FINAL NOTICE

To:

Khalsa (Bradford) Credit Union Limited

ACTION

1.
For the reasons set out in this Final Notice, the Authority hereby takes the
following action against KBCUL.

2.
The Authority issued to KBCUL the Decision Notice which notified KBCUL that, for
the reasons given below and pursuant to section 55J of the Act, the Authority had
decided to cancel KBCUL’s Part 4A permission.

3.
KBCUL has not referred the matter to the Tribunal within 28 days of the date on
which the Decision Notice was given to KBCUL.

4.
Accordingly, the Authority has today cancelled KBCUL’s Part 4A permission.

Khalsa (Bradford) Credit Union Limited

29 March 2018

DEFINITIONS

5.
The definitions below are used in this Final Notice (and in the Annex):

“the Act” means the Financial Services and Markets Act 2000;

“the Authority” means the Financial Conduct Authority;

“the Decision Notice” means the Decision Notice given by the Authority to KBCUL
dated 08 February 2018;

“EG” means the Enforcement Guide;



“the FSCS” means the Financial Services Compensation Scheme ;

“the Handbook” means the Authority’s Handbook of rules and guidance;



“the PRA” means the Prudential Regulation Authority;

“the Principles” means the Authority’s Principles for Businesses;

“the suitability Threshold Condition” means the threshold condition set out in
paragraph 3D of Schedule 6 to the Act;


“KBCUL” means Khalsa (Bradford) Credit Union Limited;

“KBCUL’s Part 4A permission” means the permission granted by the Authority to
KBCUL pursuant to Part 4A of the Act;

“SUP” means the section of the Handbook entitled ‘Supervision Manual’;

“the Threshold Conditions” means the threshold conditions set out in Schedule 6
to the Act;



“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and

“the Warning Notice” means the Warning Notice given by the Authority to KBCUL
dated 16 January 2018.

RELEVANT STATUTORY PROVISIONS

6.
The statutory and regulatory provisions relevant to this Final Notice are set out in
the Annex.

FACTS AND MATTERS RELIED ON

7.
KBCUL became regulated by the Authority on 2 July 2002 and also by the PRA on
1 April 2013.


8.
On 3 August 2006, KBCUL’s permission was made subject to a requirement that
KBCUL may not engage in its only regulated activity of accepting deposits. As a
result, KBCUL has not been permitted to carry on any regulated activity since 3
August 2006. On 3 October 2008, the FSCS declared KBCUL “in default” and its
depositors were compensated by the FSCS for their savings. Since 3 August
2006, to date, KBCUL has continued to be authorised and to hold a Part 4A
permission.

Khalsa (Bradford) Credit Union Limited

29 March 2018

FAILINGS

9.
The Authority has concluded, on the basis of the facts and matters described
above, that KBCUL’s Part 4A permission should be cancelled for the following
reasons:

a.
KBCUL’s Part 4A permission has been emptied of its only regulated activity
by own initiation variation action, taken in 2006 under section 45(3) of the
Act (the Authority’s variation power is now in section 55J of the Act), such
that KBCUL has no regulated activities for which it has permission; and

b.
the Authority is satisfied that it is no longer necessary to keep KBCUL’s
Part 4A permission in force.

DECISION MAKER

10.
The decision which gave rise to the obligation to give this Final Notice was made
by the Regulatory Decisions Committee.

IMPORTANT

11.
This Final Notice is given to KBCUL in accordance with section 390(1) of the Act.

12.
The Authority must publish such information about the matter to which this Final
Notice relates as the Authority considers appropriate. The information may be
published in such manner as the Authority considers appropriate. However, the
Authority may not publish information if such publication would, in the opinion of
the Authority, be unfair to KBCUL or prejudicial to the interest of consumers.

13.
The Authority intends to publish this Final Notice and such information about the
matter to which this Final Notice relates as it considers appropriate.

14.
For more information concerning this matter generally, KBCUL should contact
Nazia Ali at the Authority (direct line: 020 7066 4246).

Anna Couzens
Enforcement and Market Oversight Division

Khalsa (Bradford) Credit Union Limited

29 March 2018

Khalsa (Bradford) Credit Union Limited

29 March 2018

RELEVANT STATUTORY PROVISIONS

1.
The Authority’s operational objectives established in section 1B of the Act include
protecting and enhancing the integrity of the UK financial system and securing an
appropriate degree of protection for consumers.

2.
The Authority is authorised by section 55J of the Act to cancel an authorised
person’s Part 4A permission, where it appears to the Authority that such a person
is failing to satisfy the Threshold Conditions.

3.
The suitability Threshold Condition provides, in relation to a person (“B”) carrying
on or seeking to carry on regulated activities which consist of or include a PRA-
regulated activity, that:

“(1)
B must be a fit and proper person, having regard to the operational
objectives of the [Authority].

(2)
The matters which are relevant in determining whether B satisfies the
conditions in sub-paragraph (1) include-

(d)
whether B has complied and is complying with requirements
imposed by the [Authority] in the exercise of its functions, or
requests made by the [Authority], relating to the provision of
information to the [Authority] and, where B has so complied or is so
complying, the manner of that compliance;

[…].”

RELEVANT HANDBOOK PROVISIONS

4.
In exercising its power to cancel a firm’s Part 4A permission, the Authority must
have regard to the regulatory requirements and guidance published in the
Handbook and in regulatory guides, such as EG. The relevant main considerations
in relation to the action specified above are set out below.

Relevant Principle

5.
Principle 11 requires a firm to deal with its regulators in an open and co-operative
way, and to disclose to the Authority appropriately anything relating to the firm of
which the Authority would reasonably expect notice.

Relevant Rule

6.
SUP 15.5.4R requires that:

“A firm must give the [Authority] reasonable advance notice of a change in any of
the following addresses, and give details of the new address and the date of the
change:

(1)
the firm’s principal place of business in the United Kingdom;

Khalsa (Bradford) Credit Union Limited

29 March 2018

Guidance concerning the suitability Threshold Condition

7.
Guidance on the suitability Threshold Condition is set out in COND.

COND 2.5 – Suitability: Paragraph 3D of Schedule 6 to the Act

8.
COND 2.5.1CUK reproduces the relevant statutory provision that a person
concerned must be a fit and proper person having regard to the operational
objectives of the FCA, including, amongst other things, the need to ensure that it
has complied and is complying with requirements imposed by the Authority in the
exercise of its functions.

9.
COND 2.5.2G states that the Authority will take into consideration anything that
could influence a firm’s continuing ability to satisfy the suitability Threshold
Condition.

10.
COND 2.5.6G gives examples of the kind of particular considerations to which the
Authority may have regard when assessing whether a firm will satisfy, and
continue to satisfy, the suitability Threshold Condition, including whether:


the firm has been open and co-operative in all its dealings with the Authority
and is ready, willing and organised to comply with the requirements and
standards under the regulatory system (COND 2.5.6G(1));



the firm has contravened, amongst other things, the provisions of the
regulatory system, which include the Principles and other rules (COND
2.5.6G(4)).



OTHER RELEVANT REGULATORY PROVISIONS

11.
The Authority’s policy in relation to its enforcement powers is set out in EG,
certain provisions of which are summarised below.

Cancelling a firm’s Part 4A permission on the Authority’s own initiative

12.
EG 8.1.1(1) provides that the Authority may use its own initiative power to vary
or cancel the permission of an authorised person under section 55J of the Act,
where the person is failing or is likely to fail to satisfy the Threshold Conditions
for which the Authority is responsible.

13.
EG 8.5.1(1) states that the Authority will consider cancelling a firm’s Part 4A
permission using its own initiative power contained in section 55J of the Act in
circumstances where the Authority has very serious concerns about the firm, or
the way its business is or has been conducted.

14.
EG 8.5.2 provides examples of the types of circumstances in which the Authority
may cancel a firm’s Part 4A permission. One such example is the failure to
provide the Authority with valid contact details or failure to maintain the details
provided, such that the Authority is unable to communicate with the firm (EG
8.5.2(6)).