COLL 8.2.6 Duty of Operator to Rectify Breaches of Div 8.2.B—QFC Retail Schemes

(1) The operator of a QFC retail scheme must take immediate action to rectify any breach of this division.

Note Breach is defined in the glossary.
(2) If the breach relates to the incorrect pricing of units in relation to the issue of units, the rectification must extend to the reimbursement or payment of amounts by the operator to unitholders, former unitholders or the scheme.

Note Issue and money are defined in the glossary.
(3) However, if the independent entity considers that the breach is of minimal significance or that making the reimbursement or payment would be inappropriate, the independent entity may direct that rectification need not extend to reimbursement or payment.
(4) The independent entity may consider the breach to be of minimal significance if—
(a) the independent entity has reviewed the operator's controls (and supporting systems) in accordance with rule 8.2.12 (Review by independent entity of operator's pricing controls etc—QFC retail schemes); and
(b) the independent entity is satisfied, based on the review, that the operator's pricing controls comply with rule 8.2.11 (Pricing controls of operatorQFC retail schemes); and
(c) the error in pricing of a unit is less than 0.5% of the correct price.
(5) If the breach was caused by 1 or more factors or existed over a period, then, in deciding whether the breach is of minimal significance, the independent entity must consider each incorrect price separately.
(6) To remove any doubt, even though the independent entity considers the breach to be of minimal significance, the independent entity may require reimbursement or payment of amounts by the operator to unitholders, former unitholders or the scheme.
(7) In deciding under subrule (3) whether reimbursement or payment is inappropriate, the independent entity must take into account the need not to prejudice the rights of unitholders or unitholders of a class of units.
(8) If the independent entity decides that making the reimbursement or payment would be inappropriate, the independent entity must tell the Regulatory Authority about the breach and its decision immediately, but within 1 business day.

Examples

See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.

Note See also r 4.2.4 (Duty of independent entity to report certain breaches of law etc—all QFC schemes).
(9) The independent entity must give the Regulatory Authority any information about the breach and its decision that the authority reasonably requires.
(10) The independent entity must satisfy itself that any reimbursement or payment required under this rule is accurately and promptly calculated and paid.
(11) This rule does not require reimbursement to unitholders or former unitholders of amounts that the operator and independent entity reasonably consider to be immaterial.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)