SUP 3A.8 Rights and duties of auditors

The auditor of a relevant institution has various rights and duties that enable or require them to obtain information from the institution and pass information to the FCA in specified circumstances. This section imposes or gives guidance on those rights and duties.

An auditor of a relevant institution must cooperate with the FCA in the discharge of its functions under the Payment Services Regulations and the Electronic Money Regulations.

The FCA may ask the auditor to attend meetings and to supply it with information about the institution. In complying with SUP 3A.8.2R, the auditor should attend such meetings as the FCA requests and supply it with any information the FCA may reasonably request about the relevant institution to enable the FCA to discharge its functions under the Payment Services Regulations and the Electronic Money Regulations.

An auditor of a relevant institution must give any skilled person appointed by the institution or the FCA all assistance that person reasonably requires (see section 166(7) of the Act (Reports by skilled persons), as applied by the Payment Services Regulations and the Electronic Money Regulations).

An auditor of a relevant institution must be independent of the institution in performing their duties in respect of that institution.

An auditor of a relevant institution must take reasonable steps to satisfy themself that they are free from any conflict of interest in respect of that institution from which bias may reasonably be inferred. An auditor must take appropriate action where this is not the case.

SUP 3A.5.4G explains that an auditor whose appointment does not breach the ethical guidance in current issue from the auditor’s recognised supervisory body will be regarded as independent by the FCA.

SUP 3A.6.1R requires a relevant institution to cooperate with its auditor. SUP 3A.6.3G refers to the rights to information which an auditor is granted by the Act, as applied by the Payment Services Regulations and the Electronic Money Regulations. SUP 3A.6.4G refers to similar rights granted by the Companies Act 2006.

Within the legal constraints that apply, the FCA may pass on to an auditor any information which it considers relevant to the auditor’s function. An auditor is bound by the confidentiality provisions set out in Part XXIII of the Act (Public record, disclosure of information and cooperation), as applied by the Payment Services Regulations and the Electronic Money Regulations, in respect of confidential information received from the FCA. An auditor may not pass on such confidential information without lawful authority – for example, if an exception applies under the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 (SI 2001/2188), as applied by the Payment Services Regulations and the Electronic Money Regulations, or with the consent of the person from whom that information was received and (if different) to whom that information relates.

1. (1) Statutory auditors of safeguarding institutions are subject to regulation 24(3) of the Payment Services Regulations and regulation 25(3) of the Electronic Money Regulations. Those regulations require statutory auditors to communicate matters of material significance to the FCA.

2. (2) A failure to safeguard relevant funds will usually be of material significance, so should be communicated to the FCA. This is especially the case where an institution claims not to be required to safeguard relevant funds at all.

3. (3) Sections 342(3) and 343(3) of the Act, as applied by the Payment Services Regulations and the Electronic Money Regulations, provide that an auditor does not contravene any duty by giving information or expressing an opinion to the FCA, if they are acting in good faith and reasonably believe that the information or opinion is relevant to any functions of the FCA. These provisions continue to have effect after the end of the auditor’s term of appointment.

An auditor must notify the FCA without delay if they:

1. (1) are removed from office by a relevant institution;

2. (2) resign before their term of office expires; or

3. (3) are not reappointed by a relevant institution.

If an auditor ceases to be, or is formally notified that they will cease to be, the auditor of a relevant institution, they must notify the FCA without delay:

1. (1) of any matter connected with the ceasing of their appointment which the auditor thinks ought to be drawn to the FCA's attention; or

2. (2) that there is no such matter.