FCA Handbook - RCB 3.2 Annual confirmations of compliance and asset pool monitor

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RCB 3.2 Annual confirmations of compliance and asset pool monitor

Form of confirmation and use of third party advisers and asset pool monitor's report

The issuer must send to the FCA annual written confirmation of compliance with Regulations 16 (sums derived from the issue of regulated covered bonds) and 17 (general requirements on the issuer in relation to the asset pool) of the RCB Regulations in the form set out in RCB 3 Annex 1D (annual confirmation of compliance).

Before providing the confirmation required by this section, the issuer must obtain and consider written advice or reports from suitable independent third parties such as the asset pool monitor and, where appropriate, lawyers.

The FCA expects the issuer to be able to justify any reliance it places on advice or reports which are not reasonably contemporaneous with the confirmation.

The FCA expects the asset pool monitor's report to address at least the matters to be checked and due diligence procedures set out in RCB 2.3.18 G. The FCA may also specify additional matters that the asset pool monitor's report should address in relation to a particular issuer.

The FCA's use of its power under Regulation 18 of the RCB Regulations may include requiring the issuer to provide to the FCA copies of the advice or reports referred to in RCB 3.2.2 D.

The issuer must provide a copy of the asset pool monitor's report to the FCA when it sends the confirmation required by this section to the FCA.

Timing of confirmation date

(1)
The first confirmation date in relation to the annual confirmation must be the earlier of any date the issuer selects, or the date 12 months from the registration date.
(2)
Subsequent confirmations must be made:
1. (a)
  on the anniversary of the first confirmation date, or
2. (b)
  on a later date, where agreed by the FCA before that date.

The issuer must send each confirmation to the FCA within one month after the relevant confirmation date.

Period covered by confirmation

The first confirmation must cover compliance during the period from the registration date up to the confirmation date referred to in RCB 3.2.5 D (1).

Subsequent confirmations must cover compliance for the period from the last confirmation date to the date of the current confirmation.

Verification of confirmation

The issuer must ensure that a director or a senior manager signs the annual confirmation and confirms on the FCA's form that the issuer has obtained the appropriate third party advice or reports required by this section.

Where possible, the director or senior manager who signs the annual confirmation should be the same director or senior manager who has verified the application for registration under RCB 2.2.6 D. If the director or senior manager is different to the director or senior manager who verified the application for registration, the issuer should notify the FCA at least one month before sending the confirmation to the FCA.

Notifications by the owner

If the issuer is in insolvency, the owner must send the FCA under RCB 3.2.1 D:

(1)
a confirmation of compliance within one month of the date of insolvency; and
(2)
annual confirmations by the same dates as the date the confirmations under RCB 3.2.5 D are due.

(1)
The owner must ensure that a duly authorised representative signs the confirmation and confirms on the FCA's form that the owner has obtained the appropriate third party advice or reports required by this section.
(2)
The owner must obtain appropriate advice in the same manner as set out in RCB 3.2.2 D and must provide a copy of the asset pool monitor's report to the FCA as set out in RCB 3.2.4B D.

Review by asset pool monitor

In addition to requiring the asset pool monitor to prepare an annual report, Regulation 17A of the RCB Regulations requires that the asset pool monitor must inspect the compliance of the issuer or owner (as the case may be) with the requirements in Regulations 16, 17 or 24 of the RCB Regulations once every 12 months.

The FCA expects the inspection by the asset pool monitor of the compliance of the issuer or owner (as the case may be) with the relevant requirements in the RCB Regulations to address at least the matters to be checked and due diligence procedures set out in RCB 2.3.18 G. The FCA expects that the inspection will be conducted on an agreed-upon-procedures basis.

As required under Regulation 17A of the RCB Regulations, if it appears to the asset pool monitor that the issuer or owner (as the case may be) has failed to comply with the requirements set out in Regulations 17 or 24 of the RCB Regulations, or has not provided all relevant information or explanations, the asset pool monitor must report that to the FCA in writing as soon as possible.

Change of asset pool monitor

If the asset pool monitor is changed, the issuer (or owner, as the case may be) should notify the FCA when the new asset pool monitor is appointed, giving the name of the new asset pool monitor and details of the reason for the change.