Prudential Regulation Authority Rulebook

2.1

A firm must notify the PRA immediately if it becomes aware, or has information which reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

1. (1) the firm failing to satisfy one or more of the threshold conditions; or
2. (2) any matter which could have a significant adverse impact on the firm’s reputation; or
3. (3) any matter which could affect the firm’s ability to continue to provide adequate services to its customers and which could result in serious detriment to a customer of the firm; or
4. (4) any matter in respect of the firm which could result in serious financial consequences to the UK financial system or to other firms.

2.2

In determining whether the PRA should be notified of any of the events in 2.1 that may occur in the foreseeable future, a firm must consider both the probability of the event happening and the severity of the outcome should it happen.

2.3

The changes to this rule are effective from 23:00 on 31/12/2020.

A firm must give the PRA notice of:

1. (1) any proposed restructuring, reorganisation or business expansion which could have a significant impact on the firm’s risk profile or resources, including, but not limited to:
1. (a) setting up a new undertaking within a firm’s group, or a new branch (whether in the UK or not);
2. (b) [deleted.]
3. (c) commencing the provision of a new type of product or service (whether in the UK or not);
4. (d) ceasing to undertake a regulated activity or ancillary activity, or significantly reducing the scope of such activities;
5. (e) entering into, or significantly changing, a material outsourcing arrangement;
6. (f) a substantial change or a series of changes in the governing body of an overseas firm;
7. (g) any proposed change which limits the liability of any of the members or partners of a firm such as a general partner becoming a limited partner or re-registration as a limited liability company of a company incorporated with unlimited liability; or
8. (h) in relation to a dormant account fund operator, notify the PRA when the operator intends to rely on a third party for the performance of operational functions which are critical or important for the performance of relevant services and activities in connection with operating a dormant account fund on a continuous and satisfactory basis;
2. (2) any significant failure in the firm’s systems or controls, including those reported to the firm by the firm’s auditor;
3. (3) any action which a firm proposes to take which would result in a material change in its capital adequacy or solvency, including, but not limited to:
1. (a) any action which would result in a material change in the firm’s financial resources or financial resources requirement;
2. (b) a material change resulting from the payment of a special or unusual dividend or the repayment of share capital or a subordinated loan;
3. (c) for firms which are subject to consolidated financial supervision, any proposal under which another group member may be considering such an action; or
4. (d) significant trading or non-trading losses (whether recognised or unrecognised).

2.4

1. (1) A firm must notify the PRA of:
1. (a) a significant breach of a rule;
2. (b) a breach of any requirement imposed by FSMA or by regulations or an order made under FSMA by the Treasury (except if the breach is an offence, in which case (c) applies);
3. (c) the bringing of a prosecution for, or a conviction of, any offence under FSMA;
4. (d) a breach of a directly applicable provision in the MiFID Regulation;
5. (e) a breach of a directly applicable provision in the CRR or any directly applicable regulations made under the CRD or the CRR;
6. (f) a breach of any requirement in regulation 4C(3) (or any successor provision) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007; or
7. (g) it exceeding (or becoming aware that it will exceed) the limit in Article 395 of the CRR,
2. by (or as regards (c), against) the firm or any of its directors, officers, employees, approved persons, or appointed representatives or, where applicable, tied agents.
3. (2) A firm must make the notification in (1) immediately it becomes aware, or has information which reasonably suggests, that any of the matters in (1) has occurred, may have occurred or may occur in the foreseeable future.

2.5

A notification under 2.4 must include:

1. (1) information about any circumstances relevant to the breach or offence;
2. (2) identification of the rule or requirement or offence; and
3. (3) information about any steps which a firm or other person has taken or intends to take to rectify or remedy the breach or prevent any future potential occurrence.

2.6

A firm must notify the PRA immediately if:

1. (1) civil proceedings are brought against the firm and the amount of the claim is significant in relation to the firm’s financial resources or its reputation; or
2. (2) any action is brought against the firm under section 71 (Actions for damages) or section 138D (Actions for damages) of FSMA; or
3. (3) disciplinary measures or sanctions have been imposed on the firm by any statutory or regulatory authority, professional organisation or trade body (other than the PRA) or the firm becomes aware that one of those bodies has started an investigation into its affairs; or
4. (4) the firm is prosecuted for, or convicted of, any offence involving fraud or dishonesty, or any penalties are imposed on it for tax evasion; or
5. (5) it is removed as trustee of an occupational pension scheme by a court order.

2.7

A notification under 2.6 must include details of the matter and an estimate of the likely financial consequences, if any.

2.8

1. (1) A firm must notify the PRA immediately if one of the following events arises and the event is significant:
1. (a) it becomes aware that an employee may have committed a fraud against one of its customers;
2. (b) it becomes aware that a person, whether or not employed by it, may have committed a fraud against it;
3. (c) it considers that any person, whether or not employed by it, is acting with intent to commit a fraud against it;
4. (d) it identifies irregularities in its accounting or other records, whether or not there is evidence of fraud; or
5. (e) it suspects that one of its employees may be guilty of serious misconduct concerning their honesty or integrity and which is connected with the firm’s regulated activities or ancillary activities.
2. (2) A notification under (1) must provide all relevant and significant details of the incident or suspected incident of which the firm is aware.

2.9

A firm must notify the PRA immediately of any of the following events:

1. (1) the calling of a meeting to consider a resolution for winding up the firm;
2. (2) an application to dissolve the firm or to strike it off the Register of Companies;
3. (3) the presentation of a petition for the winding up of the firm;
4. (4) the making of, or any proposals for the making of, a composition or arrangement with any one or more of its creditors;
5. (5) an application for the appointment of an administrator or trustee in bankruptcy to the firm;
6. (6) the appointment of a receiver to the firm (whether an administrative receiver or a receiver appointed over particular property);
7. (7) an application for an interim order against the firm under section 252 of the Insolvency Act 1986 (or, in Northern Ireland, section 227 of the Insolvency (Northern Ireland) Order 1989);
8. (8) if the firm is a sole trader:
1. (a) an application for a sequestration order on the firm; or
2. (b) the presentation of a petition for bankruptcy; or
9. (9) anything equivalent to (1) to (8) above occurring in respect of the firm in a jurisdiction outside the UK.