Qatar Financial Centre Regulatory Authority



Notes for completing form Q13

Application by an authorised firm to vary the scope or withdraw its authorisation

Background and purpose of this form

Form Q13 ‘Application by an authorised firm to vary the scope or withdraw its authorisation’ is to be completed by:

▪ an authorised firm applying to vary its scope of authorisation (both in relation to regulated activities & specified products and customer type); or

▪ an authorised firm applying to withdraw its authorisation with the QFC Regulatory Authority.

Section 1 - Declaration

All applicants must complete the declaration. Where possible, this must be signed by two individuals who have been authorised to make the application on behalf of the applicant. All applicants must also provide evidence that the individual(s) signing the declaration on behalf of the firm have been given authority to do so. This can be in the form of meeting notes from a board resolution or power of attorney.

Question 3.3

An authorised firm must not carry on a regulated activity unless it has received prior authorisation from the Regulatory Authority to do so. In this question firms should give an indication of when they intend carrying on the new regulated activity and/or transacting business with or on behalf of the new customer type. This will assist the Regulatory Authority in managing expectations and in working with the authorised firm within the timeframe, where possible.

Question 3.4

In compliance with CTRL chapter 4, an authorised firm must take adequate steps to ensure that its systems, resources, procedures and controls are at all times appropriate to its business.

In assessing an application by an authorised firm to add regulated activities to its current scope of authorisation and/or vary the customer type, the Regulatory Authority will have regard to whether the authorised firm has sufficient financial resources, human resources and systems and controls to deal with the new regulated activity.

Authorised firms must resubmit an updated compliance plan and/or manual reflecting the new procedures put in place to assess and mitigate any risks that might emanate from the new proposed regulated activities and/or customer type, and resubmit a new business plan detailing the nature and extent of the new activities or customers and the financial projections from it. For example, a firm that had its regulated activities restricted to wholesale business only would need to detail what it has put in place to deal with retail customers if it intends dealing with this new customer type.

Firms must read the ‘Notes for completing Form Q02’ (Application for regulated activities authorisation) questions 10.19 – 10.21 for details of the QFCRA’s expectations on what should be within a compliance plan/manual, and question 3.13 for details of what should be in the business plan.

Retail insurance business

Applicants intending to carry on retail business in relation to contracts of insurance (including insurance mediation) must provide the following as part of their policies and procedures and/or as part of the business plan:

▪ The nature of the business and products and services being provided (COND 1.1.1).

▪ The process for customer identification/client classification and the class of customer e.g. market counterparty, business customer, commercial customer or retail customer (COND 2.3.1)

▪ The language of disclosure (COND 2.1.2).

▪ Details of who will be perform the Customer Facing Function and whether the individual is an employee or approved representative.

▪ Details of any restrictions, placed by the applicant, on the extent and range of regulated activities individuals performing the Customer Facing Function can do e.g. wholesale only, retail only etc.

▪ If the applicant intends using approved representatives, provide a copy of the terms and conditions of the contract (COND 2.2.3(1)).

▪ Details of the systems and controls to monitor and supervise the activities of the applicant’s approved representatives, if it has any.

▪ Procedures for dealing with complaints submitted against approved representatives.

▪ Details of how potential conflicts of interest will be identified and managed (COND 2.5.1)

▪ Detail of the procedures around inducements (COND 2.5.4 (2), commission disclosure (COND 2.5.5) and soft dollar agreements (COND 2.5.8).

▪ Complaint handling procedures (COND 2.6.1). Applicants are expected to have a nominated individual or function that deals with complaints, and the individual or function must deal with complaints in a timely manner and have the authority to settle claims arising from complaints.

▪ Claim handling procedures (COND 2.6.3). All claims are required to be dealt with fairly and timely.

▪ Financial promotions procedures (COND 3.1). Applicants will need to comply with COND 3.2, and firms intending to issue financial promotions to retail customers will need to comply with COND 3.3

▪ Procedures used to accept and reject applications; service standards for issuing policy documentation; and procedures for dealing with customer enquiries.

▪ Procedures to ensure that application forms provided to its customers are clear, fair and not misleading and enable customers to understand the conditions and provisions of the insurance policy.

▪ Procedures to ensure that application forms provided to customers make it clear that it is the customer’s duty to make all material disclosures relating to the insurance application, including potential implications of the inaccuracies in the information being disclosed.

▪ Policies and procedures to train staff to deal with retail customers efficiently and effectively.

▪ Policies and procedures to ensure that the applicant only deals with intermediaries approved by the regulatory authority to transact insurance mediation business.

▪ Procedures to transact investment business, as specified in Part 4 of COND (please note that the current regulatory regime with the QFC limits any retail investment business to contracts of insurance only).

▪ A copy of the initial disclosure document (IDD) as required in COND 4.2.1 and procedures to ensure the IDD complies with the content requirements of COND 4.2.3.

▪ A copy of the applicant’s terms of business agreement (COND 4.2.2) and the procedures to ensure that it complies with the contents requirements of COND 4.2.6.

▪ The applicant’s record keeping arrangements to ensure copies of the IDD and Terms of Business are retained in accordance with COND 4.2.9.

▪ Procedures covering “Know Your Customer” checks for suitability and AML verification requirements (COND 4.3.3)

▪ Procedures covering the necessary disclosures in respect of independence (COND 4.3.6)

▪ Procedures to ensure compliance with COND 4.3.10 where the applicant intends selling packaged products.

▪ Procedures to ensure compliance with COND 4.3.15 where the applicant intends selling life policies.

▪ If insurance intermediary, confirmation of status i.e. “independent” or “tied”.

▪ Procedures for adequate disclosure of status (be it “independent” or “tied” that complies with COND 5.2.3.

▪ If the applicant offers advice, procedures for offering advice on Insurance that cover “Know Your Customer” (COND 5.3.2); Suitability (COND 5.3.3); and assessment of the risk profile of the client (COND 5.3.4).

▪ Procedures and controls to ensure that the form and content of the disclosure within product literature complies with COND 5.4.

▪ Procedures in place to comply with post contractual obligations as detailed in COND 5.5.

▪ Confirmation of Professional Indemnity (PI) cover in place (for insurance intermediairies), and a summary of what it covers.

▪ Procedures, systems and controls covering the following areas:

- Dealing with retail customers

- Cooling off periods

- Cancellation of contracts (COND 6.2)

- Production of cover notes/policy documentation

- Claims handling (COND 6.3)

- Insurance renewals

- Complaints handling

Question 3.5

Please refer to CTRL 5 for more information on the Regulatory Authority’s requirements regarding outsourcing.

In particular, you should bear in mind that the act of outsourcing certain functions does not relieve an authorised firm of its regulatory obligations.

You should also consider whether one or more outsourcing arrangements, either singly or taken together, are such as to constitute material outsourcing.

For authorised firms acting in the capacity of an operator or independent entity of a collective investment fund, there are specific provisions in COLL Part 7.4 in relation to outsourcing.

Question 3.10

The Financial Services Regulations (FSR) schedule 3 details regulated activities and permitted activities within the QFC. QFC Law provides that no activities other than permitted activities may be carried on in the QFC (see Part 4 of Schedule 3 of the FSR). Applicants should familiarise themselves with these permitted activities in relation to the proposed business activities before answering these questions.

Please note that by completing this matrix the applicant is confirming that it has reconciled its proposed business model to the FSR definitions of regulated activities and specified products. (This is available to review on the QFC legislation website; you should refer specifically to FSR Schedule 3).

Applicants intending to perform the regulated activities of carrying out contracts of insurance and effecting contracts of insurance should consider whether they are also performing the regulated activity of advising on investments (even though this might be limited to contracts of insurance) and check the relevant boxes in matrix 5.1(a). These applicants will still be subject to prudential regulation under the Regulatory Authority’s Prudential-Insurance Rulebook (PINS).

Please note that insurance intermediaries may be advising on investments, arranging deals in investments, managing investments and dealing in investments (limited to insurance contracts) and will be subject to prudential regulation under PIIB.

Collective investment funds

Applicants intending to establish a collective investment fund in the QFC, i.e. operators, must be authorised to carry on the regulated activities of:

▪ Operating a collective investment fund

▪ Managing investments

▪ Dealing in investments (as agent)

Applicants intending to establish a private placement fund in the QFC must, in addition, be authorised to carry on the regulated activities of:

▪ Providing Custody Services

Applicants intending to provide custody services to a collective investment fund, or otherwise act in the capacity of independent entity, must be authorised to carry on the regulated activities of:

▪ Operating a collective investment fund

▪ Providing custody services

Question 3.12

A registered fund is a collective investment fund that is established in the QFC and registered under COLL. Currently all funds established in the QFC must be registered as a qualified investor fund.

Foreign funds are funds established outside the QFC.

Private placement funds, in accordance with COLL rule 1.2.1, are:

A) funds registered as qualified investor funds; and

B) the number of unitholders does not at any time exceed 100; and

C) the fund’s constitutional document contains the statements required by COLL Part S2.3 (Additional constitution requirements for private placement funds).

Question 3.17

The oversight responsibilities of the independent entity of a registered fund are set out in COLL 4.2.3 (Oversight function of independent entity). Applicants that will be acting as an independent entity should provide details of its systems and controls (including policies and procedures) for ensuring that the fund is managed by the operator in accordance with COLL 4.2.3.

The applicant should also describe the arrangements for reporting breaches in accordance with COLL 4.2.4.

Question 4.4 - 4.5

All authorised firms must observe high standards of integrity in the conduct of its business (Principle 1) and have due regard to its customers’ interests and treat them fairly. Authorised firms must therefore ensure customers’ interests are not affected and all ongoing mandates are transferred or discharged in an orderly and timely fashion, so that customers are not disadvantaged as a result of the firm’s decision to withdraw certain regulated activities and/or certain customer types.

Question 5.4 - 5.5

All authorised firms must observe high standards of integrity in the conduct of its business (Principle 1) and have due regard to its customers’ interests and treat them fairly. Authorised firms must therefore ensure customers’ interests are not affected and all ongoing mandates are transferred or discharged in an orderly and timely fashion, so that customers are not disadvantaged as a result of the firm’s decision to cease conducting regulated activities.

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