Prudential Regulation Authority Rulebook

7.

Sections 61, 63ZA and 63ZB of FSMA give the PRA flexibility to address issues which can arise when considering applications to perform an SMF or assessing the fitness and propriety of existing Senior Managers on an ongoing basis. However, these powers can only be used if they appear to advance the PRA objectives. This will be assessed on a case-by-case basis taking into account the circumstances of the firm and the relevant Senior Manager.

8.

Moreover, these FSMA powers complement, but do not replace the PRA’s ability to:

• discuss candidates for SMF roles informally with firms (without detracting from firms’ obligation to vet those candidates under Section 60A of FSMA);
• approve applications unconditionally but make non-binding recommendations on issues such as learning and development plans, either at the time of approval or subsequently; or
• reject applications or withdraw the approval of individuals deemed not to be fit and proper.

9.

In line with the PRA approach documents,^[5] the PRA may discuss the potential imposition of conditions and time limits on the approvals of individual Senior Managers with the boards and senior management of the firms concerned. However, firms should not view the availability of such conditions and time limits as a way of facilitating the approval of individuals who otherwise fail to meet minimum standards of fitness and propriety.

10.

Similarly, while the PRA relies on supervisory dialogue in seeking to ensure that Senior Managers address risks to a firm’s safety and soundness on an ex-ante basis, it reserves the right to use its power to vary approvals on its own initiative to impose conditions requiring individual Senior Managers to take certain action where justified.

11.

The rest of this statement of policy sets out, for illustrative purposes, a series of non-binding, non-exhaustive examples of situations where the PRA may use its FSMA powers to impose time limits, conditions and variations on the approvals of Senior Managers. However, each case will be assessed individually and firms should not rely on these examples to predict or develop expectations about the likely outcome of a given application.