) Part 3 of the Annex to this instrument comes into force on 31 March 2016. Amendments to the FCA Handbook D. The Supervision manual (SUP) is amended in accordance with the Annex to this instrument. Citation E. This instrument may be cited as the Supervision Manual (Amendment No 21) Instrument 2015. By order of the Board of the Financial Conduct Authority [date]

Appendix 6 Page 2 of 28 Annex Amendments to the Supervision manual (SUP) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise indicated. Part 1: Comes into force on 31 December 2015 16.10 Verification of standing data … 16.10.4A R (1) A firm other than: (a) a credit union; or (b) an FCA-authorised person with permission to carry on only credit-related regulated activity; must submit any corrected standing data under SUP 16.10.4R(3) online at the appropriate regulator’s website using the ONA system and any other appropriate systems accessible from the appropriate regulator’s website. … 16.12 Integrated Regulatory Reporting … Regulated Activity Group 5 … 16.12.18B R The applicable data items, reporting frequencies and submission deadlines referred to in SUP 16.12.4R are set out in the table below. Reporting frequencies are calculated from a firm’s accounting reference date, unless indicated otherwise. The due dates are the last day of the periods given in the table below following the relevant reporting frequency period.

Appendix 6 Page 3 of 28 Description of data item Data item (note 1) Frequency Submission deadline … … Note 3 Only applicable to a firm that:

• is subject to MIPRU 4.2D;
• has no restriction to its Part 4A permission preventing it from undertaking new home financing or home finance administration connected to regulated mortgage contracts, ; and:
• has permission to carry on any home financing or home finance administration connected to regulated mortgage contracts. … Method for submitting recovery plans and information for resolution plans 16.20.6 R A firm must submit its recovery plan and the information required for its resolution plan to the FCA online through the appropriate systems accessible from the FCA’s website, using the forms specified in SUP 16 Annex 40R. … 16 Annex 16AR Standing data (See SUP 16.10.4R) 16 Annex 16A.1 R …

18. The name and email address of the firm’s principal user of the appropriate systems accessible from the FCA’s website … 16 Annex 21R Reporting Fields … … 2 SPECIFIC REPORTING FIELDS … (c) Mortgages The following data reporting fields must be completed, where applicable for all relevant regulated mortgage contracts: … Data reporting Code (where Notes

Appendix 6 Page 4 of 28 field applicable) … Sales Data (report for all regulated mortgage contracts) … … … Was this mortgage advanced under a government supported initiative? Y = yes Yes N = no No Report whether the mortgage was advanced under a government supported initiative, e.g. through provision of a shared equity loan or indemnity insurance. … ... … Performance Data (report for all regulated mortgage contracts) … … … Current amount of payment shortfall Numeric £ Report current amount of payment shortfall at date of reporting. Report to two decimal places (i.e. pounds and pence). Report as a positive rather than a negative number. … … … … … The form CCR007 (Consumer Credit Data: key data for credit firms with limited permission) at SUP 16 Annex 38AR (Data Items relating to Consumer Credit activities) is deleted in its entirety and replaced with the form shown below. The deleted text is not shown and the new text is not shown underlined.

Appendix 6 Page 5 of 28 Amend the following text as shown. 16 Annex 38BG Notes for completion of Data Items relating to Consumer Credit activities Contents … CCR008: Credit-broking websites … Data elements 9. These are referred to by row first, then by column, so data element 2B will be the element numbered 2 in column B. General reporting guidelines 10. The consumer credit returns in SUP 16 Annex 38AR (Data Items relating to Consumer Credit activities) should reflect the standard accounting practices followed in the preparation of a firm’s annual report and accounts, unless otherwise stated. 11. The information reported in the returns should cover the reporting period specified, unless otherwise stated. … 1 Revenue from credit-related regulated activities 2 Total revenue (including from activities other than credit-related regulated activities) 3 Number of transactions involving credit-related regulated activities in reporting period 4 Number of complaints related to credit-related regulated activities received in period 5 Credit-related regulated activity which generated the highest amount of turnover in the reporting period 6 Total annual income as defined in FEES 4 Annex 11BR for the purposes of FCA fees reporting CCR007 - Consumer Credit data: Key data for credit firms with limited permissions A

Appendix 6 Page 6 of 28 CCR002 – Consumer Credit data: volumes … Column C: Total Customers: … A credit repair firm should count the number of individual customers who have engaged their services during the period. In the case of jointly owned products, each individual should be recorded as a customer for the purposes of this column. For example, a joint account held by two individuals would be recorded as two customers. Column D: Total Transactions In this column, firms should identify the total number of transaction that were made during the period. This figure should always be equal to or greater than the figure in column C. For example, if the same customer has taken out three loans, this counts as three towards the “total transactions” figure. Jointly owned products should be recorded as a single transaction. For example, a joint account held by two individuals would be recorded as one transaction. ... Row 12: Total annual income for FCA fees reporting This figure should be calculated with reference to the FEES 4 Annex 11BR.

Appendix 6 Page 7 of 28 CCR003 – Consumer Credit data: Lenders … Column G: Highest rate of interest (in period) … Row 7: Running-account credit The information recorded in this row should be on the utilisation of the running-account credit, not the facility.

Appendix 6 Page 8 of 28 CCR007 – Key data for credit firms with limited permission … Revenue from credit￾related regulated activities 1A A firm should include the total revenue received from all credit-related regulated activities during the period. A firm should report the total amount of income (before expenses) actually received by the firm for their credit￾related business activities during the reporting period. Example 1: A firm sells a product for £1000 after referring the customer for financing. The firm receives £50 commission for the referral, as well as the £1000 for the product sale. For data field 1A, the firm would need to report their credit-related income of £50. The income from activities unrelated to credit should not be included here. Example 2: A firm sells a product for £1,000. The customer pays £500 cash and firm refers customer for financing for the remaining balance. The firm receives £50 commission for the referral. For data field 1A, the firm would need to report their credit-related income of £50. The amount of finance referred should not be reported here. Total revenue (including from activities other than credit-related regulated activities) 2A A firm should include all the total revenue received from all its business undertaken during the reporting period, both regulated and unregulated. A firm should report all income (before expenses) received for all its business, both regulated and unregulated. For example, if a firm has sold a product for £1000 and received £50 commission for referring the customer for credit. For data field 2A, the firm should report the total amount of money received, £1050. Number of credit-related regulated transactions in reporting period 3A A firm should identify how many credit-related regulated activity transactions it has undertaken during the period. A firm should report every credit-related regulated transaction which occurred in the reporting period. For example, if one customer has been referred for

Appendix 6 Page 9 of 28 credit twice, then this should be recorded as two transactions. In relation to debt counselling, the amount should relate to the number of separate occasions on which advice has been given. Number of complaints relating to credit-related activities received in period 4A A firm should submit the total number of complaints received in relation to credit-related activities undertaken by the firm which it has been required to deal with under the rules in DISP. during the reporting period. Any complaints about the firm’s non-credit￾related business should not be included here. Credit-related regulated activity carried on in relation to the greatest number of customers which generated the highest amount of turnover in reporting period 5A Selecting from the following options, a firm should identify which credit-related regulated activity generated the highest amount of turnover.  Lending  Consumer hire  Not-for-profit debt counselling  Secondary credit broking  Other Total annual income as defined in FEES 4 Annex 11BR for the purposes of FCA fees reporting 6A Firms should refer to FEES 4 Annex 11BR to calculate this figure. This can be found in the following location: http://fshandbook.info/FS/html/FCA/FEES/4/Annex11B Firms which receive grants or funding for their activities should only include this information here when it relates specifically to credit-related activity.

Appendix 6 Page 10 of 28 CCR008: Credit broking websites The purpose of this data item is to give the FCA an understanding of the ownership of websites used by firms undertaking the credit-related regulated activity of credit broking. Where a firm has not acquired or disposed of a domain name in the reporting period, columns B and C should be left blank. Column A: Domain name Firms should record all website domain names held by the firm during the reporting period, regardless of whether they were acquired or disposed of during the reporting period. The domain names should be the full website addresses, beginning with either http:// or https:// For example, http://www.fca.org.uk Column B: If the firm acquired or first used the domain name during the reporting period, the date of acquisition or first use If the website was purchased or used for the first time during the reporting period, the date of this should be entered here. Otherwise, this field should be left blank. Column C: If the firm disposed of or ceased using the domain name during the reporting period, the date of disposal or cessation If the firm stopped using or sold the website during the reporting period, the date of this should be entered here. Otherwise, this field should be left blank. …

Appendix 6 Page 11 of 28 The following annex is new and the new text is not underlined.  SUP 16 Annex 40R Data items related to recovery and information for resolution plans

Appendix 6 Page 12 of 28 REP006 Recovery Plans Group Reporting A B 1 Does the data reported in the Recovery Report cover more than one entity? FRN LEI 2 If yes, list the firm reference numbers (FRNs) and/or Legal Entity Identifiers (LEIs) of all additional firms included in this report. Nil Return 3 If you wish to declare a nil return, enter the FRN, LEI or name of the group for the firm submitting on your behalf.

Appendix 6 Page 13 of 28 REP007 Resolution Plans Group Reporting A B 1 Does the data reported in the Resolution Report cover more than one entity? FRN LEI 2 If yes, list the firm reference numbers (FRNs) and/or Legal Entity Identifiers (LEIs) of all additional firms included in this report. Nil Return 3 If you wish to declare a nil return, enter the FRN, LEI or name of the group for the firm submitting on your behalf.

Appendix 6 Page 14 of 28 Part 2: Comes into force on 21 March 2016 16.12 Integrated Regulatory Reporting … Regulated Activity Group 5 … 16.12.18C R Additional applicable data items, reporting frequencies and submission deadlines referred to in SUP 16.12.4R are set out in the table below for a firm carrying on home finance administration or home finance providing activities in relation to second charge regulated mortgage contracts. Reporting frequencies are calculated from a firm's accounting reference date, unless indicated otherwise. The due dates are the last day of the periods given in the table below following the relevant reporting frequency period. Description of data item Data item (note 1) Frequency Submission deadline Analysis of second charge loans to customers Section A3(a) A4 MLAR Quarterly 20 business days Second charge business flow and rates Sections D1(a) and D2(a) MLAR Quarterly 20 business days Second charge lending to individuals Sections E1(a) and E2(a) MLAR Quarterly 20 business days Second charge lending – arrears analysis Section F(a) F1 MLAR Quarterly 20 business days Second charge mortgage administration – arrears analysis Sections H1(a) and H2(a) MLAR Quarterly 20 business days … … …

Appendix 6 Page 15 of 28 The following forms in SUP 16 Annex 19AA R (Mortgage Lenders & Administrators Return (MLAR) - sub-forms for second charge regulated mortgage activity): A(3)a – Balance Sheet (second charge); D(1)a – Second charge lending: Business flows & rates; D(2)a – Second charge lending: Business flows; E(1)a – Second charge loans to individuals: Income Multiple & LTV; E(2)a – Second charge loans to individuals: Nature of loan and purpose; F(1)a – Second charge lending: Arrears analysis; F(2)a – Second charge lending: Arrears analysis; H(1)a – Second charge mortgage administration: Arrears analysis; and H(2)a – Mortgage administration: Arrears analysis are deleted in their entirety and replaced with the forms shown below. The deleted text is not shown and the new text is not shown underlined.

Appendix 6 Page 16 of 28 MLA-A4 Analysis of second charge loans to customers A B C D E F G Gross balances Provisions Net balances Gross balances Provisions Non recourse Net balances finance Residential loans to individuals, of which 1 Second (or subsequent) charge Unsecuritised balances Securitised balances

Appendix 6 Page 17 of 28 MLA-D1 Second Charge Lending - Business flow and rates A B C D E F G H I Overdrafts: Balance at end of previous quarter Advances made in quarter Repayment of principal Write offs in quarter Other debits/(credits) and transfers (net) Balance at end of quarter Loans excluding overdrafts Overdrafts Aggregate of credit limits Residential loans to individuals, of which 1 Second (or subsequent) charge Loans acquired Loans sold Loans securitised Other Total 2 Second (or subsequent) charge A B C D E F G H I J TOTAL Fixed rates Variable rates Less than 2% above BBR 2 < 3% above BBR 3 < 4% above BBR 4% or more above BBR All balances Balances at fixed rates Balances at variable rates (£000's) (£000's) (£000's) (£000's) (£000's) (£000's) (£000's) % % % 3 Total book 4 Advances in quarter A B C D E F Commitments outstanding at end of previous quarter Commitments made since end of previous quarter Cancellations in quarter Advances made in quarter Other debits/(credits) and transfers (net) Commitments outstanding at end of quarter Second (or subsequent) charge 5 New loan 6 Remortgage 7 Total Weighted average nominal annual rate on: Balance at end of quarter on loan assets subject to non-recourse funding Loans: Advances/Repayments Loans: Interest rates Of which: Balances at end of quarter Interest rates at end of quarter (to 2 decimal places) Second (or subsequent) charge Loans: Commitments Residential loans to individuals, of which Transactions in quarter included in 1E Of which at: Loans: Book movements Residential loans to individuals, of which Of which at:

Appendix 6 Page 18 of 28 MLA-E1 Second Charge Lending - Loans to Individuals A B C D Income Multiple & LTV SINGLE income multiple < = 75 % Over 75 < = 90 % Over 90 < = 95 % Over 95 % 1 Less than 2.50 2 2.50 < 3.00 3 3.00 < 3.50 4 3.50 < 4.00 5 4.00 or over 6 Other 7 TOTAL 8 of which: Not evidenced JOINT income multiple A B C D 9 Less than 2.00 10 2.00 < 2.50 11 2.50 < 2.75 12 2.75 < 3.00 13 3.00 or over 14 Other 15 TOTAL 16 of which: Not evidenced A B C D Nature of loan and purpose Second (or subsequent) charge mortgages Number Amount Number Amount By credit history 17 Impaired credit history 18 Other 19 TOTAL second (or subsequent) charge By payment type 20 Repayment (capital & interest) 21 Interest only 22 Combined 23 Other 24 TOTAL second (or subsequent) charge By drawing facility Loans with extra drawing facility: 25 (a) Loans including unused facility 26 (b) Unused facility 27 (c) Net loans (a-b) 28 Loans with no extra drawing facility 29 TOTAL second (or subsequent) charge By purpose House Purchase: 30 Home improvement 31 Debt consolidation 32 Home improvement and debt consolidation 33 Other 34 TOTAL second (or subsequent) charge Gross advance in quarter Balances outstanding Second (or subsequent) charge mortgages Second (or subsequent) charge mortgages Gross advances in quarter : (amount) by LTV

Appendix 6 Page 19 of 28 MLA-F1 Second Charge Lending - Arrears Analysis A B C D E F G Arrears categorisation by type of loan Number Amount of arrears Balance outstanding Number Amount of arrears Balance outstanding Second (or subsequent) charge 1 1.5 < 2.5 % 2 2.5 < 5 % 3 5.0 < 7.5 % 4 7.5 < 10 % 5 10% or more 6 In possession 7 TOTAL A B C D E F G H Arrears management Those cases no longer reported (i.e. not included in 1 to 7) Number Balance outstanding Number Amount of arrears Balance outstanding A temporary concession A formal arrangement No concession arrangement Residential loans to individuals, of which 8 Second (or subsequent) charge Possession sales during quarter Capitalisation of arrears cases in quarter Number of cases for which there is in place: Arrears cases reported in 1 to 7 Cases entering higher (i.e. more serious) arrears band in quarter Position on all arrears cases at end of quarter Performance of current arrears cases during the quarter (%)

Appendix 6 Page 20 of 28 MLA-H1 Second Charge Mortgage Administration - Arrears Analysis A B C D E F G Arrears categorisation by type of loan Number Amount of arrears Balance outstanding Number Amount of arrears Balance outstanding Second (or subsequent) charge mortgages 1 1.5 < 2.5 % 2 2.5 < 5 % 3 5.0 < 7.5 % 4 7.5 < 10 % 5 10% or more 6 In possession 7 TOTAL A B C D E F G H Arrears management Those cases no longer reported (i.e. not included in 1 to 7) Number Balance outstanding Number Amount of arrears Balance outstanding A temporary concession A formal arrangement No concession arrangement Residential loans to individuals, of which 8 Second (or subsequent) charge Number of cases for which there is in place: Cases entering higher (i.e. more serious) arrears band in quarter Position on all arrears cases at end of quarter Possession sales during quarter Capitalisation of arrears cases in quarter Performance of current arrears cases during the quarter (%) Arrears cases reported in 1 to 7

Appendix 6 Page 21 of 28 Part 3: Comes into force 31 March 2016 16 Reporting Requirements … Annex 18A Retail Mediation Activities Return ('RMAR') Section C of the form is deleted in its entirety and replaced with the following. The deleted text is not shown and the new text is not shown underlined.

Appendix 6 Page 22 of 28

Appendix 6 Page 23 of 28 Amend the following as shown. 16 Annex 18BG Notes for Completion of the Retail Mediation Activities Return ('RMAR') … Section C: Client Money and assets Note: Home purchase and reversion activity should be included under the existing mortgage headings in this section of the RMAR. … The client money rules define further what is and is not client money, and set out requirements on firms for the proper handling of and accounting for client money. If a firm holding client money fails, there is a greater direct risk to consumers, and a greater adverse impact on market confidence, if it is a holder of client money compared (for example) to a firm that only holds money under risk transfer arrangements. Note 1: a firm should complete section C of the RMAR for the money it receives or holds in the course of, or in connection with, its insurance mediation activity (see CASS 5). Note 12: firms that only carry on home finance mediation activity or insurance mediation activity in respect of reinsurance contracts are exempt from the client money rules, and are not therefore required to complete this section C of the RMAR. However, a firm may make an election under CASS 5.1.1R(3) to comply with CASS 5.1 to CASS 5.6 in respect of client money it receives in the course of carrying on insurance mediation activity in relation to reinsurance contracts. Where a firm has made such an election it should also complete this section C of the RMAR. Note 3: a firm that receives or holds money for its MiFID business or designated investment business that is not MiFID business and holds money to which CASS 5 applies, may make an election under CASS 7.10.3R(1) or (2) to comply with CASS 7 for money it receives in the course of, or in connection with, its insurance mediation activity. Where a firm has made such an election, it should not complete section C of the RMAR, except to confirm that it holds money in connection with insurance mediation activities and has elected to comply with CASS 7. Note 4: a firm (e.g., a property management firm) that complies with the Royal Institute of Chartered Surveyors (RICS) Members’ Accounts rules or, in relation to a service charge, the requirement to segregate such money in accordance with section 42 of the Landlord and Tenant Act (LTA) 1987 is deemed to comply with CASS 5.3 to CASS 5.6, provided that it satisfies the requirements of CASS 5.5.49R to the extent that the firm will hold money as trustee or otherwise on behalf of its clients. Such a firm should only complete the questions in section C of the RMAR indicated in the guide for completion of individual fields below. Note 25: an authorised professional firm regulated by The Law Society (of England and Wales), The Law Society of Scotland or The Law Society of Northern Ireland must comply with the rules of its designated professional body as specified in CASS 5.1.4R, and if it does

Appendix 6 Page 24 of 28 so, it will be deemed to comply with CASS 5.2 to CASS 5.6. These firms are not therefore required to complete this section C of the RMAR. Note 36: firms should complete all applicable fields. Section C: guide for completion of individual fields Question Guidance notes Have any notifiable issues been raised in relation to client money or other assets, either in the firm’s last client assets audit report or elsewhere, that have not previously been notified to the FCA? SUP 3.10 sets out the requirement for auditors to report annually on the firm’s systems and controls in relation to client money or custody assets. Auditors and firms are required to report significant issues to the FCA (see SUP 3.8.10G and SUP15.3). Therefore, if you answer ‘yes’ here, you should ensure that the relevant issues are notified to us. Risk transfer See CASS 5.2 – holding money as agent of insurance undertaking Statutory Trust See CASS 5.3 and CASS 7.7 Non-statutory Trust See CASS 5.4 Client money credit total as at reporting date This should be the total of credits on the firm’s client money account(s) as at the current date of return. These should be taken from the firm’s ledgers. Client money debit total as at reporting date This should be the total of any debits on the firm’s client money account(s) as at the current date of return. These should be taken from the firm’s ledgers. Net client money balance as at reporting date This should be the aggregate balance on the firm’s client money account(s). If non-statutory, has auditor's confirmation of systems and controls been obtained? This refers to the requirement in CASS 5.4.4R(2) that the firm must obtain and keep current, written confirmation from its auditor that the firm has adequate systems and controls in place to meet the requirements under CASS 5.4.4R(1). Is any client money invested (other than on deposit)? You should indicate ‘yes’ here if the firm has invested any client money other than in a bank account. See CASS 5.5.14. (Note: this is only permitted for client money that is held in a non-statutory trust.) Does the firm hold any client assets (other than client money)? If the firm holds client assets and is subject to the requirements of CASS 5.8 or CASS 6, state ‘yes’ here. Does your firm receive or hold Firms should answer ‘yes’ here if they hold money

Appendix 6 Page 25 of 28 money in the course of, or in connection with, its insurance mediation activity? such that CASS 5.1 to CASS 5.6 applies (see CASS 5.1.1R). Firms to which note 4 applies should also answer ‘yes’ Has your firm elected under CASS 7.10.3R(1) or (2) to comply with CASS 7? See note 3. How does your firm hold money received in the course of, or in connection with, its insurance mediation activity? You should answer ‘yes’ or ‘no’ under each of the headings, as appropriate. CASS 5 Client money: See CASS 5.1 As agent of insurer: See CASS 5.1.5R and CASS 5.2 – holding money as agent of insurance undertaking under a written risk transfer agreement and not as client money. Firms to which note 4 applies should select ‘no’ under each heading, unless they hold money when acting both in the capacity of an insurance broker and of a property management company. A firm may answer ‘yes’ under both headings. Is your firm's CASS 5 client money held under the CASS 5.3 statutory trust or under one or more CASS 5.4 non-statutory trusts? You should indicate here the type of trust under which client money is held: Statutory trust – see CASS 5.3 Non-statutory trust – see CASS 5.4 A firm may answer ‘yes’ under both headings. If non-statutory, has an auditor’s confirmation of systems and controls been obtained? This refers to the requirement in CASS 5.4.4R(2) that the firm must obtain and keep current, written confirmation from its auditor that the firm has adequate systems and controls in place to meet the requirements under CASS 5.4.4R(1). This requirement is separate to the annual audit requirement in SUP 3.10. Is client money invested or placed in anything other than a client bank account? You should indicate ‘yes’ here if the firm has invested any client money other than in a client bank account. See CASS 5.5.14R which states that a firm may satisfy the requirement to segregate client money by segregating or arranging for the segregation of designated investments with a value at least equivalent to such money as would otherwise be segregated. This means of segregation is only permitted for client

Appendix 6 Page 26 of 28 money held under a non-statutory trust. Highest client money requirement (for money held as client money, taken from the firm's client money calculations) See CASS 5.5.63R and CASS 5.5.66R to CASS 5.5.67R A firm should enter the highest client money requirement calculated during the period. This would be taken from the firm’s client money calculations performed during the period. Only the single highest client money requirement figure should be entered, not the aggregate of the client money requirements calculated during the period. Highest account balance (for money held as client money, taken from the firm's records) This refers to money held as CASS 5 client money under a statutory trust or non-statutory trust(s). The amount should be taken from the firm’s own records and should include client money held as agent of insurer which is co-mingled with other client money in a client money account (see CASS 5.1.5AR). If your firm segregates designated investments under a non-statutory trust (see CASS 5.5.14R), you should also include the value of these investments. If your firm operates both statutory and non-statutory trust accounts, you should enter two balances; one for the highest balance in statutory trust accounts and one for the highest balance in non-statutory trust accounts. Highest account balance for money held purely as agent of insurer (and not co-mingled with client money) This refers to money held purely as agent of insurer under risk transfer agreements (see CASS 5.2) and held separate to any CASS 5 client money. The amount should be taken from the firm’s own records. If money held as agent of insurer is co-mingled with CASS 5 client money in a client bank account (see CASS 5.1.5AR), it should be reported in the previous field and therefore should not be reported in this field. The data reported in questions 20 to 23 should be taken from the firm’s client money calculation performed closest, and prior, to the end of the reporting period. Client money requirement as at end of the reporting period See CASS 5.5.63R and CASS 5.5.66R to CASS 5.5.68R Client money resource as at end of the reporting period See CASS 5.5.63R and CASS 5.5.65R Surplus (+) or deficit (-) of client money resource against client money requirement See CASS 5.5.63R This should be the difference between the client money requirement and the client money resource.

Appendix 6 Page 27 of 28 Adjustments made to withdraw an excess or rectify a deficit See CASS 5.5.63R This should be the amount of money paid into or withdrawn from the client bank account following the client money calculation performed closest, and prior to, the end of the reporting period. Is your firm exempt from the client asset audit requirement? See SUP 3.1.2R Note 4 If the firm does not hold client money or other client assets in relation to insurance intermediation activities or only holds up to, but not exceeding, £30,000 of client money under a statutory trust arising under CASS 5.3 state ‘yes’ here. Firms to which note 4 applies should answer this question. If not exempt, have you obtained a client assets audit in the last 12 months? See SUP 3.1 to SUP 3.7 and SUP 3.11. If the firm has obtained a client assets audit in the last 12 months enter ‘yes’. If it has not, enter ‘no’. Firms to which note 4 applies should answer this question. What is the name of your firm's client assets auditor? Enter the name of the firm’s auditor as it appears on the Financial Reporting Council’s register of statutory auditors. Firms to which note 4 applies should answer this question. According to your last client assets audit report, what was the auditor's opinion on your firm's compliance with the client money rules as at the period end date? This refers to the opinion at the end of the audit period. The firm should select from ‘clean’, ‘qualified’ or ‘adverse’, as appropriate. In this question, the period end date refers to the period covered by the audit report and will therefore refer to a different period to the reporting period for this return. Firms to which note 4 applies should answer this question. Have any notifiable client money issues been raised, either in the firm's last client assets audit report or elsewhere, that have not been notified to the FCA since the last reporting period for this return? Answer yes if the firm has not, since the last reporting period for this return, notified the FCA of any breaches in relation to the following notification requirements: CASS 5.5.61R: failure of a bank, broker or settlement agent. CASS 5.5.76R: failure to perform calculations or reconciliation. CASS 5.5.77R: failure to make good a shortfall by the close of business on the day the calculation is

Appendix 6 Page 28 of 28 performed. Does your firm hold any client documents or other assets (other than client money) in accordance with CASS 5.8? If the firm is subject to the requirements of CASS 5.8, state ‘yes’ here.

Financial Conduct Authority September 2015 69 Quarterly Consultation No. 10 CP15/28 Appendix 7 DISP amendments instrument

Appendix 7 DISPUTE RESOLUTION: COMPLAINTS SOURCEBOOK (AMENDMENT NO 5) INSTRUMENT 2015 Powers exercised by the Financial Ombudsman Service Limited A. The Financial Ombudsman Service Limited fixes and varies the standard terms for Voluntary Jurisdiction participants as set out in Parts 2 and 4 of the Annex to this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”): (1) section 227 (Voluntary jurisdiction); (2) paragraph 18 (Terms of reference to the scheme) of Schedule 17; and (3) paragraph 22 (Consultation) of Schedule 17. B. The fixing and variation of the standard terms in Parts 2 and 4 of the Annex by the Financial Ombudsman Service Limited is subject to the approval of the Financial Conduct Authority. Powers exercised by the Financial Conduct Authority C. The Financial Conduct Authority makes this instrument in the exercise of the following powers and related provisions in or under: (1) the following sections of the Financial Services and Markets Act 2000 (“the Act”): (a) section 137A (FCA’s general rule-making power); (b) section 137T (General supplementary powers); (c) section 139A (Power of the FCA to give guidance); (d) section 226 (Compulsory jurisdiction); (e) paragraph 23(1) (Fees) of Schedule 1ZA (the Financial Conduct Authority); and (f) paragraph 13 (FCA’s rules) of Schedule 17 (the Ombudsman Scheme); (2) paragraph 9 (Record-keeping and reporting requirements relating to relevant transitional complaints) of the Financial Services and Markets Act 2000 (Transitional Provisions) (Complaints relating to General Insurance and Mortgages) Order 2004 (SI 2004/454); (3) paragraph 15 (Record-keeping and reporting requirements relating to relevant complaints) of the Financial Services and Markets Act 2000 (Transitional Provisions) (Ombudsman Scheme and Complaints Scheme) Order 2001 (SI 2001/2326); and (4) the other powers listed in Schedule 4 (Powers exercised) to the General Provisions of the Handbook. D. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule-making instruments) of the Act.

Appendix 7 Page 2 of 47 E. The Financial Conduct Authority approves the standard terms fixed and varied by the Financial Ombudsman Service Limited. Revocation of certain amendments made by the Complaints Handling and Call Charges Instrument 2015 (FCA 2015/39) F. The following amendments made in Part 3 and Part 5 of Annex C to the Complaints Handling and Call Charges Instrument 2015 (FCA 2015/39) are revoked in accordance with paragraph G: (1) the amendments to DISP 1.10; (2) the amendments to DISP 1.10A; (3) the amendments to DISP 1 Annex 1R; (4) the deletion of DISP 1 Annex 1AR; (5) the amendments to DISP 1 Annex 1BR; and (6) Transitional Provision 39 in DISP TP 1. Commencement G. (1) Paragraph F of this instrument comes into force on the making of this instrument. (2) Parts 1 and 2 of the Annex come into force immediately after (1). (3) Part 3 of the Annex comes into force on 1 January 2016. (4) Part 4 of the Annex comes into force on 30 June 2016. Amendments to the Handbook H. The Dispute Resolution: Complaints sourcebook (DISP) is amended in accordance with the Annex to this instrument. Notes I. In the Annex to this instrument, the “notes” (indicated by “Note:”) are included for the convenience of readers but do not form part of the legislative text. Citation J. This instrument may be cited as the Dispute Resolution: Complaints Sourcebook (Amendment No 5) Instrument 2015. By order of the Board of the Financial Ombudsman Service Limited [date] By order of the Board of the Financial Conduct Authority [date]

Appendix 7 Page 3 of 47 Annex Amendments to the Dispute Resolution: Complaints sourcebook (DISP) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. Part 1: Coming into force [on the day the instrument is made] DISP 1.9, DISP 1.10, DISP 1 Annex 1R and DISP 1 Annex 1CR are deleted in their entirety and are substituted by the following text. The deleted text is not shown and the replacement text is not underlined. 1 Treating complainants fairly … 1.9 Complaints record rule 1.9.1 R A firm, including, in the case of MiFID business or collective portfolio management services for a UCITS scheme or an EEA UCITS scheme, a branch of a UK firm in another EEA state, must keep a record of each complaint received and the measures taken for its resolution, and retain that record for: (1) at least five years where the complaint relates to MiFID business or collective portfolio management services for a UCITS scheme or an EEA UCITS scheme; and (2) three years for all other complaints; from the date the complaint was received. [Note: article 10 of the MiFID implementing Directive and article 6(2) of the UCITS implementing Directive ] 1.9.2 G The records of the measures taken for resolution of complaints may be used to assist with the collection of management information pursuant to DISP 1.3.3BG(1) and regular reporting to the senior personnel pursuant to DISP 1.3.3BG(6). 1.10 Complaints reporting rules 1.10.1 R (1) Unless (2) applies, twice a year a firm must provide the FCA with a complete report concerning complaints received from eligible complainants.

Appendix 7 Page 4 of 47 (2) If a firm has permission to carry on only credit-related regulated activities or operating an electronic system in relation to lending and has revenue arising from those activities that is less than or equal to £5,000,000 a year, the firm must provide the FCA with a complete report concerning complaints received from eligible complainants once a year. (3) The report required by (1) and (2) must be set out in the format in DISP 1 Annex 1R. (4) Paragraphs (1) and (2) do not apply to a firm with only a limited permission unless that firm is a not-for-profit debt advice body that at any point in the last 12 months has held £1 million or more in client money or as the case may be, projects that it will hold £1million or more in client money in the next 12 months. 1.10.1-A G A firm with only a limited permission to whom DISP 1.10.1R(1) and (2) do not apply is required to submit information to the FCA about the number of complaints it has received in relation to credit-related activities under the reporting requirements in SUP 16.12 (see, in particular, data item CCR007 in SUP 16.12.29CR). A firm with limited permission to whom DISP 1.10.1R (1) and (2) do not apply is also subject to the complaints data publication rules in DISP 1.10A. Forwarded complaints 1.10.1A R A firm must not include in the report a complaint that has been forwarded in its entirety to another respondent under the complaints forwarding rules. 1.10.1B G Where a firm has forwarded to another respondent only part of a complaint or where two respondents may be jointly responsible for a complaint, then the complaint should be reported by both firms. Joint reports 1.10.1C R Firms that are part of a group may submit a joint report to the FCA. The joint report must contain the information required from all firms concerned and clearly indicate the firms on whose behalf the report is submitted. The requirement to provide a report, and the responsibility for the report, remains with each firm in the group. 1.10.1D G Not all the firms in the group need to submit the report jointly. Firms should only consider submitting a joint report if it is logical to do so, for example, where the firms have a common central complaints handling team, the same accounting reference date and are all subject to the same reporting frequencies and submission deadlines. Information requirements 1.10.2 R Part A of DISP 1 Annex 1R requires (for the relevant reporting period) information about:

Appendix 7 Page 5 of 47 (1) the total number of complaints received by the firm; (2) the total number of complaints closed by the firm: (a) within four weeks or less of receipt; (b) more than four weeks and up to eight weeks of receipt; and (c) more than eight weeks after receipt; (3) the total number of complaints: (a) upheld by the firm in the reporting period; and (b) outstanding at the beginning of the reporting period; and (4) the total amount of redress paid in respect of complaints during the reporting period. 1.10.2-A R Part B of DISP 1 Annex 1R requires (for the relevant reporting period) information about: (1) the total number of complaints received by the firm; (2) the total number of complaints closed by the firm; (3) the total number of complaints: (a) upheld by the firm in the reporting period; and (b) outstanding at the beginning of the reporting period; and (4) the total amount of redress paid in respect of complaints during the reporting period. 1.10.2A R (1) Twice a year a firm must provide the FCA with a complete report concerning complaints received from eligible complainants about matters relating to activities carried out by its employees when acting as retail investment advisers. The report must be set out in the format in DISP 1 Annex 1CR. (2) DISP 1 Annex 1CR requires (for the relevant reporting period) information about: (a) the total number of complaints received by the firm about matters relating to activities carried out by its employees when acting as retail investment advisers; (b) the total number of complaints closed by the firm about matters relating to activities carried out by its employees when acting as retail investment advisers;

Appendix 7 Page 6 of 47 (c) the total number of complaints upheld by the firm about matters relating to activities carried out by its employees when acting as retail investment advisers; and (d) the total amount of redress paid in respect of complaints upheld during the reporting period about matters relating to activities carried out by its employees when acting as retail investment advisers. (3) For the purpose of DISP 1 Annex 1CR retail investment adviser information must be reported by Individual Reference Number (IRN). 1.10.3 G For the purpose of DISP 1.10.2R, DISP 1.10.2-AR and DISP 1.10.2AR, when completing the return, the firm should take into account the following matters. (1) If a complaint could fall into more than one category, the complaint should be recorded in the category which the firm considers to form the main part of the complaint. (2) Under DISP 1.10.2R(3)(a) or DISP 1.10.2-AR, a firm should report any complaint to which it has given a response which upholds the complaint, even if any redress offered is disputed by the complainant. For this purpose, 'response' includes a response under the complainant's written acceptance rule (DISP 1.6.4R) and a final response. Where a complaint is upheld in part, or where the firm does not have enough information to make a decision yet chooses to make a goodwill payment to the complainant, a firm should treat the complaint as upheld for reporting purposes. However, where a firm rejects a complaint, yet chooses to make a goodwill payment to the complainant, the complaint should be recorded as 'rejected'. (3) If a firm reports on the amount of redress paid under DISP 1.10.2R(4), DISP 1.10.2-AR(4) or DISP 1.10.2AR, redress should be interpreted to include an amount paid, or cost borne, by the firm, where a cash value can be readily identified, and should include: (a) amounts paid for distress and inconvenience; (b) a free transfer out to another provider which transfer would normally be paid for; (c) goodwill payments and goodwill gestures; (d) interest on delayed settlements; (e) waiver of an excess on an insurance policy; and (f) payments to put the consumer back into the position the consumer should have been in had the act or omission not occurred.

Appendix 7 Page 7 of 47 (4) If a firm reports on the amount of redress paid under DISP 1.10.2R(4), DISP 1.10.2-AR(4) or DISP 1.10.2AR, the redress should not, however, include repayments or refunds of premiums which had been taken in error (for example where a firm had been taking, by direct debit, twice the actual premium amount due under a policy). The refund of the overcharge would not count as redress. [Note: See SUP 10A.14.24R for the ongoing duty to notify complaints about matters relating to activities carried out by an employee when acting as a retail investment adviser.] 1.10.4 R Unless DISP 1.10.4AR applies, the relevant reporting periods are: (1) the six months immediately following a firm's accounting reference date; and (2) the six months immediately preceding a firm's accounting reference date. 1.10.4A R If a firm has permission to carry on only credit-related regulated activities or operating an electronic system in relation to lending and has revenue arising from those activities that is less than or equal to £5,000,000 a year, the relevant reporting period is the year immediately following the firm's accounting reference date. 1.10.5 R Reports are to be submitted to the FCA within 30 business days of the end of the relevant reporting periods through, and in the electronic format specified in, the FCA Complaints Reporting System or the appropriate section of the FCA website. 1.10.6 R If a firm is unable to submit a report in electronic format because of a systems failure of any kind, the firm must notify the FCA, in writing and without delay, of that systems failure. 1.10.6A R (1) If a firm does not submit a complete report by the date on which it is due, in accordance with DISP 1.10.5R, the firm must pay an administrative fee of £250. (2) The administrative fee in (1) does not apply if the firm has notified the FCA of a systems failure in accordance with DISP 1.10.6R. 1.10.7 R A closed complaint is a complaint where: (1) the firm has sent a final response; or (2) the complainant has indicated in writing acceptance of the firm's earlier response under DISP 1.6.4R. 1.10.8 G [deleted] Notification of contact point for complainants

Appendix 7 Page 8 of 47 1.10.9 R For the purpose of inclusion in the public record maintained by the FCA, a firm must: (1) provide the FCA, at the time of its authorisation, with details of a single contact point within the firm for complainants; and (2) notify the FCA of any subsequent change in those details when convenient and, at the latest, in the firm's next report under the complaints reporting rules. Meaning of revenue 1.10.10 G In DISP 1.10, references to revenue in relation to any firm do not include the amount of any repayment of any credit provided by that firm as lender. 1 Annex 1R Complaints return form Illustration of the reporting requirements, referred to in DISP 1.10.1R Complaints Return (DISP 1 Ann 1R) GROUP REPORTING / NIL RETURN DECLARATION 1 Does the data reported in this return cover complaints relating to more than one entity? If 'Yes', then list the firm reference numbers (FRNs) of all the entities included in this return. Yes / No 2 We wish to declare a nil return Yes / No RETURN DETAILS REQUIRED 3 Total complaints outstanding at reporting period start date

Appendix 7 Page 9 of 47 PART A Complaints closed and total redress paid during the reporting period A B C D E Product/service grouping Complaints closed within 4 weeks Complaints closed

4 but within 8 weeks Complaints closed 8 weeks Total complaints upheld by firm Total redress paid 4 Banking and credit cards 5 Home finance 6 General insurance and pure protection 7 Decumulation, life and pensions 8 Investments Complaints opened A B C D E Product/service grouping Product/service Advising, selling and arranging Terms and disputed sums/charges General admin/ customer service Arrears related Other 9 Banking and credit cards Current accounts 10 Credit cards 46 Overdrafts 11 12 Savings (inc. Cash ISA) and other banking 13 Home finance Equity release products 14 Impaired credit mortgages 15 Other regulated home finance products (including second and subsequent charge mortgages) 16 Other unregulated home finance products 17 General insurance & Payment protection insurance 18 Other general insurance

Appendix 7 Page 10 of 47 19 pure protection Critical illness 20 Income protection 21 Other pure protection 22 Decumulation, life and pensions Personal pensions and FSAVCs 23 Investment linked annuities 24 Income drawdown products 25 Endowments 26 Other decumulation, life and pensions 27 Investments Investment bonds 28 PEPs/ISAs (exc. cash ISAs) 29 Investment trusts 30 Unit trusts/OEICs 31 Structured products 32 Other investment products/funds 33 Investment management/services (inc. platforms)

PART B A B C D E Activities Total complaints outstanding at reporting period start date Complaints received Complaints closed Complaints upheld by firm Total redress paid £ Lending 35 Debt purchasing (including complaints in relation to the underlying debt that has been purchased) 36 Hire purchase/ conditional sale agreements

Appendix 7 Page 11 of 47 37 Home credit loan agreements 38 Bill of sale loan agreements, e.g. logbook lending 39 Pawnbroking 40 High-cost short-term credit 41 Other lending 42 Credit Broking 43 Debt Management activity 44 Debt collecting 45 All other credit-related activity

NOTES ON THE COMPLETION OF THIS RETURN Nil returns If no complaints have been received during the reporting period and no complaints were outstanding at the beginning of the period, the firm may submit a NIL RETURN by clicking on the relevant box. Product/service groupings Unless otherwise specified, complaints should be allocated to these groupings based on the product or service the complaint relates to. If a firm has not received any complaints relating to a particular product or service during the reporting period, the relevant box should be left blank. Product and cause categories The 'other' categories should only be used in exceptional circumstances when none of the specific product or cause categories are appropriate. A complaint should be reported against the product/service element complained about; this may be different to the main policy itself. For example, for a term assurance policy with an attaching critical illness option, where the complaint relates to the term assurance element, it should be reported under 'other pure protection' but where the complaint relates to the critical illness element, it should be reported under 'critical illness'.

Appendix 7 Page 12 of 47 A complaint should only be reported in Part B if it is not covered by a specific category in Part A. A lender should report complaints about the way in which it collects debts due under loans where it is the lender in the relevant lending category.

Appendix 7 Page 13 of 47 Annex 1CR Illustration of the online reporting requirements, referred to in DISP 1.10.2AR This annex belongs to DISP 1.10.2AR COMPLAINTS BY RETAIL INVESTMENT ADVISERS REPORTING / NIL RETURN DECLARATION 1 Does the data reported in this return cover complaints about matters relating to activities carried out by one or more employees when acting as a retail investment adviser (RIA)? If ‘Yes’, then please list the individual reference numbers (IRNs) of all the RIAs included in this return. Yes No 2 We wish to declare a nil return Yes No Total complaints, complaints closed, complaints upheld and total redress paid during the reporting period A B C D E F IRN Name of RIA Total number of complaints received Total number of complaints closed Total number of complaints upheld Total redress paid 1 2 3 4 NOTES ON THE COMPLETION OF THIS RETURN Nil Returns If no complaints have been received during the reporting period or none of the complaints received is about matters relating to

Appendix 7 Page 14 of 47 activities carried out by an employee when acting as a retail investment adviser the firm may submit a NIL RETURN by clicking on the relevant box.

Appendix 7 Page 15 of 47 Part 2: Coming into force on the day the instrument is made 4 Standard terms … 4.2 Standard terms … 4.2.3 R The following rules and guidance apply to VJ participants as part of the standard terms, except where the context requires otherwise: (1) DISP 1 (Treating complainants fairly), except: … (b) DISP 1.10 (Complaints reporting rules); and (ba) DISP 1.10A (Complaints data publication rules); and (c) … … Part 3: Coming into force on 1 January 2016 1.10 Complaints reporting rules … Information requirements 1.10.2 R Part A of DISP 1 Annex 1 requires (for the relevant reporting period) information about: (1) the total number of complaints received by the firm; (2) the total number of complaints closed by the firm: (a) within four weeks or less of receipt; (b) more than four weeks and up to eight weeks of receipt; and (c) more than eight weeks after receipt; (3) the total number of complaints:

Appendix 7 Page 16 of 47 (a) upheld by the firm in the reporting period; and (b) outstanding at the beginning of the reporting period; and (4) the total amount of redress paid in respect of complaints during the reporting period. (1) Where a firm receives less than 500 complaints in a reporting period, Part A-1 of DISP 1 Annex 1 requires, for the relevant reporting period and in respect of particular categories of products: (a) in Table 1, information about the total number of complaints received by the firm and the cause of the complaint; (b) in Table 2, information about the number of complaints that were: (i) closed or upheld within different periods of time; and (ii) the total amount of redress paid by the firm in relation to complaints upheld and not upheld in the relevant reporting period; and (c) in Table 3, information providing context about the complaints received. (2) Where a firm receives 500 or more complaints in a reporting period, Part A-2 of DISP 1 Annex 1 requires, for the relevant reporting period and in respect of particular categories of products: (a) in Table 4, information about the total number of complaints received by the firm and the cause of the complaint; (b) in Table 5, information about the number of complaints that were: (i) closed or upheld within different periods of time; and (ii) the amount of redress paid by the firm in relation to complaints upheld and not upheld in the relevant reporting period; and (c) in Table 6, information providing context about the complaints received. … 1.10.3 G … (2) Under DISP 1.10.2R(3)(a) DISP 1.10.2R(1)(b)(i), DISP 1.10.2R(2)(b)(i) or DISP 1.10.2-AR, a firm should report any complaint to which it has given a response which upholds the

Appendix 7 Page 17 of 47 complaint, even if any redress offered is disputed by the complainant. For this purpose, 'response' includes a response under the complainant's written acceptance rule (DISP 1.6.4R), and a final response and a summary resolution communication. Where a complaint is upheld in part or where the firm does not have enough information to make a decision yet chooses to make a goodwill payment to the complainant, a firm should treat the complaint as upheld for reporting purposes. However, where a firm rejects a complaint, yet chooses to make a goodwill payment to the complainant, the complaint should be recorded as 'rejected'. (3) If a firm reports on the amount of redress paid under DISP 1.10.2R(4), DISP 1.10.2R(1)(b)(ii), DISP 1.10.2R(2(b)(ii), DISP 1.10.2-AR(4) or DISP 1.10.2AR, redress should be interpreted to include an amount paid, or cost borne, by the firm, where a cash value can be readily identified, and should include: … (4) If a firm reports on the amount of redress paid under DISP 1.10.2R(4), DISP 1.10.2R(1)(b)(ii), DISP 1.10.2R(2)(b)(ii), DISP 1.10.2-AR(4) or DISP 1.10.2AR, the redress should not, however, include repayments or refunds of premiums which had been taken in error (for example where a firm had been taking, by direct debit, twice the actual premium amount due under a policy). The refund of the overcharge would not count as redress. … 1.10A Complaints data publication rules … Mode and content of publication … 1.10A.8 G (1) The FCA recommends that firms should publish additional information alongside their complaints data summaries or total number of complaints (as appropriate) in order to relate the number of complaints to the scale of the firm's relevant business. Firms are recommended to publish the relevant standard metrics set out in the table at DISP 1 Annex 1A G with the summaries. Where the complaints data summary or total number of complaints (as appropriate) relates to a joint report the metrics should cover all the firms included in the joint report. (2) If the recommended metrics do not accurately reflect the scale of the firm's relevant business, the FCA recommends that the firm should publish metrics which best reflect the scale of its business based on the number of its customers or accounts or policies. Firms may also

Appendix 7 Page 18 of 47 publish other metrics where they consider that these would better reflect the scale of their business. (3) Firms may also publish other information to aid understanding, for example details of their internal processes for dealing with complaints. [deleted] … Publication of complaints data by the FCA 1.10A.10 G (1) To improve consumer awareness and to help firms compare their performance against their peers, the FCA publishes: (a) complaints data about the financial services industry as a whole; and (b) firm-level complaints data for those firms that are required to publish a complaints data summary or the total number of complaints (as appropriate) under DISP 1.10A.1R. (2) The FCA also publishes firm-level information giving context to the complaints data reported to it for those firms that are required to publish that information under DISP 1.10A.1R. 1.10A.11 G For firms reporting 500 or more complaints under DISP 1.10.1R(1) or 1000 or more complaints under DISP 1.10.1R(2) in the relevant reporting period, the FCA will publish the firm-level complaints data and information providing context to the complaints data reported to it either: (1) after the firm provides the appropriate consent in the complaints data report and confirms that the reported data accurately reflects the data which it will publish under DISP1.10A.1R; or (2) after the FCA receives an email from the firm under DISP 1.10A.4R confirming that the complaints data summary accurately reflects the report submitted to the FCA, that the summary has been published and where it has been published. 1.10A.12 G For firms with only a limited permission that report complaints to the FCA under the reporting requirements in SUP 16.12, the FCA will publish the firm-level complaints data reported to it after the FCA receives an email from the firm under DISP 1.10A.4R. That email should confirm that the total number of complaints accurately reflects the report submitted to the FCA under SUP 16.12, that the total number of complaints has been published and where the information has been published. …

Appendix 7 Page 19 of 47 1 Annex 1R Complaints return form Illustration of the reporting requirements, referred to in DISP 1.10.1R Complaints Return (DISP 1 Ann 1R) GROUP REPORTING / NIL RETURN DECLARATION 1 Does the data reported in this return cover complaints complaints relating to more than one entity? If 'Yes', then list the firm reference numbers (FRNs) of all the entities included in this return. Yes / No 34 If ‘Yes’ to 1 (above) list the firm reference numbers (FRNs) of all of the additional entities included in this return. Use the ‘add’ button to add additional FRNs. 111111 NIL RETURN DECLARATION 2 We wish to declare a nil return (If ‘Yes’, leave all tables blank, including the contextualisation metrics in tables 3 and 6). Yes / No RETURN DETAILS REQUIRED 3 Total complaints complaints outstanding at reporting period start date 100 49 Total number of complaints opened during the reporting period 100 COMPLAINTS DATA PUBLICATION BY FCA AND FIRMS 47 If you are reporting 500 or more complaints under DISP 1.10.1R(1) or 1000 or more complaints under DISP 1.10.1R(2), do you consent to the FCA publishing the complaints data and information on context contained in this report and due to be published under DISP 1.10A in advance of the firm publishing the data itself? Yes/No

Appendix 7 Page 20 of 47 48 If ‘Yes’ to 47 (above), does the firm confirm that the complaints data and information on context contained in this report accurately reflects the information to be published by the reporting firm under DISP 1.10A? Yes/No PART A Complaints closed and total redress paid during the reporting period A B C D E Product/service grouping Complaints closed within 4 weeks Complaints closed

4 but within 8 weeks Complaints closed 8 weeks Total complaints upheld by firm Total redress paid 4 Banking and credit cards 5 Home finance 6 General insurance and pure protection 7 Decumulation, life and pensions 8 Investments Complaints opened A B C D E Product/service grouping Product/service Advising, selling and arranging Terms and disputed sums/charges General admin/ customer service Arrears related Other 9 Banking and Current accounts

Appendix 7 Page 21 of 47 10 credit cards Credit cards 46 Overdrafts 11 12 Savings (inc. Cash ISA) and other banking 13 Home finance Equity release products 14 Impaired credit mortgages 15 Other regulated home finance products (including second and subsequent charge mortgages) 16 Other unregulated home finance products 17 General insurance & pure protection Payment protection insurance 18 Other general insurance 19 Critical illness 20 Income protection 21 Other pure protection 22 Decumulation, life and pensions Personal pensions and FSAVCs 23 Investment linked annuities 24 Income drawdown products 25 Endowments 26 Other decumulation, life and pensions 27 Investments Investment bonds 28 PEPs/ISAs (exc. cash ISAs) 29 Investment trusts 30 Unit trusts/OEICs 31 Structured products 32 Other investment products/funds 33 Investment management/services (inc. platforms)

Appendix 7 Page 22 of 47 Part A-1, DISP Annex 1R For firms receiving less than 500 complaints in the reporting period Table 1 Complaints opened when fewer than 500 total opened A D H L N N Total Advising, selling and arranging Inform￾ation, sums/ charges or product perfor￾mance General admin/ customer service Arrears related Other 50 Banking and credit cards Current accounts 51 Credit cards 52 Overdrafts 53 Packaged accounts 54 Savings (including ISAs) 55 Other banking - Please provide details below 55 X 56 Total banking and credit cards 57 Home finance Equity release 58 Impaired credit

Appendix 7 Page 23 of 47 59 Second and subsequent charge 60 Other regulated home finance products

Please provide details below 60 X 61 Other unregulated home finance products

Please provide details below 61 X 62 Total home finance 63 Insurance & pure protection Property 64 Motor & Transport 65 Travel 66 Pet 67 Warranty 68 Assistance 69 Medical/health 70 General insurance packaged multi products 71 Other general insurance

• Please provide details below 71 X 72 Payment protection insurance 73 Income protection and other accident, sickness and unemployment 74 Whole of life/term assurance/critical illness 75 Protection packaged multi products 76 Other pure protection
• Please provide

Appendix 7 Page 24 of 47 details below 76 X 77 Total insurance & pure protection 78 Decumulation & pensions Workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 79 Non-workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 80 Trust based pensions (e.g. occupational and DB) 81 Pensions packaged multi products 82 Other pensions - Please provide details below 82X 83 Annuities (including enhanced and impaired) 84 Drawdown and UFPLS 85 Third way products (e.g. investment linked, variable, fixed term) 86 Decumulation packaged multi products 87 Other decumulation - Please provide details below 87X 88 Total decumulation & pensions 89 Investment bonds 90 Endowments

Appendix 7 Page 25 of 47 91 Investments ISAs (where investment held) 92 Investment trusts 93 Unit trusts/OEICs 94 Structured products 95 ETPs 96 Discretionary management services 97 Non-discretionary management services 98 Platforms 99 Crowdfunding / peer to peer 100 FX/CFD/Spreadbetting 101 UCITS 102 Investment packaged multi products 103 Other investment products/funds - Please provide details below 103X 104 Total investments

Appendix 7 Page 26 of 47 Table 2 Complaints closed, upheld and redress when fewer than 500 opened complaints A B C D E F G H Product/service grouping Complaints closed within 3 days Complaints closed > 3 days but within 8 weeks Complaints closed > 8 weeks Total complaints closed Total complaints upheld Total redress paid for upheld complaints Total redress paid for complaints not upheld Total redress paid 111 Total banking and credit cards 117 Total home finance 132 Total insurance & pure protection 143 Total decumulation & pensions 159 Total investments

Appendix 7 Page 27 of 47 Table 3 Contextualisation metrics when fewer than 500 total opened complaints Product/service grouping: A B Provision (at reporting period end date) Intermediation (within the reporting period) 164 Banking and credit cards Number of accounts 173 Home finance Number of balances outstanding Number of sales 190 Insurance & pure protection Number of policies in force Number of polices sold 203 Decumulation & pensions Number of policies in force Number of polices sold 218 Investments Number of distinct funds or investments accounts Number of sales or equivalent transactions

Appendix 7 Page 28 of 47 Part A-2, DISP Annex 1R For firms receiving more than 500 complaints in the reporting period Table 4 Complaints opened when greater than or equal to 500 opened complaints A B C E F G I J K M N O Total Advising, selling and arranging Information, sums/ charges or product performance General admin/ customer service Arrears Related Other Claims Product/service grouping Product/service Total Unsuitable advice Unclear guidance/arrangement Disputes over sums/charges Product performance/features Product disclosure information Errors / not following instructions Delays / timescales Other general admin/customer service Arrears related Other Of which claims related 50 Banking and credit cards Current accounts 51 Credit cards 52 Overdrafts 53 Packaged accounts

Appendix 7 Page 29 of 47 54 Savings (including ISAs) 55 Other banking - Please provide details below 55 X 56 Total banking and credit cards 57 Home finance Equity release 58 Impaired credit 59 Second and subsequent charge 60 Other regulated home finance products - Please provide details below 60 X 61 Other unregulated home finance products - Please provide details below 61 X 62 Total home finance 63 Insurance & pure protection Property 64 Motor & Transport 65 Travel 66 Pet 67 Warranty 68 Assistance 69 Medical/health 70 General insurance packaged multi products 71 Other general insurance - Please provide details below

Appendix 7 Page 30 of 47 71 X 72 Payment protection insurance 73 Income protection and other accident, sickness and unemployment 74 Whole of life/term assurance/critical illness 75 Protection packaged multi products 76 Other pure protection

• Please provide details below 76 X 77 Total insurance & pure protection 78 Decumulation & pensions Workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 79 Non -workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 80 Trust based pensions (e.g. Occupational and DB) 81 Pensions packaged multi products 82 Other pensions
• Please provide details below 82X 83 Annuities (including enhanced and impaired) 84 Drawdown and UFPLS 85 Third way products (e.g. investment linked, variable, fixed term) 86 Decumulation packaged multi products

Appendix 7 Page 31 of 47 87 Other decumulation - Please provide details below 87 X 88 Total decumulation & pensions 89 Investments Investment bonds 90 Endowments 91 ISAs (where investment held) 92 Investment trusts 93 Unit trusts/OEICs 94 Structured products 95 ETPs 96 Discretionary management services 97 Non-discretionary management services 98 Platforms 99 Crowdfunding / peer to peer 100 FX/CFD/Spreadbetting 101 UCITS 102 Investment packaged multi products 103 Other investment products/funds - Please provide details below 103 X 104 Total investments

Appendix 7 Page 32 of 47 Table 5 Complaints closed, upheld and redress when greater than or equal to 500 opened complaints Redress paid reported in single units A B C D E F G H Product/service grouping Product/service Complaints closed within 3 days Complaints closed > 3 days but within 8 weeks Complaints closed > 8 weeks Total complaints closed Total complaints upheld Total redress paid for upheld complaints Total redress paid for complaints not upheld Total redress paid 105 Banking and credit cards Current accounts 106 Credit cards 107 Overdrafts 108 Packaged accounts 109 Savings (including ISAs) 110 Other banking 111 Total banking and credit cards 112 Home finance Equity release 113 Impaired credit 114 Second and subsequent charge 115 Other regulated home finance products 116 Other unregulated home finance products

Appendix 7 Page 33 of 47 117 Total home finance 118 Insurance & pure protection Property 119 Motor & Transport 120 Travel 121 Pet 122 Warranty 123 Assistance 124 Medical/health 125 General insurance packaged multi products 126 Other general insurance 127 Payment protection insurance 128 Income protection and other accident, sickness and unemployment 129 Whole of life/term assurance/critical illness 130 Protection packaged multi products 131 Other pure protection 132 Total insurance & pure protection 133 Decumulation & pensions Workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 134 Non-workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 135 Trust based pensions (e.g. Occupational and DB)

Appendix 7 Page 34 of 47 136 Pensions packaged multi products 137 Other pensions 138 Annuities (including enhanced and impaired) 139 Drawdown and UFPLS 140 Third way products (e.g. investment linked, variable, fixed term) 141 Decumulation packaged multi products 142 Other decumulation 143 Total decumulation & pensions 144 Investments Investment bonds 145 Endowments 146 ISAs (where investment held) 147 Investment trusts 148 Unit trusts/OEICs 149 Structured products 150 ETPs 151 Discretionary management services 152 Non -discretionary management services 153 Platforms 154 Crowdfunding / peer to peer 155 FX/CFD/Spreadbetting 156 UCITS 157 Investment packaged multi products

Appendix 7 Page 35 of 47 158 Other investment products/funds 159 Total Investments Table 6 Reported in single units Contextualisation metrics when greater than or equal to 500 opened complaints A B Product/service grouping Product/service Provision (at reporting period end date) Intermediation (within reporting period) Number of accounts: 160 Banking and credit cards Current accounts 161 Credit cards 162 Savings (inc. ISAs) 163 Other banking 164 Total banking and credit cards 165 of which have overdraft facility 166 of which are packaged accounts 167 Banking contextualised Number of complaints opened per 1000 accounts

Appendix 7 Page 36 of 47 Number of balances outstanding: Number of sales 168 Home finance Equity release 169 Impaired credit 170 Second and subsequent charge 171 Other regulated home finance products 172 Other unregulated home finance products 173 Total home finance 174 Home finance contextualised Number of complaints opened per 1000 balances outstanding 175 Number of complaints opened per 1000 sales Number of policies in force Number of polices sold 176 Insurance & pure protection Property 177 Motor & Transport 178 Travel 179 Pet 180 Warranty 181 Assistance 182 Medical/health

Appendix 7 Page 37 of 47 183 General insurance packaged multi products 184 Other general insurance 185 Payment protection insurance 186 Income protection and other accident, sickness and unemployment 187 Whole of life/term assurance/critical illness 188 Protection packaged multi products 189 Other pure protection 190 Total insurance & pure protection 191 Insurance & pure protection contextualised Number of complaints opened per 1000 policies in force 192 Number of complaints opened per 1000 policies sold Number of policies in force Number of polices sold 193 Decumulation & pensions Workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 194 Non-workplace personal pensions (e.g. SIPPs, SHPs, PPPs) 195 Trust based pensions (e.g. Occupational and DB) 196 Pensions packaged multi products

Appendix 7 Page 38 of 47 197 Other pensions 198 Annuities (including enhanced and impaired) 199 Drawdown and UFPLS 200 Third way products (e.g. investment linked, variable, fixed term) 201 Decumulation packaged multi products 202 Other decumulation 203 Total decumulation & pensions 204 Decumulation & pensions contextualised Number of complaints opened per 1000 policies in force 205 Number of complaints opened per 1000 policies sold Number of distinct funds or investment accounts Number of sales or equivalent transactions 206 Investments Investment bonds 207 Endowments 208 ISAs (where investment held) 209 Investment trusts 210 Unit trusts/OEICs 211 Structured products 212 ETPs 213 Crowdfunding / Peer to Peer

Appendix 7 Page 39 of 47 214 FX/CFD/Spreadbetting 215 UCITS 216 Investment packaged multi products 217 Other investment products/funds 218 Total Investments 219 of which have discretionary management services 220 of which have non-discretionary management services 221 of which sold through a platform 222 Investments contextualised Number of complaints opened per 1000 distinct funds or investment accounts 223 Number of complaints opened per 1000 sales or equivalent transactions

Appendix 7 Page 40 of 47 PART B … NOTES ON THE COMPLETION OF THIS RETURN Nil returns … Valuing data to be reported Firms should report the actual data requested in this complaints return, using single units. When reporting information on context in Table 6 of Part A-2, lines 167, 174, 175, 191, 192, 204, 205, 222 and 223 firms may use decimals. Product/service groupings … Product and cause categories … A complaint should be reported against the product/service element complained about; this may be different to the main policy itself. For example, for a term assurance policy with an attaching critical illness option, where the complaint relates to the term assurance element, it should be reported under 'other pure protection' but where the complaint relates to the critical illness element, it should be reported under 'critical illness'. For example, for a current account with attached packaged account products or policies, where the complaint relates to the current account element, it should be reported under ‘Current accounts' but where the complaint relates to the packaged account element, it should be reported under ‘Packaged accounts'. In Table 1 of Part A-1 and Table 4 of Part A-2, in relation to complaints about platforms in the investments product/service grouping, firms should include complaints about the platform rather than the underlying funds or investments. A complaint should only be reported in Part B if it is not covered by a specific category in Part A. A lender should report complaints about the way in which it collects debts due under loans where it is the lender in the relevant lending category. Where Table 1 of Part A-1 and Table 4 of Part A-2 refer to ‘Other’ products or services (for example, ‘Other banking’ or ‘Other regulated home finance products’), a firm should provide information for up to a maximum of five products or services. In Table 1 of Part A-1, and Tables 4 and 5 of Part A-2, a complaint should only be reported in a ‘packaged multi product’ category (for example, ‘General insurance packaged multi products’ or ‘Pensions packaged multi products’), if it is not apparent to which underlying product the complaint relates. For insurance purposes, this may cover both households or small businesses. In Table 6 of Part A-2, a product should only be included in a ‘packaged multi product’ category if it is not apparent to which underlying category the policy, pension, investment or account relates. In Table 4 of Part-A-1, a complaint should only be reported in the ‘of which claims related’ category if the complaint relates to an insurance product. A complaint should only be reported in Part B if it is not covered by a specific category in Part A. A lender should report complaints about the way in which it collects debts due under loans where it is the lender in the relevant lending category. Contextualisation When providing information giving context to its complaints data, a firm should choose the metric which best reflects whether the majority of business undertaken by the firm involves the provision of products or services by the firm itself or intermediation. A firm should only provide information on context for either provision or intermediation, not both activities.

Appendix 7 Page 41 of 47 For provision, information on context should indicate the total volume of a firm’s relevant business at the end date of the reporting period; this is likely to include accounts opened, loans provided, policies sold and funds and investments provided, and that are still in force, before the commencement of the relevant reporting period. For intermediation, information on context provided by a firm should indicate the number of sales within the relevant reporting period only. In Table 3 of Part A-1 or Table 6 of Part A-2: (1) When reporting information about the ‘number of balances outstanding’ in the ‘Home Finance’ product category, firms should report the total number of balances outstanding (all loans) as reported by the firm at row E.45 or E.53 of E(2) in SUP 16 Annex 19A (Mortgage Lenders and Administrators Return) on the firm’s most recent return. (2) When reporting information about intermediation sales in the ‘Crowdfunding / peer to peer’ product category, firms should provide the number of funded pitches within the reporting period. (3) When reporting information about the ‘number of policies in force’ or the ‘number of distinct funds or investment accounts’, the reported information should cover the number of existing accounts or policies or any relevant past policies that relate to the complaint(s) being reported. For example, in relation to payment protection insurance, a firm may no longer have any current policies in force and the firm may wish to include the total number of past policies issued/sold. (4) Where reporting information about a product which is contained within a wrapper, platform or packaged multi product, only the wrapper, platform or packaged multi product should be counted rather than all of the underlying policies, funds or investments. However, for insurance purposes where there are packages of underlying and identifiable separate policies these should be counted separately. (5) When reporting the number of policies sold/number of sales or equivalent transactions, renewals should be included. Transparency To improve consumer awareness and to help firms compare their performance against their peers, the FCA publishes: (1) complaints data about the financial services industry as a whole; and (2) firm-level data for firms required to publish their data under DISP 1.10A.1R. The FCA also publishes firm-level information giving context to the complaints data reported where firms are due to publish that information under DISP 1.10A.1R. This will be the data in Table 6 of Part A-2, lines 167, 174, 175, 191, 192, 204, 205, 222 and 223. For firms reporting 500 or more complaints under DISP 1.10.1R(1) or 1000 or more complaints under DISP 1.10.1R(2) in the relevant reporting period, the FCA will publish the complaints data of the firm either: (1) after the firm provides consent in the report; or (2) (if the firm does not provide consent) after the FCA receives an email from the firm confirming that the complaints data summary accurately reflects the report submitted to the FCA, that the summary has been published and where it has been published as required by DISP 1.10A.4R. If the firm ticks the ‘Yes’ box in this report consenting to the FCA publishing the firm’s complaints data, it must also confirm that the data contained in the report accurately reflects the information to be published by the reporting firm. If the firm has submitted a joint report on behalf of a group, the firm should only tick the ‘Yes’ box consenting to the FCA publishing the complaints data if the firm is authorised to do so by those firms on whose behalf it is submitting this report.

Appendix 7 Page 42 of 47 A firm which does not provide consent in this report must still ensure that the complaints data contained in this report accurately reflects the data which the firm is required to publish under DISP 1.10A.1R and confirm this to the FCA under DISP 1.10A.4R.

Appendix 7 Page 43 of 47 DISP 1 Annex 1A is deleted in its entirety. The deleted text is not shown. 1 Annex 1BR Complaints publication report This table belongs to DISP 1.10A.2R. Complaints publication report Firm name: ……………… Group: (if applicable): ……………….. Other firms included in this report (if any): ……………… Period covered in this report: [e.g. 1 January – 30 June 2015 or 1 January – 31 December 2015] Brands/trading names covered: …………………… Number of complaints opened Number of complaints closed Complaints closed within 8 weeks (%) Closed complaints upheld by firm (%) Banking and credit cards Home finance General insurance and pure protection Decumulation, life and pensions Investments Credit-related Not applicable

Appendix 7 Page 44 of 47 Number of complaints opened by volume of business Product / service grouping Provision (at reporting period end date) Intermediation (within the reporting period) Number of complaints opened Number of complaints closed Percentage closed within 3 days Percentage closed after 3 days but within 8 weeks Percentage upheld Main cause of complaints opened Banking and credit cards per 1000 accounts N/A Home finance per 1000 balances outstanding per 1000 sales Insurance and pure protection per 1000 policies in force per 1000 policies sold Decumulation and pensions per 1000 policies in force per 1000 policies sold Investments per 1000 distinct funds or investment accounts per 1000 sales or equivalent transactions Credit related (Recommende d only) per 1000 accounts / loans (Recommen ded only) per 1000 sales N/A Note 1: When providing the appropriate information on the context of complaints, a firm should choose the metric which best reflects whether the majority of business undertaken by the firm

Appendix 7 Page 45 of 47 involves the provision of products or services by the firm itself or intermediation. A firm should only provide information on context in respect of either provision or intermediation, not both activities. Note 2: For provision, information on context should relate the number of complaints opened within the reporting period to the total volume of a firm’s relevant business at the end date of the reporting period. This is likely to include accounts opened, loans provided, policies sold and funds and investments provided before the commencement of the relevant reporting period. Note 3: For intermediation, information on context published by a firm should relate the number of complaints opened within the reporting period to the number of sales within the relevant reporting period only. Note 4: It is recommended that firms publish appropriate information on context in respect of credit￾related complaints. However, publication of this data is not mandatory. Note 5: When a firm publishes the ‘main cause of complaints opened’, this should be the cause category prompting the largest number of complaints for the relevant product/service grouping in Table 4 of Part A-2, DISP 1 Annex 1. … TP 1 Transitional Provisions (1) (2) Material to which the transitional provision applies (3) (4) Transitional provisions (5) Transitional provision: dates in force (6) Handbook provision coming into force … 39 DISP 1.5, DISP 1.10 and DISP 1.10A, DISP 1 Annex 1R, DISP 1 Annex 1BR R (1) For six month reporting periods commencing on or before 31 December 2015, the rules and guidance in column (2) apply as they stood at the start of the relevant reporting period. (2) For six month reporting periods commencing on or after 1 January 2016 and on or before 29 June 2016 the rules and guidance in column (2) apply as they stood on 1 January 2016 subject to the following modifications: (i) the reference in DISP 1.10.3G(2) to a summary resolution communication is ignored; (ii) firms are not required to complete columns A and B of Table 2 of Part A-1 of DISP 1 From 1 January 2016 From 1 January 2016

Appendix 7 Page 46 of 47 Annex 1R, and references in DISP 1.10.2R(1)(b)(i) are to be construed accordingly; (iii) firms are not required to complete columns A and B of Table 5 of Part A-2 of DISP 1 Annex 1R, and references in DISP 1.10.2R(2)(b)(i) are to be construed accordingly; (iv) firms are not required to publish information about the percentage of complaints closed within three days, or closed after three days but within eight weeks; and (v) DISP 1.5.1R(3) and (5) are to be disregarded. (3) For six month reporting periods commencing on or after 30 June 2016, the rules and guidance in column (2) apply as they stood on 30 June 2016 (with no modifications). (4) For twelve month reporting periods commencing on or before 31 December 2015, the rules and guidance in column (2) apply as they stood at the start of the relevant reporting period. (5) For twelve month reporting periods commencing on or after 1 January 2016 but on or before 29 June 2016: (i) DISP 1.10 DISP 1 Annex 1R apply as they stood on 1 January 2016; (ii) DISP 1.10A and DISP 1 Annex 1BR apply as they stood on 1 January 2016 save that firms are not required to publish information about the percentage of complaints closed within three days, or closed after three days but within eight weeks; and (iii) DISP 1.5.1R(3) and (5) are to

Appendix 7 Page 47 of 47 be disregarded. (6) For twelve month reporting periods commencing on or after 30 June 2016, the rules and guidance in column (2) apply as they stood on 30 June 2016 (with no modifications). Part 4: Coming into force on 30 June 2016 1.5 Complaints resolved by close of the third business day 1.5.1 R The following rules do not apply to a complaint that is resolved by a respondent by close of business on the third business day following the day on which it is received: (1) the complaints time limit rules (except DISP 1.6.1R(1) (Keeping the complainant informed); and … … Summary resolution communication 1.5.4 R Where the respondent considers a complaint to be resolved under this section, the respondent must promptly send the complainant a ‘summary resolution communication’, being a written communication from the respondent which: …

70 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Appendix 8A Miscellaneous changes to LR, DTR, PR, GENPRU, SUP and the Glossary

Appendix 8A LISTING, PROSPECTUS AND DISCLOSURE AND TRANSPARENCY RULES SOURCEBOOKS (MISCELLANEOUS AMENDMENTS NO [4]) INSTRUMENT 2015 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the following powers and related provisions in or under the following sections of the Financial Services and Markets Act 2000 (the “Act”): (1) section 73A (Part 6 Rules); (2) section 84 (Matters which may be dealt with by prospectus rules); (3) section 89C (Transparency rules); (4) section 89O (Corporate governance rules); (5) section 96 (Obligations of issuers of listed securities); (6) section 137A (General rule-making power); (7) section 137T (General supplementary powers); and (8) section 139A (Guidance). B. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule-making instruments) of the Act. Commencement C. This instrument comes into force on [date]. Amendments to the FCA Handbook D. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes to this instrument listed in column (2). (1) (2) Glossary of definitions Annex A General Prudential sourcebook (GENPRU) Annex B Supervision manual (SUP) Annex C Listing Rules sourcebook (LR) Annex D Prospectus Rules sourcebook (PR) Annex E Disclosure Rules and Transparency Rules sourcebook (DTR) Annex F

Appendix 8A Page 2 of 27 Notes E. In Annexes E and F to this instrument, the “notes” (indicated by “Note:”) are included for the convenience of readers but do not form part of the legislative text. European Union Legislation F. Although European Union legislation is reproduced in this instrument, only European Union legislation as printed in the paper edition of the Official Journal of the European Union is deemed authentic. Citation G. This instrument may be cited as the Listing, Prospectus and Disclosure and Transparency Rules Sourcebooks (Miscellaneous Amendments No [4]) Instrument 2015. By order of the Board of the Financial Conduct Authority [date]

Appendix 8A Page 3 of 27 Annex A Amendments to the Glossary of definitions In this Annex, underlining indicates new text and striking through indicates deleted text. Amend the following definition as shown. Prospectus RTS Regulation Regulations (1) the Commission Delegated Regulation (EU) No 382/2014 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for publication of supplements to the prospectus; and (2) Commission Delegated Regulation (EU) No [xxx]/2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004. …

Appendix 8A Page 4 of 27 Annex B Amendments to the General Prudential sourcebook (GENPRU) In this Annex, underlining indicates new text and striking through indicates deleted text. 1 Application … 1.3 Valuation … General requirements: Accounting principles to be applied 1.3.4 R … (2) Financial Reporting Standards and Statements of Standard Accounting Practice issued or adopted by the Accounting Standards Board Financial Reporting Council; (3) Statements of Recommended Practice, issued by industry or sectoral bodies recognised for this purpose by the Accounting Standards Board Financial Reporting Council; … 2 Capital … 2.2 Capital resources … Core tier one capital: externally verified interim net profits … 2.2.103 G A firm may include interim profits before a formal decision has been taken only if these profits have been verified, in accordance with the relevant Auditing Practices Board's Practice Note guidance issued by the Financial Reporting Council, by persons responsible for the auditing of the accounts.

Appendix 8A Page 5 of 27 Annex C Amendments to the Supervision manual (SUP) In this Annex, underlining indicates new text and striking through indicates deleted text. 3 Auditors … 3.10 Duties of auditors: notification and report on client assets … Client assets report … 3.10.5B G SUP 3.10.4R provides that an auditor must ensure that a client assets report is prepared in accordance with the terms of, as the case may be, a reasonable assurance engagement or a limited assurance engagement. However, the FCA also expects an auditor to have regard, where relevant, to material published by the Auditing Practices Board Financial Reporting Council that deals specifically with the client assets report which the auditor is required to submit to the FCA. In the FCA's view, a client assets report that is prepared in accordance with that material is likely to comply with SUP 3.10.4R and SUP 3.10.5R where that report is prepared for a firm within the scope of the material in question.

Appendix 8A Page 6 of 27 Annex D Amendments to the Listing Rules sourcebook (LR) In this Annex, underlining indicates new text and striking through indicates deleted text. 5 Suspending, cancelling and restoring listing and reverse takeovers: All securities … 5.2 Cancelling listing … Cancellation in relation to takeover offers: offeror interested in more than 50% of voting rights 5.2.11A R LR 5.2.5R does not apply to the cancellation of equity shares with a premium listing in the case of a takeover offer if: … (3) unless LR 5.2.11D R applies, the offeror has obtained acceptances of its takeover offer or acquired or agreed to acquire shares from independent shareholders that represent a majority of the voting rights held by the independent shareholders on the date its firm intention to make its takeover offer was announced; and (4) the offeror has stated in the offer document or any subsequent circular sent to the holders of the shares that a notice period of not less than 20 business days prior to cancellation will commence either on the offeror obtaining the relevant shareholding and acceptances as described in LR 5.2.11AR(2) to (3) or as described in LR 5.2.11DR or on the first date of issue of compulsory acquisition notices under section 979 of the Companies Act 2006. … 5.2.11C R The issuer must notify shareholders that the relevant thresholds described in LR 5.2.11AR(2) to (3) or LR 5.2.11DR have been obtained and that the notice period has commenced and of the anticipated date of cancellation, or the explanatory letter or other material accompanying the section 979 notice must state that the notice period has commenced and the anticipated date of cancellation. 5.2.11D R LR 5.2.11AR(3) does not apply where the offeror has by virtue of its shareholdings and acceptances of its takeover offer acquired or agreed to acquire issued share capital carrying more than 80% of the voting rights of the issuer. [deleted]

Appendix 8A Page 7 of 27 … 9 Continuing obligations 9.3 Continuing obligations: holders … Pre-emption rights … 9.3.12 R LR 9.3.11R does not apply to: … (4) an overseas company with a premium listing if a disapplication of statutory pre-emption rights has been authorised by shareholders that is equivalent to an authority given in accordance either with section 570 or section 571 of the Companies Act 2006 or in accordance with the law of its country of incorporation provided that the country has implemented article 29 of Directive 77/91/EEC or article 33 of Directive 2012/30/EU and the issue of equity securities or sale of treasury shares that are equity shares by the listed company is within the terms of the authority; or …

Appendix 8A Page 8 of 27 Annex E Amendments to the Prospectus Rules sourcebook (PR) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. 1 Preliminary 1.1 Preliminary … Provisions implementing the prospectus directive 1.1.6 G The FCA considers that the following documents together determine the effect of the prospectus directive: … (6) …; and (7) the Prospectus RTS Regulation Regulations. 1.1.7 G To assist readers, extracts from the Act, the PD Regulation and the Prospectus RTS Regulation Regulations are reproduced in the text of these rules. Readers should however consult those documents themselves to see the full text. ESMA materials 1.1.8 G In determining whether Part 6 of the Act, these rules, the PD Regulation and the Prospectus RTS Regulation Regulations have been complied with, the FCA will consider whether a person has acted in accordance with the ESMA Prospectus Recommendations, the ESMA Prospectus Questions and Answers and the ESMA Prospectus Opinion. … 2.2 Format of the prospectus … Base prospectus … 2.2.9 R If the final terms of the offer are not included in the base prospectus or a supplementary prospectus:

Appendix 8A Page 9 of 27 (1) the final terms must be: (a) filed with the FCA; and (b) made available to the public in accordance with PR 3.2.4R to PR 3.2.6R. [Note: see PR TR 2 See PR 3.2 for the requirements regarding making final terms available to the public] … … 2.5 Omission of information … Request to omit information 2.5.3 R G Article 2(2) of Commission Delegated Regulation (EU) No [xxx]/2015 sets out requirements regarding the submission of requests to omit information from a prospectus. The FCA considers that a reasoned request for this purpose would A request to the FCA to authorise the omission of specific information must: (1) be in writing from the applicant; (2) identify the specific information concerned and the specific reasons for its omission; and (3) state why in the applicant's opinion one or more of the grounds in section 87B(1) of the Act applies. [Note: Extracts of Article 2 of Commission Regulation EU [xxx]/2015 are reproduced for the convenience of readers in PR3.1.-1EU.] … 3 Approval and publication of prospectus 3.1 Approval of prospectus Prospectus review process 3.1.-1 EU Articles 2, 3 and 4 of Commission Delegated Regulation (EU) No [xxx]/2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004 provide that:

Appendix 8A Page 10 of 27 Article 2 Submission of an application for approval

1. The issuer, offeror or person asking for admission to trading on a regulated market shall submit all drafts of the prospectus in searchable electronic format via electronic means to the competent authority.A contact point to which the competent authority can submit all notifications in writing, via electronic means, shall be specified when the first draft of the prospectus is submitted.
2. Along with the first draft of the prospectus submitted to the competent authority, or during the prospectus review process, the issuer, offeror or person asking for admission to trading on a regulated market shall also submit in searchable electronic format: (a) if required by the competent authority of the home Member State according to Article 25(4) of Regulation (EC) No 809/2004 or on their own initiative, a cross reference list which shall also identify any items from Annexes I to XXX to Regulation (EC) No 809/2004 that have not been included in the prospectus because, given the nature of the issuer, offeror or person asking for admission to trading or the securities being offered to the public or admitted to trading, they were not applicable. … (b) if the issuer, offeror or person asking for admission to trading on a regulated market is requesting the competent authority of the home Member State to authorise the omission of information from the prospectus according to Article 8(2) of Directive 2003/71/EC, a reasoned request to that effect; (c) if the issuer, offeror or person asking for admission to trading on a regulated market wishes the competent authority of the home Member State to notify the competent authority of a host Member State, upon approval of the prospectus, with a certificate of approval according to Article 18(1) of Directive 2003/71/EC, a request to this effect; (d) any information which is incorporated by reference into the prospectus, unless such information has already been approved by or filed with the same competent authority in accordance with Article 11 of Directive 2003/71/EC; (e) any other information considered necessary, on reasonable grounds, for the review by the competent authority of the home Member State and expressly required by the competent authority for that purpose. Article 3 Changes to the draft prospectus

Appendix 8A Page 11 of 27

1. Following submission of the first draft of the prospectus to the competent authority of the home Member State, where the issuer, offeror or person asking for admission to trading on a regulated market submits subsequent drafts of the prospectus, the subsequent drafts shall be marked to highlight all changes made to the preceding unmarked draft of the prospectus as submitted to the competent authority. Where only limited changes are made, marked extracts of the draft prospectus, showing all changes from the preceding draft, shall be acceptable. An unmarked draft of the prospectus shall always be submitted along with the draft highlighting all changes made. Where the issuer, offeror or person asking for admission to trading on a regulated market is unable to comply with the requirement set out in the first subparagraph due to technical difficulties related to the marking of the prospectus, each change made to the preceding draft of the prospectus shall be identified to the competent authority of the home Member State in writing.
2. Where the competent authority of the home Member State has, in accordance with Article 5(2) of this Regulation, notified the issuer, offeror or person asking for admission to trading on a regulated market that it considers that the draft prospectus does not meet the requirement of completeness, including consistency of the information given and its comprehensibility, the subsequently submitted draft of the prospectus shall be accompanied by an explanation as to how the incompleteness notified by the competent authority has been addressed. Where changes made to a previously submitted draft prospectus are self-explanatory or clearly address the incompleteness notified by the competent authority, an indication of where the incompleteness has been addressed shall be considered sufficient. Article 4 Final submission With the exception of the cross reference list mentioned in Article 2(2)(a), submission of the final draft of the prospectus for approval shall be accompanied by any information mentioned in Article 2(2) which has changed since a previous submission. The final draft of the prospectus shall not be annotated in the margin. Where no changes have been made to the previously submitted information mentioned in Article 2(2), the issuer, offeror or person asking for admission to trading on a regulated market shall not be required to resubmit such information. In those cases, the issuer, offeror or person asking for admission to trading on a regulated market shall confirm in writing that no changes have been made to the previously submitted information.

Appendix 8A Page 12 of 27 3.1.1 R An applicant must submit to the FCA the following information: (1) a completed form A; (2) the prospectus; (3) if the order of items in the prospectus does not coincide with the order in the schedules and building blocks in the PD Regulation, a cross reference list identifying the pages where each item can be found in the prospectus; (4) a letter identifying any items from the schedules and building blocks that have not been included because they are not applicable; (5) if information is incorporated in the prospectus by reference to another document, a copy of the document (annotated to indicate which item of the schedules and building blocks in the PD Regulation it relates to); (6) if the applicant is requesting the FCA to authorise the omission of information from the prospectus, the information required by PR 2.5.3R; (7) [deleted] (8) [deleted] (9) contact details of individuals who are: (a) [sufficiently knowledgeable about the documentation to be able to answer queries from the FCA; and (b) available to answer queries between the hours of 7 a.m. and 6 p.m.; and] (10) any other information that the FCA may require. [deleted] 3.1.1A R If the order of disclosure items in the prospectus does not coincide with the order set out in the schedules and building blocks in the PD Regulation, an applicant must provide the FCA with a cross reference list identifying the pages where each disclosure item can be found in the prospectus. [Note: articles 25(4) and 26(3) of the PD Regulation] 3.1.2 G FEES 3 sets out the relevant application fee payable to the FCA. [deleted] 3.1.2A R An applicant must take all reasonable care to ensure that any prospectus submitted for approval, for which it is responsible, contains: (1) … (2) the information items required in Annexes I to XVII and Annexes

Appendix 8A Page 13 of 27 XX to XXX of the PD regulation Regulation, as appropriate to its application. … When information must be submitted Timeframe for submission 3.1.3 R (1) The applicant must submit to the FCA by the date specified in paragraph (2): (a) the completed form A in final form; (i) a completed Form A; (ii) a completed Prospectus Publication Form; (iii) a completed Issuer Contact Details Form; and (iv) a completed Transaction Review Submissions Information Sheet; [Note: Article 2(2)(e) of Commission Delegated Regulation (EU) No [xxx]/2015. These forms are available on the UKLA section of the FCA’s website.] (b) the relevant fee; and [Note: FEES 3 sets out the relevant fee payable to the FCA.] (c) the other information referred to in PR 3.1.1R in draft form the first draft of the prospectus (accompanied, where relevant, by the additional information set out in article 2(2) of Commission Regulation EU [xxx]/2015). [Note: Extracts of article 2 of Commission Regulation EU [xxx]/2015 are reproduced for the convenience of readers in PR 3.1.-1EU.] (2) The date referred to in paragraph (1) is: … (b) at least 20 working days before the intended approval date of the prospectus if the applicant does not have transferable securities admission admitted to trading and has not previously made an offer; or … (3) The applicant must submit the final version of the draft prospectus and the additional information set out in Article 4 of Commission Regulation EU [xxx]/2015 to the FCA the information referred to in

Appendix 8A Page 14 of 27 paragraph (1)(c) in final form before midday on the day on which approval is required to be granted. [Note: Article 4 of Commission Regulation EU [xxx]/2015 is reproduced for the convenience of readers in PR3.1.-1EU.] Drafts of documents 3.1.4 R Drafts of documents must be submitted to the FCA: (1) in a substantially complete form; (2) in duplicate in hard copy or an agreed electronic format; and (3) annotated in the margin to indicate compliance with all applicable requirements of Part 6 of the Act and these rules. [deleted] 3.1.5 R If further drafts of documents are required, they must be submitted to the FCA: (1) marked to show all changes made since the last draft was reviewed by the FCA; (2) marked to show all changes made to the documents as a consequence of the FCA's comments (in a way that differentiates those changes from other changes); (3) in duplicate in hard copy or an agreed electronic format; and (4) annotated in the margin to indicate compliance with all applicable requirements of the Act and these rules. [deleted] … Request for certificate of approval 3.1.6 G If an applicant wishes the FCA to provide a certificate of approval to another competent authority at the time the prospectus is approved, it should include a request for the supply of the certificate with its application for approval of the prospectus (PR 5.3.2R sets out the requirements for such a request). [deleted] Approval of prospectus 3.1.7 UK … [Note: Section 87C of the Act sets out time limits for the FCA to notify an applicant of its decision on an application for approval.] 3.1.7A EU Article 5(2) and (4) of Commission Delegated Regulation (EU) No [xxx]/2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of

Appendix 8A Page 15 of 27 advertisements and amending Commission Regulation (EC) No 809/2004 provides that: 2. Where the competent authority of the home Member State considers, on reasonable grounds, that the documents submitted to it are incomplete or that supplementary information is needed, for instance due to inconsistencies or incomprehensibility of certain information provided, it shall notify the issuer, offeror or person asking for admission to trading of the need for supplementary information and the reasons therefor, in writing, via electronic means. 4. Where the issuer, offeror or person asking for admission to trading on a regulated market is unable or unwilling to provide the supplementary information requested in accordance with paragraph 2, the competent authority of the home Member State shall be entitled to refuse the approval of the prospectus and terminate the review process. 3.1.8 G The FCA will only approve a prospectus when it considers that the information provided with the application is complete and is in final form. Note: Section 87C of the Act sets out time limits for the FCA to notify an applicant of its decision on an application for approval. [deleted] … Service of Notice Regulations 3.1.17 G Regulation 7 of The Financial Services and Markets Act 2000 (Service of Notice Regulations) 2001 (SI 2001/1420) contains provisions relating to the possible methods of serving documents on the FCA. Regulation 7 does not apply to the submission of a draft prospectus to the FCA for approval because of the provisions set out in PR 3.1.-1EU. 3.2 Filing and publication of prospectus … Method of publishing … 3.2.6A EU Commission Delegated Regulation (EU) No [xxx]/2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004 provides that:

Appendix 8A Page 16 of 27 Recital 7 …Requiring investors to agree to a disclaimer limiting legal liability, pay a fee or go through a registration process to gain access to the prospectus impedes easy accessibility and should not be permitted. Filters warning in which jurisdictions an offer is being made and requiring investors to disclose their country of residence or indicate that they are not resident in a particular country or jurisdiction should not be considered as disclaimers limiting legal liability. Article 6 Publication of the prospectus in electronic form

1. When published in electronic form pursuant to points (c), (d) or (e) of Article 14(2) of Directive 2003/71/EC, the prospectus, whether a single document or comprising several documents, shall: (a) be easily accessible when entering the website; (b) be in searchable electronic format that cannot be modified; (c) not contain hyperlinks with the exception of links to the electronic addresses where information incorporated by reference is available; (d) be downloadable and printable.
2. Where a prospectus containing information incorporated by reference is published in electronic form, it shall include hyperlinks to each document containing information incorporated by reference or to each webpage on which that document is published.
3. If a prospectus for offer of securities to the public is made available on the websites of issuers or financial intermediaries or of regulated markets, these shall take measures to avoid targeting residents in Member States or third countries where the offer of securities to the public does not take place, such as the insertion of a disclaimer as to who are the addressees of the offer.
4. Access to the prospectus published in electronic form shall not be subject to: (a) completion of a registration process; (b) acceptance of a disclaimer limiting legal liability; (c) payment of a fee. Article 7

Appendix 8A Page 17 of 27 Publication of final terms The publication method for final terms related to a base prospectus does not have to be the same as the one used for the base prospectus as long as the publication method used is one of the methods indicated in Article 14 of Directive 2003/71/EC. Article 8 Publication in newspapers

1. In order to comply with point (a) of Article 14(2) of Directive 2003/71/EC the publication of a prospectus shall be made in a general or financial information newspaper having national or supra-regional scope.
2. If the competent authority is of the opinion that the newspaper chosen for publication does not comply with the requirements set out in paragraph 1, it shall determine a newspaper whose circulation is deemed appropriate for this purpose taking into account, in particular, the geographic area, number of inhabitants and reading habits in each Member State. FCA will publish a list of approved prospectuses 3.2.7 G The FCA will publish on its website, a list of prospectuses approved over the previous 12 months. The list will specify how a prospectus is made available and where it can be obtained, including include, if applicable, a hyperlink to the prospectus published on the issuer's or regulated market's website. [Note: article 14.4 PD] … 3.2.9 EU Articles 29, 30 and 33 of the PD Regulation provide for further requirements relating to publication of prospectuses: Article 29 Publication in electronic form
3. The publication of the prospectus or base prospectus in electronic form, either pursuant to [PR 3.2.4R(3) and PR 3.2.4R(4)], or as an additional means of availability, shall be subject to the following requirements: (1) the prospectus or base prospectus shall be easily accessible when entering the website;

Appendix 8A Page 18 of 27 (2) the file format shall be such that the prospectus or base prospectus cannot be modified; (3) the prospectus or base prospectus shall not contain hyper-links, with exception of links to the electronic addresses where information incorporated by reference is available; (4) the investors shall have the possibility of downloading and printing the prospectus or base prospectus. The exception referred to in point (3) of the first subparagraph shall only be valid for documents incorporated by reference; those documents shall be available with easy and immediate technical arrangements. 2. If a prospectus or base prospectus for offer of securities to the public is made available on the web-sites of issuers and financial intermediaries or of regulated markets, these shall take measures, to avoid targeting residents in Members States or third countries where the offer of securities to the public does not take place, such as the insertion of a disclaimer as to who are the addressees of the offer. Article 30 Publication in newspapers

1. In order to comply with [PR 3.2.4R(1)] the publication of a prospectus or a base prospectus shall be made in a general or financial information newspaper having national or supra-regional scope;
2. If the [FCA] is of the opinion that the newspaper chosen for publication does not comply with the requirements set out in paragraph 1, it shall determine a newspaper whose circulation is deemed appropriate for this purpose taking into account, in particular, the geographic area, number of inhabitants and reading habits in each Member State. Article 33 Publication of the final terms of base prospectuses The publication method for final terms related to a base prospectus does not have to be the same as the one used for the base prospectus as long as the publication method used is one of the publication methods indicated in [PR 3.2.4R]. [deleted] …

Appendix 8A Page 19 of 27 3.3 Advertisements … Advertisements … 3.3.3A EU Article 11 of Commission Delegated Regulation (EU) No [xxx]/2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004 provides that: Article 11 Dissemination of advertisements

1. Where an advertisement relating to an offer to the public or an admission to trading on a regulated market has been disseminated, and a supplement to the prospectus is subsequently published, due to the arising or noting of a significant new factor, material mistake or inaccuracy relating to the information included in the prospectus, an amended advertisement shall be disseminated if the significant new factor, material mistake or inaccuracy relating to the information included in the prospectus renders the contents of the previously disseminated advertisement inaccurate or misleading. 2, An amended advertisement shall make reference to the previous advertisement, specify that the previous advertisement has been amended due to it containing inaccurate or misleading information and specify the differences between the two versions of the advertisement.
2. An amended advertisement shall be disseminated without undue delay following the publication of the supplement. With the exception of orally disseminated advertisements, an amended advertisement shall be disseminated, at a minimum, through the same means as the original advertisement. The obligation to amend an advertisement shall not apply after the final closing of the offer to the public or after the time when trading on a regulated market begins, whichever occurs later.
3. Where no prospectus is required in accordance with Directive 2003/71/EC, any advertisement shall include a warning to that effect unless the issuer, offeror or person asking for admission to trading on a regulated market chooses to publish a prospectus which complies with Directive 2003/71/EC, Regulation (EC) No 809/2004

Appendix 8A Page 20 of 27 and this Regulation. Other information disclosed must be consistent with prospectus … 3.3.5 EU Article 34 of the PD Regulation sets out a non-exhaustive list of the types of advertisement covered by the advertising provisions: Dissemination of advertisements Advertisements related to an offer to the public of securities or to an admission to trading on a regulated market may be disseminated to the public by interested parties, such as issuer, offeror or person asking for admission, the financial intermediaries that participate in the placing and/or underwriting of securities, notably by one of the following means of communication: (1) Addressed or unaddressed printed matter; (2) Electronic message or advertisement received via a mobile telephone or pager; (3) Standard letter; (4) Press advertising with or without order form; (5) Catalogue; (6) Telephone with or without human intervention; (7) Seminars and presentations; (8) Radio; (9) Videophone; (10) Videotext; (11) Electronic mail; (12) Facsimile machine (fax); (13) Television; (14) Notice; (15) Bill;

Appendix 8A Page 21 of 27 (16) Poster; (17) Brochure; (18) Web posting including internet banners. [deleted] 3.3.6 EU Article 34 of the PD Regulation also provides for the inclusion of a warning where no prospectus is required in accordance with the PD: Article 34 Where no prospectus is required in accordance with Directive 2003/71/EC, any advertisement shall include a warning to that effect unless the issuer, the offeror or the person asking for admission to trading on a regulated market chooses to publish a prospectus which complies with Directive 2003/71/EC and this Regulation. [deleted] 3.3.7 EU Article 12 of Commission Delegated Regulation (EU) No [xxx]/2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004 provides that: Article 12 Consistency for the purposes of Article 15(4) of Directive 2003/71/EC Information disclosed in an oral or written form about the offer to the public or admission to trading on a regulated market, whether for advertisement or other purposes, shall not: (a) contradict the information contained in the prospectus; (b) refer to information which contradicts that contained in the prospectus; (c) present a materially unbalanced view of the information contained in the prospectus, including by way of omission or presentation of negative aspects of such information with less prominence than the positive aspects; (d) contain alternative performance measures concerning the issuer, unless such are contained in the prospectus. For the purposes of points (a)-(d), information contained in the prospectus shall consist of information included in the prospectus, if

Appendix 8A Page 22 of 27 already published, or information to be included in the prospectus, if the prospectus is published at a later date. For the purposes of point (d), alternative performance measures shall consist of performance measures which are financial measures of historical or future financial performance, financial position, or cash flows, other than financial measures defined in the applicable financial reporting framework. App 1.1 Relevant definitions App 1.1.1 Note: The following definitions relevant to the prospectus rules are extracted from the Glossary. … Prospectus RTS Regulations (1) the Commission Delegated Regulation (EU) No 382/2014 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for publication of supplements to the prospectus.; and (2) Commission Delegated Regulation (EU) No xxx/2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004. …

Appendix 8A Page 23 of 27 Annex F Amendments to the Disclosure Rules and Transparency Rules sourcebook (DTR) In this Annex, underlining indicates new text and striking through indicates deleted text. 1B Introduction (Corporate governance) 1B.1 Application and purpose (Corporate governance) … Purpose: Corporate governance statements 1B.1.4 G The purpose of the requirements in DTR 7.2 is to implement parts of the Fourth Company Law Directive and the Seventh Company Law Directive Accounting Directive (including those Directives that Directive as applied to banking and insurance companies) which requires companies to publish a corporate governance statement. … Exemption 1B.1.6 R … [Note: Article 46a(3) of the Fourth Company Law Directive Article 20(4) of the Accounting Directive] … 4 Periodic Financial Reporting 4.1 Annual financial report … Auditing of financial statements 4.1.7 R … (4) … (a) on the register of third country auditors kept for the purposes of regulation 34 of the Statutory Auditors and Third Country Audit Regulations 2007 (SI 2007/3494)

Appendix 8A Page 24 of 27 regulation 6 of the Statutory Auditors and Third Country Auditors Regulations 2013 (SI 2013/1672); or … Content of management report 4.1.8 R … [Note: article 4(5) of the TD] 4.1.9 R … [Note: article 4(5) of the TD] … 4.1.11 R The management report required by DTR 4.1.8 R must also give an indication of: … (4) the information concerning acquisitions of own shares prescribed by Article 22 (2) of Directive 77/91/EEC article 24(2) of Directive 2012/30/EU; … [Note: article 4(5) of the TD] … 4.2 Half-yearly financial reports … Content of interim management report … 4.2.8 R … (2) … [Note: Article 43(1)(7b) of Directive 78/660/EC articles 2(3), 6(1)(j) and 17(1)(r) of the Accounting Directive] (3) … [Note: Article 43(1)(7b) of Directive 78/660/EC articles 2(3) and 17(1)(r) of the Accounting Directive]

Appendix 8A Page 25 of 27 Auditing of the condensed set of financial statements 4.2.9 R (1) If the half-yearly financial report has been audited or reviewed by auditors pursuant to the Auditing Practices Board Financial Reporting Council guidance on Review of Interim Financial Information, the audit report or review report must be reproduced in full. (2) If the half-yearly financial report has not been audited or reviewed by auditors pursuant to the Auditing Practices Board Financial Reporting Council guidance on Review of Interim Financial Information, an issuer must make a statement to this effect in its report. … Responsibility statements 4.2.10 R … (4) … (b) for UK issuers not using IFRS, pronouncements on interim reporting Financial Reporting Standard 104 : Interim Financial Reporting issued by the Accounting Standards Board Financial Reporting Council; or … … 7 Corporate Governance 7.2 Corporate governance statements … 7.2.2 R The corporate governance statement must contain a reference to the following, where applicable: (1) the corporate governance code to which the issuer is subject; and/or (2) the corporate governance code which the issuer may have voluntarily decided to apply; and/or (3) all relevant information about the corporate governance practices applied beyond over and above the requirements under of national law. [Note: Article 46a(1)(a) first paragraph of the Fourth Company Law

Appendix 8A Page 26 of 27 Directive article 20(1)(a) first paragraph of the Accounting Directive] 7.2.3 R (1) An issuer which is complying with DTR 7.2.2R(1) or DTR 7.2.2R(2) must: … (b) to the extent that where it departs from that corporate governance code, explain which parts of the corporate governance code it departs from and the reasons for doing so. (2) Where DTR 7.2.2R(3) applies, the issuer must make details of its corporate governance practices publicly available and state in its directors' report where they can be found. (3) If an issuer has decided not to apply refer to any provisions of a corporate governance code referred to under DTR 7.2.2R(1) and DTR 7.2.2R(2), it must explain its reasons for that decision. [Note: Article 46a(1)(a) second paragraph and Article 46a(1)(b) of the Fourth Company Law Directive article 20(1)(a) second paragraph and article 20(1)(b) of the Accounting Directive] … 7.2.5 R … [Note: Article 46a(1)(c) of the Fourth Company Law Directive article 20(1)(c) of the Accounting Directive] 7.2.6 R … [Note: Article 46a(1)(d) of the Fourth Company Law Directive article 20(1)(d) of the Accounting Directive] 7.2.7 R … [Note: Article 46a(1)(f) of the Fourth Company Law Directive article 20(1)(f) of the Accounting Directive] … 7.2.9 R An issuer may elect that, instead of including its corporate governance statement in its directors' report, the information required by DTR 7.2.1R to DTR 7.2.7R may be set out in: (1) in a separate report published together with and in the same manner as its annual report. In the event of a separate report, the corporate governance statement must contain either the information required by DTR 7.2.6 R or a reference to the directors' report where that information is made available; or

Appendix 8A Page 27 of 27 (2) by means of a reference in its directors' report to where such a document is publicly available on the issuer's website to which reference is made in the directors’ report. Under (1) or (2), the corporate governance statement must contain the information required by DTR 7.2.6R or a reference to the directors’ report where that information is made available. [Note: Article 46a(2) first and second sentence of the Fourth Company Law Directive article 20(2) of the Accounting Directive] 7.2.10 R Subject to DTR 7.2.11R, an issuer which is required to prepare a group directors' report within the meaning of section 415(2) of the Companies Act 2006 must include in that report a description of the main features of the group's internal control and risk management systems in relation to the process for preparing consolidated accounts financial reporting process for the undertakings included in the consolidation, taken as a whole. In the event that the issuer presents its own annual report and its consolidated annual report as a single report, this information must be included in the corporate governance statement required by DTR 7.2.1R. [Note: Article 36(2)(f) of the Seventh Company Law Directive article 29(2)(b) of the Accounting Directive ] 7.2.11 R (1) An issuer that elects to include its corporate governance statement in a separate report as permitted by DTR 7.2.9R(1) must provide the information required by DTR 7.2.10R in that report. (2) An issuer that elects to include its corporate governance statement in a document publicly available on the issuer's website to which reference is made in the directors’ report as permitted by DTR 7.2.9R(2) must provide the information required by DTR 7.2.10R in that document.

Financial Conduct Authority September 2015 71 Quarterly Consultation No. 10 CP15/28 Appendix 8B SAAD instrument

Appendix 8B DISCLOSURE RULES AND TRANSPARENCY RULES SOURCEBOOK (STATUTORY AUDIT AMENDING DIRECTIVE) INSTRUMENT 2016 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the following powers and related provisions in or under the following sections of the Financial Services and Markets Act 2000 (the “Act”): (1) section 73A (Part 6 Rules); (2) section 89O (Corporate governance rules); (3) section 101 (Part 6 rules: general provisions); (4) section 137A (General rule-making power); (5) section 137T (General supplementary powers); and (6) section 139A (Guidance). B. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule-making instruments) of the Act. Commencement C. This instrument comes into force on [date] 2016. Amendments to the Handbook D. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes to this instrument listed in column (2). (1) (2) Glossary of definitions Annex A Disclosure Rules and Transparency Rules sourcebook (DTR) Annex B Notes E. In Annex B to this instrument, the “notes” (indicated by “Note:”) are included for the convenience of readers but do not form part of the legislative text. Citation F. This instrument may be cited as the Disclosure Rules and Transparency Rules Sourcebook (Statutory Audit Amending Directive) Instrument 2016. By order of the Board of the Financial Conduct Authority [date]

Appendix 8B Page 2 of 7 Annex A Amendments to the Glossary of definitions Insert the following new definition in the appropriate alphabetical position. The text is not underlined. Audit Regulation Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC.

Appendix 8B Page 3 of 7 Annex B Amendments to the Disclosure Rules and Transparency Rules sourcebook (DTR) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. 1B Introduction (Corporate governance) 1B.1 Application and purpose (Corporate governance) … Exemptions 1B.1.3 R DTR 7.1 does not apply to: (1) any issuer which is a subsidiary undertaking of a parent undertaking where the parent undertaking is subject to: (a) DTR 7.1, or to requirements implementing Article 41 article 39 of the Audit Directive in any other EEA State; and (b) articles 11(1), 11(2) and 16(5) of the Audit Regulation; [Note: Article 41.6(a) article 39(3)(a) of the Audit Directive] (2) … [Note: Article 41.6(c) article 39(3)(c) of the Audit Directive] (3) a credit institution whose shares are not admitted to trading and which has, in a continuous or repeated manner, issued only debt securities which are admitted to trading provided that: (a) … (b) the credit institution has not been subject to a requirement to publish a prospectus in accordance with section 85 of the Act. ; and [Note: Article 41.6(d) article 39(3)(d) of the Audit Directive] (4) any issuer which is a UCITS or an AIF. [Note: article 39(3)(b) of the Audit Directive] …

Appendix 8B Page 4 of 7 7 Corporate Governance 7.1 Audit committees Audit committees and their functions 7.1.1 R An issuer must have a body which is or bodies responsible for performing the functions set out in DTR 7.1.3R. At least one member of that body must be independent and at least one member must have competence in accounting and/or auditing. 7.1.1A R (1) A majority of the members of the relevant body must be independent. (2) At least one member of the relevant body must have competence in accounting or auditing, or both. (3) The members of the relevant body as a whole must have competence relevant to the sector in which the issuer is operating. [Note: article 39(1) of the Audit Directive] 7.1.2 G The requirements for independence and competence in accounting and/or auditing may be satisfied by the same member members or by different members of the relevant body. 7.1.2A R The chairman of the relevant body must be: (1) independent; and (2) appointed by the members of the relevant body or by the administrative or supervisory body of the issuer. [Note: article 39(1) of the Audit Directive] 7.1.3 R An issuer must ensure that, as a minimum, the relevant body must: (1) monitor the financial reporting process and submit recommendations or proposals to ensure its integrity; (2) monitor the effectiveness of the issuer's internal quality control, internal audit where applicable, and risk management systems and, where applicable, its internal audit, regarding the financial reporting of the issuer, without breaching its independence; (3) monitor the statutory audit of the annual and consolidated accounts financial statements, in particular, its performance, taking into account any findings and conclusions by the competent authority under article 26(6) of the Audit Regulation; (4) review and monitor the independence of the statutory auditor, and in particular the provision of additional services to the issuer in

Appendix 8B Page 5 of 7 accordance with articles 22, 22a, 22b, 24a and 24b of the Audit Directive and article 6 of the Audit Regulation, and in particular the appropriateness of the provision of non-audit services to the issuer in accordance with article 5 of the Audit Regulation.; (5) inform the administrative or supervisory body of the issuer of the outcome of the statutory audit and explain how the statutory audit contributed to the integrity of financial reporting and what the role of the relevant body was in that process; (6) except when article 16(8) of the Audit Regulation is applied, be responsible for the procedure for the selection of statutory auditor(s) and recommend the statutory auditor(s) to be appointed in accordance with article 16 of the Audit Regulation. [Note: article 39(6) of the Audit Directive] 7.1.4 R An issuer must base any proposal to appoint a statutory auditor on a recommendation made by the relevant body. [deleted] [Note: Article 41.3 of the Audit Directive] 7.1.5 R ... [Note: Article 41.5 article 39(4) (part) of the Audit Directive] … After DTR 8 insert the following new Appendix. The text is not underlined. Appendix 1 Audit Committees for certain issuers App 1.1 App 1.1.1 As set out in DTR TP [28], an issuer with a financial year beginning before [17] June 2016 and to which DTR 7.1 applied before [17] June 2016 must comply with the requirements set out in this appendix in relation to their audit committee. App 1.1.2 To assist issuers, this appendix adopts the text of DTR 7.1 before it was amended by the Disclosure Rules and Transparency Rules Sourcebook (Statutory Audit Amending Directive) Instrument 2016 in order to cover issuers with a financial year beginning before [17] June 2016. App 1.1.3 7.1 Audit committees Audit committees and their functions 7.1.1 R An issuer must have a body which is responsible for performing the functions set out in DTR 7.1.3R. At least one member of that body must be independent and at least one member must have competence in accounting and/or auditing.

Appendix 8B Page 6 of 7 7.1.2 G The requirements for independence and competence in accounting and/or auditing may be satisfied by the same member or by different members of the relevant body. 7.1.3 R An issuer must ensure that, as a minimum, the relevant body must: (1) monitor the financial reporting process; (2) monitor the effectiveness of the issuer's internal control, internal audit where applicable, and risk management systems; (3) monitor the statutory audit of the annual and consolidated accounts; (4) review and monitor the independence of the statutory auditor, and in particular the provision of additional services to the issuer. 7.1.4 R An issuer must base any proposal to appoint a statutory auditor on a recommendation made by the relevant body. [Note: Article 41.3 of the Audit Directive] 7.1.5 R The issuer must make a statement available to the public disclosing which body carries out the functions required by DTR 7.1.3R and how it is composed. [Note: Article 41.5 (part) of the Audit Directive] 7.1.6 G An issuer may include the statement required by DTR 7.1.5R in any statement it is required to make under DTR 7.2 (Corporate governance statements). 7.1.7 G In the FCA's view, compliance with provisions A.1.2, C.3.1, C.3.2, C.3.3 and C.3.8 of the UK Corporate Governance Code will result in compliance with DTR 7.1.1R to DTR 7.1.5R. TP 1 Disclosure and transparency rules Transitional Provisions (1) (2) Material to which the Transitional provision applies (3) (4) Transitional provision (5) Transitional Provision: dates in force (6) Handbook Provision: coming into force …

Appendix 8B Page 7 of 7 [28] DTR 7.1 R (1) DTR 7.1 does not apply to an issuer with a financial year beginning before [17] June 2016. (2) An issuer with a financial year beginning before [17] June 2016 and to which DTR 7.1 applied before [17] June 2016 must instead comply with the requirements set out in DTR App 1 for that financial year and must comply with DTR 7.1 as of the beginning of its next financial year. From [ ] 2016 [ ] 2016

72 September 2015 Financial Conduct Authority CP15/28 Quarterly Consultation No. 10 Appendix 8C Current prospectus forms

FORM A Application for the approval of a prospectus in accordance with Part VI of the Financial Services and Markets Act 2000 (FSMA) as amended To: Financial Conduct Authority Date: _________________________________[insert name of issuer, offeror, or person seeking admission to trading on a regulated market] (the 'applicant') hereby applies for the draft prospectus1 /registration document/securities note and summary2 attached hereto to be approved by the FCA. Confirmation: We acknowledge our obligations under FSMA as amended, the Prospectus Directive Regulation and the Prospectus Rules and the legal implications of approval of a prospectus/registration document/securities note and summary under those provisions. Accordingly we confirm, in relation to the application for approval of the attached prospectus/registration document/securities note and summary that: (a) the United Kingdom is our Home Member State under the Prospectus Directive; (b) all information required to be included in a prospectus/registration document/securities note and summary has been included therein, or if the final version has not yet been submitted, will be included therein prior to submission; and (c) all the documents and information required to be provided with the application have been or will be supplied in accordance with the Prospectus Rules and all other requirements of the FCA in respect of this application have been or will be complied with. Signed Director or Secretary or other duly authorised officer for and on behalf of Name of Applicant Attachments:  Draft prospectus/registration document/securities note and summary  The documents referred to in PR 3.1.1  The applicable fee

1 References to prospectus in this form include a base prospectus and a supplementary prospectus

2 Please delete as appropriate

Page 1 of 3 PROSPECTUS PUBLICATION FORM As set out in PR 3.2.7G, the FCA will publish on its website, a list of prospectuses approved over the previous 12 months. This list will specify how the prospectuses have been made available and where they can be obtained– including a hyperlink to the prospectus published on the issuer's or its financial intermediaries’ websites and, if applicable, the website of the regulated market on which admission is sought. Under the Prospectus Directive, a variety of publication options are available to issuers/offerors or persons requesting admission to trading on a regulated market.1 These options are set out in PR3.2.4R. Therefore when completing this form, a number of boxes may not apply and you may leave them blank. However, a person publishing a prospectus in accordance with PR3.2.4R(1) or (2) must also publish their prospectus electronically in accordance with PR3.2.4R (3). The information you give us on this form will appear on our website shortly after your prospectus is approved. Approved prospectus details Publication/ approval date Name(s) of issuer/offeror and/or person requesting admission to trading Prospectus title Admission date / offer date Option 1 - Publication by being made available at office of the issuer and financial intermediaries The prospectus is to be made available in a printed form, free of charge, at the registered office of the issuer and at the offices of the financial intermediaries (PR 3.2.4R(2)): Issuer and Intermediary* Name: Name: Address: Address: *Where more than one, please complete for each financial intermediary. Please note that where this option is chosen, you must also complete Option 6 (PR3.2.4AR). Option 2 - Publication on website of the issuer or financial Intermediaries The issuer must make its prospectus available in an electronic form on its website or, if applicable, on that of its financial intermediaries placing or selling the transferable securities, including paying agents (PR 3.2.4R(3) and PR3.2.4A). A paper copy of the prospectus can be obtained by calling the following telephone numbers (PR 3.2.6R):

1 The requirements to publish a prospectus under PR3.2.2R – PR3.2.6R are in addition to, and distinct from, the obligation to file a prospectus with the FCA (via the national storage mechanism) under PR3.2.1R and PR3.2.1AR.

Page 2 of 3 Issuer Intermediary** Website address*: Website address*: Tel no: Tel no:

• Please provide a website address that takes an investor to a webpage from which they can access the document itself, rather than the generic website home page of the issuer or financial intermediary. ** Where more than one, please complete for each financial intermediary. Option 3 - Publication by being made available at office of a regulated market If applicable, the prospectus is to be made available in a printed form, free of charge, at the offices of the following regulated market where admission to trading is sought (PR 3.2.4R(2)): Market: Address: Please note that where this option is chosen, you must also complete Option 6 (PR3.2.4AR). Option 4 - Publication on the website of a regulated market If applicable, the prospectus is to be made available in an electronic form on the website of the regulated market where admission to trading is sought (PR 3.2.4R(4)): Website address*:
• Please provide a website address that takes an investor to a webpage from which they can access the document itself, rather than the generic website home page of the market. Option 5 - Publication in a newspaper The prospectus is to be made available in printed form in the following newspaper edition (PR 2.4R(1)): Newspaper* Edition (dd/mm/yy)
• Where more than one, please complete for each newspaper. Please note that where this option is chosen, you must also complete Option 6 (PR3.2.4AR).

Page 3 of 3 Option 6 – Additional website publication where Options 1, 3 or 5 chosen Issuer Intermediary** Website address*: Website address*: Tel no: Tel no:

• Please provide a website address that takes an investor to a webpage from which they can access the document itself, rather than the generic website home page of the issuer or financial intermediary. ** Where more than one, please complete for each financial intermediary.

ISSUER CONTACT DETAILS New Applicants: Please complete all sections below so that we can set up our records correctly. This information will be used if we need to contact you in the future. Other Issuers: If the information shown below has changed since your last listing application please complete the relevant sections. Full name of Issuer Registered Office Address: Postcode Telephone Number Fax Number Website (if applicable) Main Contact (usually Company Secretary) Name Position Address: (if different to above) Postcode Telephone Number Fax Number Email (if applicable) Preferred Contact Method: FAX/LETTER (please delete as appropriate) Other Information Sponsor/Broker (main contact for the issuer) Persons authorised to release information on behalf of the company Accounting Reference Date First year end date

Financial Conduct Authority September 2015 73 Quarterly Consultation No. 10 CP15/28 Appendix 9 Technical amendments to GEN

Appendix 9 GENERAL PROVISIONS (AMENDMENT) INSTRUMENT 2015 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the powers and related provisions in or under: (1) the following sections of the Financial Services and Markets Act 2000 (“the Act”): (a) section 137A (The FCA’s general rules); (b) section 137T (General supplementary powers); and (c) section 139A (Power of the FCA to give guidance); and (2) the other powers and related provisions listed in Schedule 4 (Powers exercised) to the General Provisions of the Handbook. B. The rule-making powers listed above are specified for the purpose of section 138G (Rule-making instruments) of the Act. Commencement C. This instrument comes into force on [date] 2015. Amendments to the Handbook D. The General Provisions (GEN) are amended in accordance with the Annex to this instrument. Citation E. This instrument may be cited as the General Provisions (Amendment) Instrument 2015. By order of the Board of the Financial Conduct Authority [date 2015]

Appendix 9 Annex Amendments to the General Provisions (GEN) In this Annex, underlining indicates new text and striking through indicates deleted text. 2.2 Interpreting the Handbook … Cross-references in the Handbook … 2.2.13A R Unless a contrary intention appears, to the extent that a provision made by the appropriate regulator FCA ('the referring provision') contains a cross￾reference to another provision that is not made by that regulator the FCA including a provision formerly made by the PRA which the PRA has now deleted ('the referred provision'), the referred provision as amended from time to time (excepting deletion in its entirety) is to be taken to have treated as having been made by the appropriate regulator FCA to the extent necessary to make the referring provision function with the full effect indicated by the reference. … Application of provisions made by both the FCA and the PRA 2.2.23 R (1) This rule applies to Handbook provisions made by both the FCA and the PRA, and to Handbook provisions made by the FCA and formerly also made by the PRA. It may affect their application by the FCA to PRA-authorised persons and PRA approved persons, and may affect their application by the PRA to any authorised person or approved person. … … 2.2.25 G Examples of rules being interpreted as cut back by GEN 2.2.23R include the following: … (3) COMP 5.2.1R sets out types of protected claims to be covered by the FSCS. The powers of the FCA and the PRA to make this type of rule are set out in the order made under section 213(1A) of the Act. The rule must be read as applying only to the extent of those powers. For example, the PRA has no power to make COMP 5.2.1R(3) creating protected claims in connection with protected investment business,

Appendix 9 and the FCA has no power to make COMP 5.2.1R(1) as creating protected claims for a protected deposit. As such, those provisions are to be interpreted as not applied by the PRA and FCA, respectively.

Financial Conduct Authority © Financial Conduct Authority 2015 25 The North Colonnade Canary Wharf London E14 5HS Telephone: +44 (0)20 7066 1000 Website: www.fca.org.uk All rights reserved