The appendix to FSA PS13/5 - The New FCA Handbook sets out the Financial Conduct Authority’s policy on the use of its power to direct a qualifying parent undertaking (also known as an ‘unregulated holding company’). The powers relate to all FCA-authorised investment firms and recognised UK investment exchanges (RIE).
Often, it is the Board of the ultimate parent undertaking that decides overall group strategy and organisation, risk management procedures and intra-group flows of capital and liquidity. Therefore, actions taken by a parent undertaking can affect the regulated entity’s ability to comply with its regulatory requirements. This could pose risks to the FCA’s operational objectives where the interests of the parent and subsidiary undertakings are not sufficiently aligned. Consequently, there are circumstances in which the FCA may wish to direct a parent undertaking of an FCA-authorised group to act, or refrain from acting, in a certain manner.
The direction will be designed to bring the FCA regulated entity and the group back into compliance with its regulatory requirements or to prevent the parent undertaking from taking action which may lead to disorderly failure of FCA regulated entities or the FCA regulated entity’s group.
What to do now
- Read the Appendix to the Policy Statement