Regulated firms in the UK are under a duty to deal with the financial services regulators in an open and cooperative way and report matters of which the respective regulator would reasonably expect notice. This obligation is found within the rules of both the Financial Conduct Authority (FCA) (Principle 11) and the Prudential Regulation Authority (PRA) (Fundamental Rule 7). It applies to unregulated and regulated activities and takes into account the activities of other members of a group.
This obligation to report to the FCA and PRA, and to be open and cooperative in dealings with the regulators, also extends to individuals personally if they are “approved persons”, performing controlled functions, or are subject to the Senior Managers and Certification Regime.
These notification obligations enable the regulators to monitor firms’ and responsible individuals’ compliance with the rules and to react quickly to matters which require a regulatory response (for example, action to protect consumers from detriment).
It is a matter of judgement for a regulated firm or individual to assess whether the duty to notify the respective regulator has been engaged. The FCA provides guidance on what matters must be reported by firms in Chapter 15 of the Supervision Handbook, including:
immediate notification of matters which have (or may have) serious regulatory impact, including matters that could have a significant adverse impact on the firm’s reputation, serious financial consequences for the UK financial system or other firms, or could result in serious detriment to a customer (SUP15.3.1R)
notification of significant breaches of rules (including Principles, Statements of Principle and the Code of Conduct for Staff rules); whether a breach has occurred or may occur in the foreseeable future (SUP15.3.11R(1))
notification of any significant breach or potential breach of competition law (SUP15.3.32R), and)
notification of other key matters including civil, criminal or disciplinary proceedings against the firm (SUP15.3.15R), fraud, errors and other irregularities (SUP15.3.17R) and insolvency, bankruptcy and winding up (SUP15.3.21R).