SUP 6B.1 Introduction

The FCA has powers under section 55J of the Act to vary or cancel an authorised person’s Part 4A permission and a power under section 55L to impose requirements on an authorised person. The FCA may use these powers where:

1. (1)

   the person is failing or is likely to fail to satisfy the threshold conditions for which the FCA is responsible;

2. (2)

   the person has not carried on a regulated activity to which the Part 4A permission relates for a period of at least 12 months (or 6 months in the case of a full-scope UK AIFM);

3. (3)

   it is desirable to exercise the power in order to advance one or more of its operational objectives; or

4. (4)

   the person has failed to comply with a requirement in Part 5 of the AIFMD UK regulation (AIFs which acquire control of non-listed companies and issuers), or it is for some other reason desirable to exercise the power for the purposes of ensuring compliance with such a requirement.

The powers under sections 55J and 55L of the Act to vary and cancel a person’s Part 4A permission and to impose requirements are exercisable in the same circumstances. However, the statutory procedure for the exercise of the own-initiative powers to vary a permission or impose a requirement is different to the statutory procedure for the exercise of the cancellation power under section 55J and this may determine how the FCA acts in a given case. Certain types of behaviour which may cause the FCA to cancel permission in one case may lead it to impose requirements, vary, or vary and later cancel, permission in another, depending on the circumstances. The non-exhaustive examples provided below are therefore illustrative but not conclusive of which action the FCA will take in a given case.

Separately, the FCA has its additional own-initiative variation power, under Schedule 6A to the Act, to vary or cancel the Part 4A permission of a firm that is an FCA-authorised person if:

1. (1)

   it appears to the FCA that that person is carrying on no regulated activity to which the permission relates; and

2. (2)

   that person has failed to respond as directed by the FCA to notices served by the FCA on that person under paragraph 2 of Schedule 6A.

Guidance on that power, which may be used in an enforcement context, is provided in SUP 7.