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Relative Speaking - Changes to Close Links, June 2010
Sometimes, it’s the small things that matter. Whilst the economy is in turmoil and the Euro is beset with problems, 1st June 2010 marked the FSA’s introduction of electronic Close Links reporting.
Followers of IMS regulatory updates will be aware already of this development, which we trailed in March this year. For those that are unfamiliar with the change, here is a link to the relevant regulatory update.
The FSA has now published the final version of the reporting form at http://www.fsa.gov.uk/pubs/other/close_links.xls
Unless they elect to report monthly, most firms will continue to submit changes to close links on an “Event driven” basis, as soon as reasonably practicable and no later than one month after a firm or group becomes aware that it has become, or ceased to be, closely linked with another person. Event-driven reporters will now file their annual return electronically within four months of the firm or group’s accounting reference date.
An organisation chart will need to be attached whenever a change has occurred since the last reporting period; although our testing of the validations in the form suggests that the form as currently published does not ensure this in all cases.
Why does this matter?
The origins of the close links provisions contained in the Financial Services and Markets Act 2000 (FSMA) lie in the collapse of the Bank of Credit & Commerce International (BCCI) in 1991. Close links concern the broader relationships of the regulated firm, helping the FSA to determine governance and management relationships and whether there may be impediments to access information about the authorised firm.
Whilst relative to everything else that is happening, this may seem like more FSA bureaucracy, close links reporting is central to FSA’s oversight and threshold conditions and now the FSA will have a more effective means to identify firms that do not comply.
If you would like to discuss further how we can assist you on this matter please contact Peter Moore, Jonathan Wilson or your usual IMS Consultant.
2 June 2010 
