Explanatory note

The Rules impose a duty on an auditor of an authorised person under the Financial Services Act 1986 to report to the relevant regulator any matter of which he may become aware in his capacity as auditor of that person where the auditor has reasonable cause to believe that the matter is, or is likely to be, of material significance for determining whether a person is fit and proper to carry on investment business or whether disciplinary action ought to be taken or powers of intervention exercised in order to protect investors against a significant risk of loss. The relevant regulator may be the Securities and Investments Board or a recognised self-regulating organisation or recognised professional body under the Act.