RCB Regulated Covered Bonds

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Export part as

RCB 1

Introduction

RCB 1.1

Introduction to sourcebook

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Application

RCB 1.1.1

handbook-guidance
This sourcebook applies to issuers and owners in relation to regulated covered bonds.
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Purpose

RCB 1.1.2

handbook-guidance
The general purpose of this sourcebook is to set out the guidance, directions and rules made by the FSA under the RCB Regulations. Those regulations enable bonds to be issued which comply with Article 52(4)of the UCITS Directive.

RCB 1.1.3

handbook-guidance
This sourcebook should be read together with the RCB Regulations.
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Other relevant provisions

RCB 1.1.4

handbook-guidance
This section refers to some of the other parts of the FSA's Handbook which may be relevant to regulated covered bonds.
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RCB 1.1.5

handbook-guidance
Investors in regulated covered bonds may be able to take advantage of different regulatory treatments depending on what type of investor they are.
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RCB 1.1.6

handbook-guidance
BIPRU firms which have exposures to covered bonds which meet the requirements set out in BIPRU 3.4.106 R to BIPRU 3.4.109 R may benefit from reduced risk weights as set out in BIPRU 3.4.110 R article 129 of the EUCRR.
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RCB 1.1.7

handbook-guidance
An insurer (which is not a non-directive friendly society, incoming EEA firm or an incoming Treaty firm) may benefit from increased counterparty limits under INSPRU 2.1.22R (3)(b).
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RCB 1.1.8

handbook-guidance
UCITS schemes and non-UCITS retail schemes may benefit from less onerous spread requirements and increased investment limits under COLL 5.2.11 R and COLL 5.6.7 R.
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RCB 1.1.9

handbook-guidance
  1. (1) Issuers which are subject to an obligation to publish a prospectus under the Prospectus Directive are required by Article 3 of the PD Regulation to disclose risk factors. These requirements are set out in PR 2.3.1 EU and PR App 3.1.1 EU.
  2. (2) In complying with these obligations, issuers should consider disclosing the risk that actions by a regulatory authority in relation to the issuer may adversely affect the ability of the issuer to meet its obligations to investors or the ability of the owner to meet its guarantee obligations to investors. An example of such action may include restricting the issuer's ability to transfer further assets to the asset pool.
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Export chapter as

RCB 2

Applications for registration

RCB 2.1

Application and purpose of chapter

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Application

RCB 2.1.1

handbook-guidance
This chapter applies to issuers.
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Purpose

RCB 2.1.2

handbook-guidance
This chapter sets out the requirements that an issuer must follow to apply for registration as a regulated covered bond issuer and for registration of a regulated covered bond under Regulations 8(a) and 8(b) of the RCB Regulations (applications to the FSA for registration).
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RCB 2.2

Applying for registration

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Form, manner and verification of application

RCB 2.2.1

handbook-directions
The issuer must apply for registration using the form at RCB 2 Annex 1D (application for registration).
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RCB 2.2.2

handbook-guidance
RCB 3.6.5 D sets out the methods the issuer may use to send the form to the FSA.
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RCB 2.2.3

handbook-directions
Until the application has been determined by the FSA, the issuer must inform the FSA of any significant change to the information given in the application immediately it becomes aware of that change.
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RCB 2.2.4

handbook-guidance
The form and content of the application documentation is a matter for direction by the FSA, which will determine what additional information and documentation may be required on a case-by-case basis.
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RCB 2.2.5

handbook-guidance
The FSA will not treat the application as having been received until it receives the registration fee (see RCB 5.2.5 R).

RCB 2.2.6

handbook-directions
The issuer must ensure that a senior manager of the issuer verifies the application by confirming on the FSA's form that the issuer has obtained the appropriate third party advice or reports as required by RCB 2.3.16 D and is satisfied that:
  1. (1) the information provided in the application is correct and complete; and
  2. (2) the arrangements relating to the covered bond or programme will comply with the requirements in the RCB Regulations and in RCB.

RCB 2.2.7

handbook-guidance
The FSA expects the issuer to be able to justify any reliance it places on advice or reports which are not reasonably contemporaneous with the confirmation the senior manager gives in relation to compliance with the requirements of the RCB Regulations and RCB.
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RCB 2.2.8

handbook-directions
The issuer must ensure that the senior manager, who verifies the application for registration under this section, gives their consent to the FSA displaying their confirmation of compliance with the relevant requirements on the FSA's website.
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RCB 2.3

Determination of registration

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RCB 2.3.1

handbook-guidance
To enable the FSA to be satisfied that the issuer and the proposed owner will comply with requirements imposed on the issuer or owner, as the case may be, by or under the RCB Regulations, the applicant should use the application form to provide relevant details of the proposed covered bond or programme and demonstrate how each of the requirements will be complied with.
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RCB 2.3.2

handbook-guidance
  1. (1) The FSA's application form covers both issuer registration and covered bond registration as the FSA will not normally consider applications for issuer registration in isolation from the application for registration of the covered bond.
  2. (2) An issuer which has been admitted to the register of issuers should use the same form to apply for registration of subsequent covered bonds or programmes.
  3. (3) The issuer does not need to apply for registration of individual issuances from a programme which has already been registered, but does need to notify the FSA of the issuance under RCB 3.4.1 D.
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RCB 2.3.3

handbook-guidance
In relation to registration of an issuer of regulated covered bonds, the FSA will need to be satisfied that the issuer's compliance with the requirements of the regulatory system has been adequate and does not give rise to any material cause for concern over the issuer's ability to issue regulated covered bonds in compliance with the RCB Regulations.
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RCB 2.3.4

handbook-guidance
To demonstrate that the issuer and the proposed owner will comply with Regulation 17, and Regulations 23 and 24 of the RCB Regulations (capability of the asset pool to cover claims), the issuer should set out what it considers to be the risks of the regulation not being complied with and show how those risks have been adequately mitigated by reference to the tests and provisions set out in the covered bond or programme documentation.
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Asset pool of sufficient quality

RCB 2.3.5

handbook-guidance
Regulations 17(2)(d) (requirements on issuer relating to the asset pool) and 23(2) (requirements on owner relating to the asset pool) require the issuer of a regulated covered bond and the owner of the relevant asset pool to make arrangements so that the asset pool is of sufficient quality to give investors confidence that in the event of the failure of the issuer there will be a low risk of default in the timely payment by the owner of claims attaching to a regulated covered bond.
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RCB 2.3.6

handbook-guidance

The FSA will:

  1. (1) expect the issuer to demonstrate that it has in place appropriate systems, controls, procedures and policies, including in relation to risk management, underwriting, arrears and valuation;
  2. (2) expect the issuer to demonstrate that the cash-flows generated by the assets would be sufficient to meet the payments due in a timely manner including under conditions of economic stress and in the event of the failure of the issuer;
  3. (3) take account of any over collateralisation used to mitigate these risks to achieve the desired outcome so that, for example, potential credit losses and mismatches are offset; and
  4. (4) not only consider the probability of default in timely payment of claims, but also the loss in the event of a default. This will include consideration of recovery assumptions, timing and costs.
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RCB 2.3.7

handbook-guidance
The risk factors which the FSA will take into account in assessing the issuer's and owner's compliance with Regulations 17(2)(d) (general requirements on issuer in relation to the asset pool) and 23(2) (requirements on owner relating to the asset pool) will include credit risk of the assets, concentration risk, market risk and counterparty risk.
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Credit risk

RCB 2.3.8

handbook-guidance
  1. (1) The credit risk of an asset is the risk of loss if another party fails to perform its obligations or fails to perform them in a timely fashion.
  2. (2) Where, for example, the asset pool includes residential mortgages the relevant factors which the FSA may consider include:
    1. (a) whether the asset pool contains (or could contain) loans made to individuals who have been made bankrupt or have had court judgments made against them;
    2. (b) the extent to which the asset pool contains (or could contain) loans made to individuals whose earnings have been self-certified rather than independently verified;
    3. (c) whether the asset pool contains (or could contain) loans which have a higher credit risk in terms of individuals' willingness or ability to pay (for example, because they have high loan-to-value ratios, low debt service ratios or high income multipliers);
    4. (d) the quantity and duration of mortgages which are in arrears;
    5. (e) the length of time the loan has been in place; and
    6. (f) the purpose and terms of the mortgage (for example, owner occupied, buy-to-let, interest only, repayment, fixed rate, variable rate or endowment).
  3. (3) Where, for example, the asset pool includes commercial mortgages, the relevant factors the FSA may consider in addition to any of the relevant residential mortgage factors described above, include:
    1. (a) the type of property to which the mortgage relates (for example whether it is office, retail, industrial);
    2. (b) the terms of the loans (including size, interest rate, maturity, options, representations and warranties); and
    3. (c) occupation levels, rental income and terms of rental agreements of the property secured.

Concentration risk

RCB 2.3.9

handbook-guidance

Concentration risk is the risk of loss from exposures being limited in number or variety. The relevant factors the FSA may consider include:

  1. (1) the level of granularity of the asset pool (i.e. what is the number and size distribution of assets in the pool);
  2. (2) whether the borrowers or collateral is unduly concentrated in a particular industry, sector, or geographical region.
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Market risk

RCB 2.3.10

handbook-guidance
Market risk is the risk that arises from fluctuations in the values of, or income from, assets or in interest or exchange rates. The relevant factors the FSA may consider include whether the hedging agreements (defined in Regulation 1(2) of the RCB Regulations as agreements entered into or assets held as protection against possible financial loss) adequately protect against any adverse mismatched cash-flows due to changes in market variables.
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Counterparty risk

RCB 2.3.11

handbook-guidance

Counterparty risk is the risk that the counterparty to a transaction could default before the final settlement of the transactions cash flows. The relevant factors the FSA may consider include whether the:

  1. (1) counterparty has an appropriate credit rating;
  2. (2) counterparty can unilaterally terminate the hedging agreement, and if so under what circumstances;
  3. (3) contractual arrangements contain appropriate termination procedures (for example, what provisions apply in the event of default or in respect of the calculation of termination payments); and
  4. (4) contractual arrangements provide adequately for what is to happen in the event of issuer default.
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Assessment of risk factors

RCB 2.3.12

handbook-guidance
  1. (1) The FSA will assess each risk factor separately and then assess any inter-dependencies and correlations to form a judgment on the quality of the asset pool as a whole. For example, an asset pool which is of high credit quality and so low risk due to a combination of factors such as owner occupation, low income multiples, full valuation methodologies, and a strong payments track record, may permit another factor such as high loan-to-value ratios, that would otherwise be considered as inconsistent with high quality, to be included.
  2. (2) The more that an asset pool consists of loans involving risks such as high loan-to-value ratios, self-certification, borrowers with poor credit profiles, and low borrower affordability, the less likely it is, without other mitigating factors, to be of sufficiently high quality to meet the requirements in Regulations 17(2)(d) (general requirements on issuer in relation to the asset pool) and 23(2) (requirements on owner relating to the asset pool) of the RCB Regulations.
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Covered bonds collateralised by real estate

RCB 2.3.13

handbook-guidance
In assessing whether the asset pool is of sufficient quality, the FSA will have regard to the requirements about legal certainty referred to in BIPRU 3.4.64 R, the requirements about monitoring of property values in BIPRU 3.4.66 R and the valuation rules in BIPRU 3.4.77 R to BIPRU 3.4.80 R.
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Rectifying non-compliance

RCB 2.3.14

handbook-guidance

The FSA expects the issuer to demonstrate that there are provisions in the covered bond or programme that adequately deal with:

  1. (1) the identification and rectification of any breach of Regulations 17(2) (general requirements on issuer in relation to the asset pool) and 24 (requirements on owner relating to the asset pool) of the RCB Regulations;
  2. (2) the appointment of replacements for parties, for example servicers, cash managers or paying agents; and
  3. (3) the orderly winding-up of the asset pool in the event that breaches of Regulations 17(2) and 24 are not rectified in a timely way.
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Representation of bond investors' views and interests

RCB 2.3.15

handbook-guidance
The FSA expects the issuer to demonstrate, as part of showing that Regulations 17 (general requirements on issuer in relation to the asset pool) and 24 (requirements on owner relating to the asset pool) of the RCB Regulations will be complied with, that there are provisions in the covered bond or programme which enable the views and interests of investors in the regulated covered bond to be taken account of in an appropriate and timely way by a suitably qualified, adequately resourced, third party who acts independently, such as a bond trustee.
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Third party advice and reports

RCB 2.3.16

handbook-directions
The issuer must obtain written advice and reports regarding the compliance of the issuer and the relevant covered bond or programme with the requirements in the RCB Regulations and RCB from suitable independent third party advisers, such as lawyers and accountants, before making an application.
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Legal advice

RCB 2.3.17

handbook-guidance
  1. (1) The FSA expects legal advice to deal adequately with at least the following matters in relation to the actual or proposed arrangements:
    1. (a) whether the transfer of the assets to the owner would be upheld in the event of liquidation or administration, or similar collective insolvency proceedings, of the issuer or the transferor (if different from the issuer);
    2. (b) the risk of the transfer of an asset to the owner being re-characterised as the creation of a security interest;
    3. (c) the risk of an asset transferred to the owner being clawed back under insolvency law provisions (such as rules against preferences, or transactions at an undervalue);
    4. (d) whether the contractual arrangements limit eligible property to the items listed in Regulation 2(1) of the RCB Regulations (meaning of eligible property);
    5. (e) whether the contractual arrangements limit the situation of eligible property to locations permitted under Regulation 2(2) of the RCB Regulations (situation of eligible property);
    6. (f) whether the contractual arrangements limit the asset pool to items listed in Regulation 3 of the RCB Regulations (composition of asset pool);
    7. (g) if security is granted over the asset pool by the owner, the enforceability of that security and any relevant legal limitations;
    8. (h) whether the owner meets the requirements set out in Regulation 4 of the RCB Regulations (meaning of owner);
    9. (i) whether the owner is a company or limited liability partnership which has its registered office in the United Kingdom and whether the contractual arrangements support an analysis that the owner's "centre of main interests" (defined in Regulation 1(2) of the RCB Regulations as having the same meaning as in Article 3(1) of Council Regulation (EC) No. 1346/2000 of 29 May 2000 on insolvency proceedings) is also situated in the United Kingdom;
    10. (j) whether the contractual arrangements are consistent with the obligation of the issuer to lend sums derived from the issue of a regulated covered bond to the owner of the relevant asset pool under Regulation 16 of the RCB Regulations (sums derived from the issue of regulated covered bonds);
    11. (k) whether the contractual arrangements provide that if the owner is wound up, the asset pool will be used to reimburse the claims of investors in regulated covered bonds under the priority set out in Regulation 27 of the RCB Regulations (priority in a winding-up of an owner);
    12. (l) whether the contractual arrangements provide for the appointment of a person who will enable the views and interests of investors in the regulated covered bond to be taken account of in an appropriate and timely way as explained in RCB 2.3.15 G;
    13. (m) whether the contractual arrangements provide for the identification and rectification of breaches of Regulation 17 of the RCB Regulations (general requirements on issuer relating to the asset pool) and Regulations 23 and 24 of the RCB Regulations (requirements relating to the asset pool) and the orderly winding-up of the asset pool in the event that the breaches cannot be rectified; and
    14. (n) the enforceability of the contractual arrangements.
  2. (2) Where assets are situated outside England and Wales, the FSA expects the issuer to obtain advice on whether the law of those jurisdictions impacts on the enforceability of security and the availability of those assets. Relevant issues to consider may include true sale, perfection of security, priority and recognition of insolvency proceedings, and foreclosure rights.
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Accountancy reports

RCB 2.3.18

handbook-guidance
  1. (1) The FSA expects the report from the accountants to address at least the following matters:
    1. (a) that the level of over collateralisation meets the limits set out in the covered bond arrangements which are designed to ensure compliance with the requirement that the asset pool is capable of covering claims attaching to the bond in Regulation 17 (requirements on issuer in relation to the asset pool) of the RCB Regulations; and
    2. (b) that appropriate due diligence procedures have been carried out to check whether:
      1. (i) the attributes of the asset pool correspond accurately to supporting information obtained from other sources (for example, in the case of mortgage pools, that information such as the mortgage amount, value, term, type and location correspond to land registry records, valuation reports and loan agreements);
      2. (ii) the attributes of the asset pool are appropriately reflected on the records which are maintained in order to comply with the requirements of Regulations 17(2)(a) and 24(1)(a)(i) of the RCB Regulations (requirement to keep a record of each asset in the asset pool) and on the issuer's systems; and
      3. (iii) the issuer's analysis of the assets provided to the FSA is accurate.

Providing advice and reports to the FSA

RCB 2.3.19

handbook-guidance
The FSA's use of its power under Regulation 12 of the RCB Regulations (requirement of further information to determine application) may include requiring the issuer to provide copies of the advice or reports referred to in RCB 2.3.16 D to the FSA.
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RCB 2 Annex 1

Application for the admission to the register of issuers and register of regulated covered bonds

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handbook-directions
This annex consists only of one or more forms. Forms are to be found through the following address:



Application for the admission to the register of issuers and register of regulated covered bonds - rcb2_annex_1d.doc

Export chapter as

RCB 3

Notifications

RCB 3.1

Application and Purpose

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Application

RCB 3.1.1

handbook-guidance
This chapter applies to issuers and owners.

Purpose

RCB 3.1.2

handbook-guidance
This chapter sets out the reporting and notifications requirements under Regulations 18, 20, 24 and 25 of the RCB Regulations.

RCB 3.2

Annual confirmations of compliance

Form of confirmation and use of third party advisers

RCB 3.2.1

handbook-directions
The issuer must send to the FSA annual written confirmation of compliance with Regulations 16 (sums derived from the issue of regulated covered bonds) and 17 (general requirements on the issuer in relation to the asset pool) of the RCB Regulations in the form set out in RCB 3 Annex 1D (annual confirmation of compliance).
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RCB 3.2.2

handbook-directions
Before providing the confirmation required by this section, the issuer must obtain and consider written advice or reports from suitable independent third party advisers such as accountants and, where appropriate, lawyers.

RCB 3.2.3

handbook-guidance
The FSA expects the issuer to be able to justify any reliance it places on advice or reports which are not reasonably contemporaneous with the confirmation.
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RCB 3.2.4

handbook-guidance
The FSA expects reports from accountants to address at least the matters to be checked and due diligence procedures set out in RCB 2.3.18 G.

Timing of confirmation date

RCB 3.2.5

handbook-directions
  1. (1) The first confirmation date in relation to the annual confirmation must be the earlier of any date the issuer selects, or the date 12 months from the registration date.
  2. (2) Subsequent confirmations must be made on the anniversary of the first confirmation date.
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RCB 3.2.6

handbook-directions
The issuer must send each confirmation to the FSA within one month after the relevant confirmation date.
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Period covered by confirmation

RCB 3.2.7

handbook-directions
The first confirmation must cover compliance during the period from the registration date up to the confirmation date referred to in RCB 3.2.5 D (1).
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RCB 3.2.8

handbook-directions
Subsequent confirmations must cover compliance for the period from the last confirmation date to the date of the current confirmation.
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Verification of confirmation

RCB 3.2.9

handbook-directions
The issuer must ensure that a senior manager signs the annual confirmation and confirms on the FSA's form that the issuer has obtained the appropriate third party advice or reports required by this section.

Notifications by the owner

RCB 3.2.10

handbook-directions
If the issuer is in insolvency, the owner must send the FSA under RCB 3.2.1 D:
  1. (1) a confirmation of compliance within one month of the date of insolvency; and
  2. (2) annual confirmations by the same dates as the date the confirmations under RCB 3.2.5 D are due.
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RCB 3.2.11

handbook-directions
  1. (1) The owner must ensure that a duly authorised representative signs the confirmation and confirms on the FSA's form that the owner has obtained the appropriate third party advice or reports required by this section.
  2. (2) The owner must obtain appropriate advice in the same manner as set out in RCB 3.2.2 D.

RCB 3.3

Asset pool notifications

  • 06/03/2008

Form of notification

RCB 3.3.1

handbook-directions
The issuer must send to the FSA, information relating to the asset pool, in the form set out in RCB 3 Annex 2D (asset notification form).

RCB 3.3.2

handbook-directions
The issuer must send the form to the FSA within one month of the end of each quarter following the registration date.

Notifications by the owner

RCB 3.3.3

handbook-directions
If the issuer is in insolvency, the owner must send to the FSA the asset pool notifications set out at RCB 3.3.1 D by the same dates as the dates the notifications under those directions are due.

Due diligence

RCB 3.3.4

handbook-guidance
The issuer or the owner, as the case may be, should carry out, or make arrangements to carry out, appropriate due diligence to check that the analysis in the asset pool information provided to the FSA is correct.

RCB 3.4

Covered Bond issuance notifications

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RCB 3.4.1

handbook-directions
The issuer must inform the FSA of the information relating to bond issuances from a regulated covered bond in the form set out in RCB 3 Annex 3D (series notification form) on or before the date of issuance.

RCB 3.5

Other notifications

  • 06/03/2008

Notifications of change of owner

RCB 3.5.1

handbook-guidance
Regulation 25 of the RCB Regulations (change of owner) sets out the procedures which apply where a regulated covered bond has been issued and the owner of the relevant asset pool proposes to transfer ownership to another person.
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RCB 3.5.2

handbook-directions
If an owner proposes to transfer the asset pool to a new owner it must provide the FSA as a minimum with the following information in writing at least three months before the proposed transfer date:
  1. (1) name, address and contact details of the proposed new owner;
  2. (2) proposed transfer date and reasons for the transfer;
  3. (3) an explanation of how the proposed new owner will comply with the requirements imposed on it by the RCB Regulations and RCB; and
  4. (4) confirmation that the existing owner and the proposed new owner have obtained appropriate advice in relation to the proposed transfer, and details of such advice.
  • 06/03/2008

Notifications of material changes

RCB 3.5.3

handbook-guidance
Regulation 20 of the RCB Regulations (material changes to the regulated covered bond) sets out the procedures which apply where an issuer proposes to make a material change to the contractual terms of the bond.
  • 06/03/2008

RCB 3.5.4

handbook-directions
If an issuer proposes to make a material change to the contractual terms of a regulated covered bond, it must inform the FSA of the following information to the FSA at least 3 months before the proposed date of the change:
  1. (1) details of the proposed change including proposed date of change and the reasons for it;
  2. (2) an assessment of the impact of the change on the ability of the issuer and owner to continue to comply with their requirements under the RCB Regulations and RCB; and
  3. (3) confirmation that the issuer has obtained appropriate advice in relation to the proposed change and details of such advice.
  • 06/03/2008

RCB 3.5.5

handbook-guidance
The FSA will regard as material any change that may affect the ability of the issuer or the owner to continue to comply with the requirements made on them under the RCB Regulations and RCB.
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Notifications to the FSA if asset pool is not capable or not likely to be capable of covering claims and of other matters

RCB 3.5.6

handbook-directions
The issuer or the owner, as the case may be, must notify the FSA immediately, in writing by e-mail or hand-delivered letter, if Regulation 18(2), or 24(1)(c) of the RCB Regulations (obligation to inform FSA if asset pool not capable, or not likely to be capable of covering claims) is triggered.
  • 06/03/2008

RCB 3.5.7

handbook-directions
The issuer or the owner, as the case may be, must notify the FSA immediately in writing by e-mail, or hand-delivered letter, if requirements relating to the relevant regulated covered bond under the RCB Regulations or RCB are, or are likely to be, materially breached, or of any other matter which the FSA should be made aware of.
  • 06/03/2008

RCB 3.5.8

handbook-guidance
The issuer or the owner, as the case may be, should include details of proposals to rectify the breach at the time they notify, or as soon as practicable after that time.
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RCB 3.6

Fees and other matters

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Administrative fee

RCB 3.6.1

handbook-rule
If an issuer or owner does not provide the notifications to the FSA required by directions made under this chapter by the date specified, then that issuer or owner must pay to the FSA an administrative fee of £250.
  • 06/03/2008

Further information and direction

RCB 3.6.2

handbook-guidance
The FSA's exercise of its powers under Part 1 paragraph 3 of the Schedule to the RCB Regulations (power to require information) may include requesting information on the reviews undertaken or advice given by accountants and where appropriate lawyers.
  • 06/03/2008

RCB 3.6.3

handbook-guidance
The form and content of the notifications in this chapter are a matter for direction by the FSA which will determine any additional information and documentation required on a case-by-case basis.
  • 06/03/2008

Review of legal advice

RCB 3.6.4

handbook-guidance
The issuer or the owner, as the case may be, should review legal advice as necessary. For example, advice should be reviewed if a relevant statutory provision is amended or where a new decision or judgment of a court might have a bearing on the conclusions reached which is material to the issuer's or owner's compliance with the requirements of the RCB Regulations or the RCB.
  • 06/03/2008

Method of sending forms and information to FSA

RCB 3.6.5

handbook-directions
Unless otherwise stated, the issuer or the owner, as the case may be, must send the relevant forms and information to the FSA's address marked for the attention of the "Covered Bonds Team, Capital Markets Sector" by any of the following methods:
  1. (1) post; or
  2. (2) leaving it at the FSA's address and obtaining a time-stamped receipt; or
  3. (3) e-mail to rcb@fsa.gov.uk.
  • 06/03/2008

RCB 3 Annex 1

Annual confirmation of compliance with the RCB Regulations and the RCB Sourcebook

  • 06/03/2008

handbook-directions
This annex consists only of one or more forms. Forms are to be found through the following address:



Annual confirmation of compliance with the RCB Regulations and the RCB Sourcebook - rcb3_annex_1d.doc

RCB 3 Annex 2

Asset pool notification form

  • 06/03/2008

handbook-directions
This annex consists only of one or more forms. Forms are to be found through the following address:



Asset pool notification form - rcb3_annex_2d.doc

RCB 3 Annex 3

Series issuance notification form

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This annex consists only of one or more forms. Forms are to be found through the following address:



Series issuance notification form - rcb3_annex_3d.xls

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RCB 4

Enforcement powers

RCB 4.1

Application and purpose

  • 06/03/2008

Application

RCB 4.1.1

handbook-guidance
This chapter contains guidance for issuers, and owners and other persons subject to the RCB Regulations.
  • 06/03/2008

Purpose

RCB 4.1.2

handbook-guidance
The purpose of this chapter is to give guidance on the FSA's approach to the use of its enforcement powers under the RCB Regulations and to set out the FSA's policy on the imposition and amount of financial penalties.
  • 06/03/2008

RCB 4.2

Enforcement powers and penalties

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The FSA's enforcement powers

RCB 4.2.1

handbook-guidance
The FSA's approach to the exercise of its enforcement powers will be consistent with its approach in DEPP and EG so far as appropriate.
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RCB 4.2.2

handbook-guidance
The FSA's exercise of its powers under the RCB Regulations is without prejudice to the use of its powers under the Act or under other legislation.
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RCB 4.2.3

handbook-guidance
  1. (1) When deciding whether to take enforcement action under Part 7 of the RCB Regulations, and what form that enforcement action should take, the FSA will consider all relevant factors, including:
    1. (a) the relevant factors on decisions to take action set out in DEPP 6.2.1 G;
    2. (b) whether any contractual or other arrangements agreed between the parties can be used effectively to address any perceived failure under the RCB Regulations; and
    3. (c) the interests of investors in the relevant regulated covered bond.
  2. (2) The FSA does not normally expect to use its enforcement powers where the issuer or the owner are in the process of rectifying non-compliance and where they have taken account of the views and interests of investors in the regulated covered bond. This is without prejudice to the FSA's use of its enforcement powers as a result of its consideration of all relevant factors, as set out in RCB 4.2.3 G (1).
  • 06/03/2008

Financial penalties

RCB 4.2.4

handbook-guidance
The FSA's policy on imposing financial penalties (including the amount of any such penalties) under the RCB Regulations will be consistent with the policy as set out in DEPP and EG with appropriate modifications.
  • 06/03/2008

RCB 4.2.5

handbook-guidance

When considering whether to impose a financial penalty, the amount of penalty, and whether to impose the penalty on the issuer or the owner, the FSA will have regard, where relevant, to:

  1. (1) the statement on determining the appropriate level of a financial penalty set out in DEPP 6.5 to DEPP 6.5D;
  2. (2) the particular arrangements between the issuer and the owner;
  3. (3) the likely impact of the penalty on the interests of investors in a regulated covered bond; and
  4. (4) the conduct of the issuer or the owner.

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RCB 5

Fees

RCB 5.1

Application and purpose

  • 06/03/2008

Application

RCB 5.1.1

handbook-rule
This chapter applies to issuers in relation to regulated covered bonds.
  • 06/03/2008

Purpose

RCB 5.1.2

handbook-guidance
The purpose of this chapter is to prescribe the fees payable under RCB.
  • 06/03/2008

RCB 5.2

Fees to be paid

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Introduction

RCB 5.2.1

handbook-guidance
This chapter provides for an initial fee for registration of a regulated covered bond and subsequent annual fees.
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RCB 5.2.2

handbook-guidance
The registration fee is for the FSA's work in dealing with an issuer's application for registration of a regulated covered bond.
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RCB 5.2.3

handbook-guidance
The annual fee is a fee for the FSA's ongoing costs in administering the regulated covered bond regime. Like the registration fee, it is charged to issuers in respect of their participation in the regime.
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RCB 5.2.4

handbook-guidance
Fees are not refundable.
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Registration Fees

RCB 5.2.5

handbook-rule
An issuer applying for registration of a regulated covered bond must pay the FSA a registration fee of £25,000 in full.
  • 06/03/2008

Annual Fees

RCB 5.2.6

handbook-rule
  1. (1) An issuer must pay the FSA a fee of £20,000 for each financial year (1 April to 31 March) in which the issuer is on the register of issuers as at 31 March of the previous financial year.
  2. (2) For the first year in which the issuer becomes registered, the issuer must pay the fee set out in the applicable row of the table at RCB 5.2.7 R of the annual fee.
  3. (3) Fees must be paid in full within 30 days of the date of the invoice.
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RCB 5.2.7

handbook-rule
Table of annual fee for first year:
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Method of payment

RCB 5.2.8

handbook-rule
The issuer must pay the fees payable under this chapter by bankers draft, cheque, or by credit transfer.
  • 06/03/2008

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RCB 6

Warning and decision notices

RCB 6.1

Application and purpose

  • 11/12/2008

Application

RCB 6.1.1

handbook-guidance
This chapter contains guidance for issuers and owners and other persons subject to the RCB Regulations.
  • 11/12/2008

Purpose

RCB 6.1.2

handbook-guidance
The purpose of this chapter is to set out the FSA's statement of the procedure which it proposes to follow on giving warning notices and decision notices in relation to regulated covered bonds.
  • 11/12/2008

RCB 6.2

Policy on decision and warning notices

  • 11/12/2008

Decision and warning notices

RCB 6.2.1

handbook-guidance
When making a decision on an application for registration under the RCB Regulations, or in relation to material changes to the contractual terms of the regulated covered bond, or in relation to a change of owner, or when seeking to use direction, revocation or penalty powers, the RCB Regulations require the FSA to give the subject of the intended action a warning notice and a decision notice. The recipient of a warning notice has the right to make representations to the decision maker, and may refer the decision to give a decision notice to the Tribunal.
  • 11/12/2008

RCB 6.2.2

handbook-guidance
Regulation 44 of the RCB Regulations (Warning notices and decision notices) applies Part XXVI of the Act (Notices) in respect of notices that we give under the RCB Regulations. This means that the provisions of section 393 of the Act (Third party rights) and section 394 of the Act (Access to Authority material) apply to penalty procedures under the RCB Regulations and that, if the matter is not referred to the Tribunal, then upon taking the action to which a decision notice relates, the FSA will issue the subject of the decision notice a final notice. The FSA is required to publish such details about the matter to which a final notice relates as it considers appropriate.
  • 11/12/2008

FSA decision maker

RCB 6.2.3

handbook-guidance
DEPP 2 Annex 1 G identifies the relevant decision maker in relation to warning notices and decision notices issued by the FSA under the RCB Regulations.
  • 11/12/2008

RCB 6.2.4

handbook-guidance
Decisions on applications for registration, in relation to material changes to contractual terms of the regulated covered bond, or in relation to a change of owner, or decisions to issue a direction under the RCB Regulations or to revoke an issuer's registration, will be taken under executive procedures following the process set out in DEPP 4.
  • 11/12/2008

RCB 6.2.5

handbook-guidance
Decisions to impose a financial penalty under regulation 34 of the RCB Regulations will be taken by the RDC under the procedure set out in DEPP 3.2 or, where relevant, DEPP 3.3.
  • 11/12/2008

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Transitional Provisions and Schedules

RCB Sch 1

Record keeping requirements

  • 06/03/2008

handbook-guidance
  1. (1) The aim of the guidance in the following table is to give the reader a quick overall view of the relevant record keeping requirements in this sourcebook.
  2. (2) Regulation 17(2)(a) (general requirements on issuer in relation to the asset pool) and Regulation 24(1)(a)(i) (requirements on owner in relation to the asset pool) require a record to be kept of each asset in the asset pool.
  3. (3) It is not a complete statement of those requirements and should not be relied on as if it were.
  4. (4) There are no other record-keeping requirements in RCB.
  5. (5) Table
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RCB Sch 2

Notification requirements

  • 06/03/2008

handbook-guidance
(1) The aim of the guidance in the following table is to give the reader a quick overall view of the relevant notification and reporting requirements
(2) It is not a complete statement of those requirements and should not be relied on as if it were.
(3) Table

RCB Sch 3

Fees and other requirement payments

  • 06/03/2008

The provisions relating to fees are set out in RCB Chapter 5 and in RCB 3.6.1 R (administrative fee)

RCB Sch 4

Powers exercised

  • 06/03/2008

RCB Sch 4.1

handbook-guidance

RCB Sch 4.2

handbook-guidance
  • 06/10/2009

RCB Sch 4.3

handbook-guidance
  • 06/10/2009

RCB Sch 5

Rights of action for damages

  • 06/03/2008

handbook-guidance
Not applicable
  • 06/03/2008

RCB Sch 6

Rules that can be waived

  • 06/03/2008

handbook-guidance
Not applicable
  • 06/03/2008

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