SUP 10
Approved
persons
SUP 10.1
Application
- 01/12/2004
General
SUP 10.1.1
See Notes
This chapter applies to every firm.
- 21/06/2001
SUP 10.1.2
See Notes
This chapter is also relevant to every approved person.
- 21/06/2001
SUP 10.1.3
See Notes
The rules in
this chapter specify descriptions of functions under section 59
of the Act (Approval
for particular arrangements). The effect of these rules,
and the provisions of Part V of the Act (Performance
of Regulated Activities), is that every firm,
except an overseas firm to
which SUP 10.1.6 R applies, must apply to
the FSA for
the approval of one or more persons to
perform a controlled function on
its behalf.
- 01/12/2002
SUP 10.1.4
See Notes
- 21/06/2001
SUP 10.1.5
See Notes
The
list of controlled functions is
at SUP 10.4.5 R.
- 21/06/2001
Overseas firms: UK services
SUP 10.1.6
See Notes
This chapter does not apply to an overseas firm in relation
to regulated activities which
are carried on in the United
Kingdom other than from an establishment maintained by it or
its appointed representative in
the United Kingdom.
- 21/06/2001
Overseas firms: UK establishments
SUP 10.1.7
See Notes
Only the following controlled functions apply to an overseas firm which maintains
an establishment in the United
Kingdom from which regulated
activities are carried on:
(1) the chief
executive function;
(2) the required
functions;
(4) the significant management (settlements) function in
so far as the activities relate to designated
investment business; and
(5) the
customer functions
.
- 21/06/2001
SUP 10.1.8
See Notes
For
an incoming EEA firm, incoming Treaty firm or UCITS qualifier, see SUP 10.1.9 R to SUP
10.1.15 G.
- 21/06/2001
Incoming EEA firms, incoming Treaty firms and UCITS qualifiers
SUP 10.1.9
See Notes
This chapter does not apply to:
(1) an incoming
EEA firm; or
(2) an incoming
Treaty firm; or
(3) a UCITS
qualifier;
if and in so
far as the question of whether a person is
fit and proper to perform a particular function in
relation to that firm is
reserved, under any of the Single
Market Directives, the Treaty or the UCITS Directive to an authority in
a country or territory outside the United
Kingdom.- 21/06/2001
SUP 10.1.10
See Notes
SUP 10.1.9 R reflects the provisions of section 59(8) of the Act and, in relation to an incoming Treaty firm and a UCITS qualifier, the Treaty and the UCITS Directive. It preserves the principle
of Home State prudential
regulation. In relation to an incoming
EEA firm exercising an EEA
right, or an incoming
Treaty firm exercising a Treaty
right, the effect is to reserve to the Home State regulator the assessment of the
fitness and propriety of a person performing
a function in the exercise of that right. A member of the governing body, or the notified UKbranchmanager,
of an incoming EEA firm,
acting in that capacity, will not therefore have to be approved by the FSA under the Act.
- 21/06/2001
SUP 10.1.11
See Notes
But an incoming EEA firm, or incoming Treaty firm, will have had to consider
the impact of the Host
State rules with
which it is required to comply when carrying on a passported activity or Treaty activity through a branch in the United Kingdom. An incoming EEA firm will have been notified of those provisions
under Part II of Schedule 3 to the Act in
the course of satisfying the conditions for authorisation in the United Kingdom.
- 21/06/2001
SUP 10.1.12
See Notes
An incoming
EEA firm will have to consider, for example, the position of
a branch manager based in the United Kingdom who may
also be performing a function in relation to the carrying on of a regulated activity not
covered by the EEA right of
the firm.
In so far as the function is within the description of a controlled function, the firm will need to seek approval for that person to perform that controlled function.
- 21/06/2001
Incoming EEA firms: passported activities from a branch
SUP 10.1.13
See Notes
Only the following controlled functions apply to an incoming EEA firm with
respect to its passported
activities carried on from a branch in the United Kingdom:
(2) the compliance
oversight function;
(3) the money
laundering reporting function;
(5) the significant
management (settlements) function in so far as the activities
relate to designated investment
business; and
- 21/06/2001
Incoming EEA firms etc with top-up permission activities from a UK branch
SUP 10.1.14
See Notes
In relation to the activities of a firm for which it has
a top-up permission,
only the following controlled
functions apply:
(3) the significant
management (settlements) function in so far as the activities
relate to designated investment
business; and
(4) the
customer functions.
- 21/06/2001
SUP 10.1.15
See Notes
An incoming EEA firm may
require a Part IV permission in
respect, for example, of its commodities business.
The list of controlled
functions which apply mirror those which apply to overseas firms, without
the chief executive function.
In the case of a firm with top-up permission, the FSA anticipates that the
equivalent responsibility of the chief
executive for the relevant business would be assumed by the person performing the EEA investment business oversight function.
- 21/06/2001
Appointed representatives
SUP 10.1.16
See Notes
The descriptions of the following functionsapply to an appointed representative of a firm, except an introducer appointed representative,
as they apply to a firm:
- 21/06/2001
SUP 10.1.16A
See Notes
(1)
SUP 10.1.16 R is modified in relation
to an appointed representative meeting
the conditions in (2) so that only one of the following governing functions:
applies, as appropriate, to an individual within that appointed representative who will be required to be an approved person.
(a)
director function;
or
(b)
chief executive
function; or
(c)
partner function;
or
applies, as appropriate, to an individual within that appointed representative who will be required to be an approved person.
(2) The conditions are that:
(a) the scope of appointment of the appointed representative includes insurance mediation activity in
relation to non-investment
insurance contracts but no other regulated activity, and
(b) the principal purpose of the appointed
representative is to carry on activities other than regulated activities.
- 21/06/2001
SUP 10.1.17
See Notes
(1)
The
effect of SUP 10.1.16 R is
that the directors (or
their equivalent) and senior
managers (or their equivalent) of an appointed representative must also be approved under section
59 of the Act for
the performance of certain controlled
functions.
(2)
SUP 10.1.16 R has
a limited application to an appointed
representative appointed by a firm to carry on insurance mediation activity or
mortgage mediation activity
. The description
of the customer functions do
not apply to such an appointed
representative as these functions do not apply to a firm carrying on these regulated activities.
(3) The effect of SUP 10.1.16A
R is that only one director (or
equivalent) of an appointed
representative to which that rule applies must be approved under section
59 of the Act for
the performance of a governing
function.
- 21/06/2001
Members of a profession
SUP 10.1.18
See Notes
This chapter, except in respect of the required functions, does
not apply to an authorised
professional firm in respect of its non-mainstream regulated activities.
- 21/06/2001
SUP 10.1.19
See Notes
SUP 10.1.18 R is relevant to the person, such as a partner in a professional firm, whose
only regulated activities are
incidental to his professional services, and where the principal purpose of
the firm is
to carry on activities which are not regulated
activities. Any regulated activities which that person carries on are
not within the description of a controlled
function (except with respect to the required functions).
- 21/06/2001
SUP 10.1.20
See Notes
For
further guidance on the supervision and regulation of activities carried on
by a member of a designated
professional body, see PROF 5.
- 21/06/2001
Oil market participants, service companies, energy market participants, subsidiaries of local authorities or registered social landlords and insurance intermediaries.
SUP 10.1.21
See Notes
The descriptions of significant influence functions, other than
the required functions, do not extend to activities
carried on by a firm whose
principal purpose is to carry on activities other than regulated activities and which is:
(1) an oil
market participant; or
(2) a service
company; or
(3) an energy
market participant; or
(4) a wholly owned subsidiary of:
(a) a local authority; or
(b) a registered social landlord; or
(5) a firm with permission to carry on insurance mediation activity in
relation to non-investment
insurance contracts but no other regulated activity.
- 20/09/2001
SUP 10.1.22
See Notes
It will be a matter of fact in each case
whether, having regard to all the circumstances, including in particular where
the balance of the business lies, a firm's principal
purpose is to carry on activities other than regulated activities. If a firm wishes to rely on SUP
10.1.21 R, it should be in a position to demonstrate
that its principal purpose is to carry on activities other than regulated activities.
- 20/09/2001
Committees of the Society of Lloyd's
SUP 10.1.23
See Notes
(1) For the purpose of SUP 10.6.4 R (the director
function), "director" includes an executive member of a committee
to which the Council of
the Society of Lloyd's directly
delegates authority to carry out the Society's regulatory
functions.
(2) For the purpose of SUP 10.6.8 R (the non-executive
director function), "non-executive
director" includes a non-executive member of a committee to
which the Council of
the Society of Lloyd's directly
delegates authority to carry out the Society's regulatory
functions.
- 21/06/2001
SUP 10.1.24
See Notes
The
effect of SUP 10.6.4 R is
that the function of an executive member of the Council of the Society of Lloyd's comes within the description
of the director function. SUP 10.1.23R (1) provides that the
function of an executive member of certain committees of the Society of Lloyd's with
regulatory functions also comes within the description of the director function. SUP 10.6.8 R and SUP
10.1.23R (2) are the equivalent provisions for the non-executive
member of certain committees of the Society
of Lloyd's with regulatory functions.
- 21/06/2001
SUP 10.1.25
See Notes
- 21/06/2001
Insolvency practitioners
SUP 10.1.26
See Notes
This chapter does not apply to a function
performed by:
(1) a person acting
as an insolvency practitioner within the meaning of section 388 of the Insolvency
Act 1986; or
(2) a person acting
as a nominee in relation to a voluntary arrangement under Parts I (Company
Voluntary Arrangements) and VIII (Individual Voluntary Arrangements) of the
Insolvency Act 1986; or
(3) a person acting
as an insolvency practitioner within the meaning of Article 3 of the Insolvency
(Northern Ireland) Order 1989; or
(4) a person acting
as a nominee in relation to a voluntary arrangement under Parts II (Company
Voluntary Arrangements) and VIII (Individual Voluntary Arrangements) of the
Insolvency (Northern Ireland) Order 1989.
- 21/06/2001
SUP 10.2
Purpose
- 01/12/2004
SUP 10.2.1
See Notes
The immediate purpose of SUP
10.3 to SUP 10.10 is to specify, under section 59 of the Act, descriptions of the 27
controlled
functions which are listed in SUP 10.4.5 R. The underlying purpose is to establish, and mark the boundaries
of, the "approved persons regime". An approved
person is a person,
generally an individual, who is approved to perform a controlled function.
- 21/06/2001
SUP 10.2.2
See Notes
The controlled functions which
have been specified in this chapter are those functions which the FSA sees as key to the
operation of the provisions of Part V of the Act (Performance of Regulated Activities) and the provisions
made under Part V. Those provisions include:
(1) the Statements
of Principle and Code of Practice for Approved Persons issued
under section 64 of the Act (see APER); and
- 21/06/2001
SUP 10.2.3
See Notes
The
purpose of the direct regulation of an individual (and in some cases a body corporate) is to
complement the regulation of the authorised
person, that is the firm for
which the approved person performs
the function.
- 21/06/2001
SUP 10.2.4
See Notes
SUP 10.11 to SUP
10.14 set out the procedures for applying for approval,
changing the details held by the FSA concerning
an approved person,
and withdrawing from approval.
- 21/06/2001
SUP 10.3
Provisions related to the act
- 01/12/2004
Arrangements and regulated activities
SUP 10.3.1
See Notes
A function is a controlled function only to the extent that
it is performed under an arrangement entered
into by:
(1) a firm;
or
(2) a contractor of the firm;
in relation
to the carrying on by the firm of
a regulated activity.- 21/06/2001
SUP 10.3.2
See Notes
Sections 59(1) and (2) of the Act provide that approval
is necessary in respect of a controlled
function which is performed under an arrangement entered into by a firm, or its contractor
(typically an appointed
representative), in relation to a regulated activity.
- 21/06/2001
SUP 10.3.3
See Notes
Arrangement is
defined in section 59(10) of the Act as
any kind of arrangement for
the performance of a function which is entered into by a firm or any of its contractors with another person and includes the
appointment of a person to
an office, his becoming a partner,
or his employment (whether under a contract of service or otherwise). For
the provisions in this chapter relating to outsourcing, see SUP
10.12.3 G and SUP 10.12.4
G.
- 01/12/2002
SUP 10.3.4
See Notes
If, however, a firm is a member of a group, and the arrangements for the performance of a controlled function of
the firm are
made by, say, the holding
company, the person performing
the function will only require approval if there is an arrangement (under section 59(1)) or a contract
(under section 59(2)) between the firm and holding company permitting
this. This need not be a written contract but could arise, for example, by
conduct, custom and practice.
- 21/06/2001
SUP 10.3.5
See Notes
The arrangement must
be "in relation to" the carrying on of a regulated
activity. Regulated
activities are defined in the Glossary by reference to the Regulated Activities Order.
This order prescribes the activities which are regulated activities for the purposes of
the Act.
- 21/06/2001
SUP 10.4
Specification of functions
- 01/12/2004
SUP 10.4.1
See Notes
Each of the functions described in SUP 10.4.5 R (the table of controlled functions) is a controlled function.
- 01/12/2002
SUP 10.4.2
See Notes
SUP 10.4.1 R, together with the table of controlled functions in SUP 10.4.5 R, specifies, in brief
terms, the descriptions of the controlled
functions. Other rules in
this chapter contain the detail of the description for each function. Further rules in this chapter
contain provisions which will apply to each description as indicated in those rules: see in particular SUP 10.1 for the application provisions.
- 01/12/2002
SUP 10.4.3
See Notes
The fact that a person may be approved for one purpose does
not have the effect of bringing all his activities within that controlled function.
- 01/12/2002
SUP 10.4.4
See Notes
Certain controlled functions expressly
include other controlled
functions: see SUP 10.6.2 R in relation to governing
functions; SUP 10.10.7
R in relation to the investment adviser function;
and SUP 10.10.20 R in relation to the investment management function.
In view of broad descriptions of the significant
management functions (CF16 to CF20), these are expressed so
as not to include other controlled
functions.
- 21/06/2001
SUP 10.4.5
See Notes
Controlled functions
- 01/01/2005
SUP 10.5
Significant influence functions
- 01/12/2004
What are the significant influence functions?
SUP 10.5.1
See Notes
The significant
influence functions, which are specified in SUP
10.4.1 R, comprise the governing functions (see SUP
10.6), the required
functions (see SUP 10.7), the
systems and controls functions
(see SUP
10.8) and the significant
management functions (see SUP 10.9). SUP 10.5 applies
to each of the significant
influence functions.
- 21/06/2001
The first condition
SUP 10.5.2
See Notes
Each significant influence function is one which
is likely to result in the person responsible
for its performance exercising a significant influence on the conduct of a firm's affairs, so far
as relating to a regulated
activity of the firm.
- 21/06/2001
SUP 10.5.3
See Notes
SUP 10.5.2 R gives effect to section 59(5) of the Act (where this provision is referred to as
the first condition).
- 21/06/2001
SUP 10.5.4
See Notes
Whether a functionis likely to
result in the person responsible
for its performance exercising significant influence on the conduct of the firm's affairs is a question
of fact in each case. The FSA has
identified the significant
influence functions as satisfying this condition. What amounts to exercising
significant influence in any particular case will depend on the circumstances.
The person performing
one of these functions is likely to play a part in ensuring that effective
governance structures, systems and controls are developed and operated. In
relation to a firm as
a whole, this is expected to include setting the business strategy, regulatory
climate and ethical standards of the firm.
In relation to a branch,
this will include ensuring that the firm's strategy
(as it affects the branch)
is appropriate in the context of the UK regulatory system, and
setting the regulatory climate and ethical standards of the branch in the United Kingdom.
- 21/06/2001
Periods of less than 12 weeks
SUP 10.5.5
See Notes
If:
(1) a firm appoints
an individual to perform a function which, but for this rule, would be a significant influence function;
(2) the appointment is to provide cover for
an approved person whose
absence is:
(a) temporary; or
(b) reasonably unforeseen; and
(3) the appointment is for less than 12 weeks
in a consecutive 12 month period;
the description
of the relevant significant
influence function does not relate to those activities of that
individual.- 21/06/2001
SUP 10.5.6
See Notes
SUP 10.5.5 R enables cover to be given for, say, holidays and emergencies and
avoids the need for the precautionary approval of, for example, a deputy.
However, as soon as it becomes apparent that a person will be performing a controlled function for
more than 12 weeks, the firm should
apply for approval.
- 21/06/2001
SUP 10.6
Governing functions
- 01/12/2004
Introduction
SUP 10.6.1
See Notes
Every firm will have one or more persons responsible for directing its affairs.
These persons will
be performing the governing
functions and will be required to be approved persons unless the application provisions
in SUP 10.1, or the particular description
of a controlled function,
provide otherwise. For example, each director of
a company incorporated
under the Companies Acts will perform the governing function in relation to that company.
- 21/06/2001
What the governing functions include
SUP 10.6.2
See Notes
Each of the governing functions (other than the non-executive director function) includes
where apportioned under SYSC 2.1.1 R:
(1)
systems and controls functions; and
- 21/06/2001
SUP 10.6.3
See Notes
The effect of SUP
10.6.2 R is that a person who is approved to perform a governing function (other
than the non-executive
function) will
not have to be specifically approved to perform any of the systems and controls functions or the significant management functions.
However, a firm may
apply for the systems
and controls function or significant
management functions to be explicitly added for such persons, if it wishes. . A
person who
is approved to
perform a governing function will
have to be additionally approved before he can perform any of the required functions or
customer
functions.
- 01/12/2002
SUP 10.6.3A
See Notes
PRU 9.1.3 R
provides that an insurance intermediary, other than a sole trader, must allocate to a director or senior manager the responsibility
for the firm'sinsurance mediation activity.PRU 9.1.4 R provides that the firm may allocate this
responsibility to one or more of the persons performing
a governing function (other than
the non-executive director
function).
- 21/06/2001
SUP 10.6.3B
See Notes
Where
a person performing
a governing function is
also responsible for the firm's insurance mediation activity,
the words "(insurance mediation)" will be inserted after the relevant controlled function (see PRU 9.1.7 G).
- 21/06/2001
Director function (CF1)
SUP 10.6.4
See Notes
If a firm is a body corporate (other than a limited liability partnership),
the director function is
the function of acting in the capacity of a director (other
than non-executive director)
of that firm.
- 21/06/2001
SUP 10.6.5
See Notes
The
definition of director includes
a person in
accordance with whose directions or instructions the directors are accustomed to act. Such a person is defined in section 741 of the Companies Act 1985 as a "shadow director".
The directors of
a holding company would
not, as such, be shadow directors.
However, where, for example, a member of a holding company board frequently gives instructions
to directors of
a firm, either
on his own or through a committee which takes frequent executive decisions,
the firm should
consider carefully whether he (and other members of the committee) should
be approved to perform this function. An individual is not a shadow director (or director) because his
job description included the word "director". Whether a person is a director within the definition is a question
of fact in each case.
- 01/12/2002
SUP 10.6.6
See Notes
- 21/06/2001
SUP 10.6.7
See Notes
A director can
be a body corporate and
may accordingly require approval as an approved
person in the same way as a natural person may require approval.
- 21/06/2001
Non-executive director function (CF2)
SUP 10.6.8
See Notes
(1) If a firm is a body corporate, the non-executive director function is the function
of acting in the capacity of a non-executive
director of that firm.
(2) If a firm is a long-term insurer, the non-executive director function is also the
function of acting in the capacity of an individual (other than an individual
performing the director
function or the non-executive
director function under (1)) who, as a member of a committee
having the purpose of a With-profits Committee (see COB 6.11.6 G (1)), has responsibility
in relation to governance arrangements for with-profits business under
COB 6.11 (Reporting to with-profits policyholders on compliance with PPFM).
- 30/04/2004
SUP 10.6.9
See Notes
Examples
of responsibilities of a non-executive
director may include:
(1) playing his part, by providing an independent
perspective to the overall running of the business, in setting and monitoring
the firm's strategy;
(2) scrutinising the approach of executive
management, the firm's performance
and its standards of conduct; and
(3) carrying out other responsibilities as
assigned by the firm:
for example, as a member of a board committee on audit or remuneration or
as a member of a committee having the purpose of a With-profits Committee
(see COB
6.11.6 (1)).
- 30/04/2004
SUP 10.6.10
See Notes
The
extent of the responsibilities of a particular non-executive director will be a matter of
fact in each case but they will not extend to executive responsibilities.
- 21/06/2001
Chief executive function (CF3)
SUP 10.6.11
See Notes
The chief
executive function is the function of acting in the capacity
of a chief executive of
a firm.
- 21/06/2001
SUP 10.6.12
See Notes
The
title given to a person performing
the chief executive function is
likely to be "Chief Executive Officer" or similar.
However, the title, or absence of title, does not of itself determine whether
the activities of a person amount
to the chief executive
function.
- 21/06/2001
SUP 10.6.13
See Notes
This function is having the responsibility,
alone or jointly with one or more others, under the immediate authority of
the governing body,
for the conduct of the whole of the business (or relevant activities); or,
in the case of a branch in
the United Kingdom of
an overseas firm,
for all of the activities subject to the UK regulatory system.
- 21/06/2001
SUP 10.6.14
See Notes
For a branch in the United Kingdom of an overseas firm, the FSA would not normally expect the overseas chief executive of the firm as a whole to be
approved for this function where there is a senior manager under him with specific responsibility
for those activities of the branch which
are subject to the UKregulatory system. In
some circumstances, the person within
the firm responsible
for UK operations
may, if the function is likely to enable him to exercise significant influence
over the branch,
also perform the chief
executive function (see SUP 10.7.4 G). The senior manager may be
called a Managing Director, UK Regional Head, Branch Manager, UK Country Head;
or, in the case of a non-EEA insurer with a branch in the United Kingdom, UK
chief executive.
- 21/06/2001
SUP 10.6.15
See Notes
A person performing
the chief executive function may
be a member of
the governing body but
need not be. If the chairman of the governing
body is also the chief
executive, he will be discharging this function. If the responsibility
is divided between more than one person but
not shared, there is no person exercising
the chief executive function.
But if that responsibility is discharged jointly by more than one person, each of those persons will be performing
the chief executive function.
- 21/06/2001
SUP 10.6.16
See Notes
Note that a body corporate may be a chief executive. If so, it will need to be
approved to perform the chief
executive function.
- 21/06/2001
Partner function (CF4)
SUP 10.6.17
See Notes
(1) If a firm is a partnership, the partner function is the function of acting
in the capacity of a partner in
that firm.
(2) If the principal purpose of the firm is to carry on one
or more regulated activities,
each partner performs
the partner function.
(3) If the principal purpose of the firm is other than to
carry on regulated activities:
(a) a partner performs
the partner function to
the extent only that he has responsibility for a regulated activity; and
(b) a partner in
a firm will
be taken to have responsibility for each regulated
activity except where the partnership has
apportioned responsibility to another partner or
group of partners.
- 21/06/2001
SUP 10.6.18
See Notes
- 21/06/2001
SUP 10.6.19
See Notes
Any apportionment referred to in SUP 10.6.17 R (3)(b) will have taken
place under SYSC 2.1.1 R. The FSA may ask to see details
of the apportionment but will not require, as a matter of course, a copy of
the material which records this (see SYSC 2.2).
- 21/06/2001
SUP 10.6.20
See Notes
The effect of SUP
10.1.18 R is that regulated
activity in SUP 10.6.17
R (and elsewhere) is to be taken as not including an
activity that is a non-mainstream exempt regulated activity.
Therefore, a partner whose
only regulated activities are
incidental to his professional services, in a partnership whose principal purpose is to
carry on other than regulated
activities, need not be an approved
person. What amounts to the principal purpose of the firm is a matter of fact
in each case having regard to all the circumstances, including the activities
of the firm as
a whole. Any regulated
activities which such a partner carries
on are not within the description of the partner
function.
- 21/06/2001
SUP 10.6.21
See Notes
If a firm is a limited liability partnership, the partner function extends
to the firm as
if the firm were
a partnership and
a member of the firm were
a partner.
- 21/06/2001
SUP 10.6.22
See Notes
The
Limited Liability Partnerships Act 2000 provides for a legal entity to be
formed under which every member of the limited
liability partnership is the agent of the limited liability partnership. The effect
of SUP 10.6.21 R is to treat a limited liability partnership as
a partnership for
the purposes of the partner
function.
- 21/06/2001
SUP 10.6.23
See Notes
If a partnership is registered under the Limited
Partnership Act 1907, the partnerfunction does
not extend to any function performed by a limited partner.
- 21/06/2001
Director of unincorporated association function (CF5)
SUP 10.6.24
See Notes
If a firm is an unincorporated association, the director of unincorporated association
function is the function of acting in the capacity of a director of the unincorporated
association.
- 21/06/2001
SUP 10.6.25
See Notes
There
are many kinds of unincorporated association. For example, it could be a committee
of management of a property unit trust; or the board of trustees of an occupational pension scheme where
the trustees themselves carry on regulated
activities. The FSA would
expect each member of the committee of management or board to be performing
the director of unincorporated
association function and therefore to need to be approved to
do so.
- 21/06/2001
Small friendly society function (CF6)
SUP 10.6.26
See Notes
(1) If a firm is a non-directive friendly society, the small friendly society function is
the function of directing its affairs, either alone or jointly with others.
(2) If the principal purpose of the firm is to carry on regulated activities,
each person with
responsibility for directing its affairs performs the controlled function.
(3) If the principal purpose of the firm is other than to
carry on regulated activities,
a person performs
the small friendly society
function only to the extent that he has responsibility for a regulated activity.
- 21/06/2001
SUP 10.6.27
See Notes
A friendly society that
is not subject to the Insurance
Directives is often referred to as a non-directive friendly society. For the purposes
of SUP 10 it is referred to as a small friendly society.
- 21/06/2001
SUP 10.6.28
See Notes
(1) Each person on the non-directive friendly society's governing body will be
taken to have responsibility for its regulated
activities, unless the firm has
apportioned this responsibility to one particular individual to whom it is
reasonable to give this responsibility.
(2) The individual need not be a member of
the governing body.
- 21/06/2001
SUP 10.6.29
See Notes
(1) Typically a non-directive friendly Society will appoint
a "committee of management" to direct its affairs. However, the governing
arrangements may be informal and flexible. If this is the case, the FSA would expect the society
to resolve to give responsibility for the carrying on of regulated activities to one individual who
is appropriate in all the circumstances. That individual may, for example,
have the title of chief
executive or similar. The individual would have to be an approved person under SUP 10.6.26 R.
(2) Any apportionment of responsibilities
will have taken place under SYSC 2.1.1 R.
The FSA may
ask to see details of the apportionment but will not require, as a matter
of course, a copy of the material which records this (seeSYSC 2.2).
- 21/06/2001
Sole trader function (CF7)
SUP 10.6.30
See Notes
(1)
If
a firm is
a sole trader,
the sole trader function is
the function of acting in the capacity of the sole trader.
(2) The sole
trader function applies only to a sole trader who employs one or more approved persons.
- 21/06/2001
SUP 10.6.31
See Notes
- 21/06/2001
SUP 10.6.32
See Notes
If
a sole trader does
not employ an approved person,
the sole trader himself
will not have to be an approved
person unless he seeks to perform any of the customer functions.
- 21/06/2001
SUP 10.7
Required functions
- 01/12/2004
Apportionment and oversight function (CF8)
SUP 10.7.1
See Notes
The apportionment
and oversight function is the function of acting in the capacity
of a director or senior manager responsible
for either or both of the apportionment function and the oversight function
set out in SYSC 2.1.3 R.
- 21/06/2001
SUP 10.7.2
See Notes
SYSC
2.1.3 R provides that a firm must appropriately allocate to one or
more individuals the functions of dealing with the apportionment of responsibilities
under SYSC
2.1.1 R, and of overseeing the establishment and maintenance
of systems and controls under SYSC 3.1.1 R.
Where there is a chief
executive, he or she must be one of the individuals to whom
the functions are allocated (unless the functions are allocated to someone
of greater seniority): see SYSC 2.1.6 G.
- 21/06/2001
SUP 10.7.3
See Notes
The fact that there is a person performing the apportionment and oversight function,
and who has responsibility for activities subject to regulation by the FSA, may have a bearing
on whether a manager who is based overseas will be performing a controlled function. It
is a factor to take into account when assessing the likely influence of the
overseas manager.
- 21/06/2001
SUP 10.7.4
See Notes
Generally, in relation to a UK establishment of an overseas firm or a firm which is part of
an overseas group,
where an overseas manager's responsibilities in relation to the United Kingdom are strategic
only, he will not need to be an approved
person. However, where, in accordance with SYSC 3, he is responsible
for implementing that strategy in the United
Kingdom, and has not delegated that responsibility to a senior manager in the United Kingdom, he is
likely to be performing a controlled
function, such as, for example, the chief executive function.
- 21/06/2001
SUP 10.7.4A
See Notes
PRU 9.1.3 R
provides that an insurance intermediary, other than a sole trader, must allocate to a director or senior manager the responsibility
for the firm's insurance mediation activity
PRU
9.1.4 R (2)
provides that the
firm may allocate this responsibility to the person performing the apportionment and oversight function.
- 21/06/2001
SUP 10.7.4B
See Notes
Where
the person performing
the apportionment and oversight
function is also responsible for the firm's insurance
mediation activity, the words "(insurance mediation)" will be
inserted after this controlled
function (see PRU 9.1.7 G).
- 21/06/2001
SUP 10.7.5
See Notes
See
also SUP 10.9.5 G and SUP
10.9.6 G in relation to matrix management in the context
of significant management
functions.
- 21/06/2001
EEA investment business oversight function (CF9)
SUP 10.7.6
See Notes
The EEA
investment business oversight function is the function of acting
in the capacity of an individual who is responsible, in accordance withSYSC
2.1.3 R (2), for overseeing the establishment and maintenance
of systems and controls in relation to designated
investment business carried on from a branch in the United Kingdom of an incoming EEA firm.
- 21/06/2001
SUP 10.7.7
See Notes
Where an overseas individual has not
delegated this function to a senior
manager in the United
Kingdom, he is likely to be performing this controlled function. However, the FSA anticipates that any
individual carrying out this function will normally be located in the United Kingdom. He may
be the local chief executive or
one or more of the individuals approved to perform the significant management (designated investment business)
function. If the local chief
executive (or other individual) is approved for this function,
this does not mean that all his responsibilities are the concern of the FSA. SUP
10.1.9 R preserves the principle of Home State prudential regulation whenever
it applies and in respect of each controlled
function.
- 21/06/2001
Compliance oversight function (CF10)
SUP 10.7.8
See Notes
The compliance
oversight function is the function of acting in the capacity
of a director or senior manager who is
allocated the function set out in SYSC 3.2.8 R.
- 21/06/2001
SUP 10.7.9
See Notes
SYSC
3.2.8 R provides that a firm which carries on designated investment business with or for customers must allocate
to a director or senior manager the function
of having responsibility for oversight of the firm's compliance and reporting to the governing body in respect
of that responsibility.
- 01/12/2002
SUP 10.7.10
See Notes
Compliance
in SYSC
3.2.8 R means compliance with the rules in COB, COLL or CIS and CASS. The FSA anticipates that some firms will include oversight
of compliance with PRIN, MAR, and other requirements
and standards, within its compliance function. These other responsibilities
would not, however, be brought within the compliance oversight function (see also SUP 10.4.3 G).
- 01/04/2004
SUP 10.7.11
See Notes
Some firms, particularly firms with complex structures
or which are part of a group,
may find it appropriate to seek approval for the group head of compliance and other persons to perform the compliance oversight function.
Examples of other persons include
the senior manager responsible
for compliance in a firm which
is a subsidiary within
the group and
a senior manager in
a reporting line, where compliance is organised along product lines.
- 21/06/2001
SUP 10.7.12
See Notes
Although
a firm may
choose to use the services of an external compliance consultant, the responsibility
for the compliance oversight
function must, in accordance with SYSC 3.2.8 R, rest with one or more directors or senior managers of the firm.
- 21/06/2001
Money laundering reporting function (CF11)
SUP 10.7.13
See Notes
The money
laundering reporting function is the function of acting in the
capacity of the money laundering
reporting officer of a firm.
- 21/06/2001
SUP 10.7.13A
See Notes
A firm's obligations in
respect of its money laundering
reporting officer are set out in SYSC 3.2.6I R and
the scope of application of that rule is
set out in SYSC 1.1.
- 01/03/2006
Actuarial function (CF12) and with-profits actuary function (CF12A)
SUP 10.7.17
See Notes
The actuarial function is the function of acting in the capacity of an actuary appointed by a firm under SUP 4.3.1 R to perform the duties set out in SUP 4.3.13 R.
- 31/12/2004
SUP 10.7.17A
See Notes
The with-profits
actuary function is the function of acting in capacity of an actuary appointed by a firm under SUP 4.3.1 R to perform the duties set out in SUP 4.3.16A R.
- 31/12/2004
SUP 10.7.18
See Notes
The
effect of SUP 4.1.1 R (Application)
and SUP
4.3.1 R (Appointment of an actuary) is that a long-term insurer (unless
it is a certain kind of friendly
society) must appoint one or more actuaries to perform the actuarial function in
respect of all classes of its long-term
insurance business and the with-profits
actuary function in respect of all classes of its with-profits business. The kinds of friendly society to which
the provisions do not apply are:
- 31/12/2004
SUP 10.7.19
See Notes
- 01/01/2005
SUP 10.7.20
See Notes
The actuarial function and the with-profits actuary function do not extend to the giving of actuarial
advice to a firm by
an actuary who has not
been appointed to perform these functions. A person who gives actuarial
advice, whether occasionally or regularly, other than in his capacity as an actuary appointed to perform these functions would
not be performing a controlled
function.
- 01/01/2005
SUP 10.7.21
See Notes
The rules and guidance concerning the
rights and duties of an actuary appointed to perform
either of these functions are set out in SUP 4.3.13 R to SUP
4.3.18 G.
- 31/12/2004
Lloyd's actuary function (CF12B)
SUP 10.7.22
See Notes
The
Lloyd's actuary function is the function of
acting in the capacity of the actuary appointed
under SUP
4.6.1 R to perform the duties set out in SUP 4.6.7 R.
- 01/01/2005
SUP 10.7.23
See Notes
The effect
of SUP
4.6.1 R is that the Society of Lloyd's must appoint an actuary (the "Lloyd's actuary").
- 01/01/2005
SUP 10.8
Systems and control functions
- 01/12/2004
Finance function (CF13)
SUP 10.8.1
See Notes
The finance
function is the function of acting in the capacity of a senior manager with responsibility
for reporting to the governing
body of a firm in
relation to its financial affairs.
- 21/06/2001
SUP 10.8.2
See Notes
This
function is often performed by a senior
manager who is given the title of Financial Controller, Chief
Finance Officer or Finance Officer. The individual may also be given the title
of Finance Director but, if he is a director of
the company,
he should be approved to
perform the director function (and
not the finance function).
The fact that an individual may use one of these titles does not necessarily
mean that he is performing a controlled
function.
- 21/06/2001
Risk assessment function (CF14)
SUP 10.8.3
See Notes
The risk assessment function is
the function of acting in the capacity of a senior manager with responsibility for reporting
to the governing body of
a firm in
relation to setting and controlling its risk exposure.
- 21/06/2001
SUP 10.8.4
See Notes
Depending
on the scale, nature and complexity of its business it may be appropriate
for a firm to
have a separate risk assessment
function: see SYSC 3.2.10 G.
- 21/06/2001
SUP 10.8.5
See Notes
This
function is often performed by a senior
manager who is given the title of Head of Risk, or who is a
member of a Risk Committee. Other examples of titles are Head of Credit Risk
and Head of Market Risk (but the fact that an individual may use one of these
titles does not necessarily mean that he is performing a controlled function).
- 01/12/2002
Internal audit function (CF15)
SUP 10.8.6
See Notes
The internal audit function is
the function of acting in the capacity of a senior manager with responsibility for reporting
to the governing body,
or the audit committee (or its equivalent), of a firm in relation to its adherence to internal
systems and controls, procedures and policies.
- 21/06/2001
SUP 10.8.7
See Notes
Depending
on the scale, nature and complexity of its business it may be appropriate
for a firm to
have a separate internal
audit function: see SYSC 3.2.16 G.
If it does, this will not require the person performing
the function to have any special obligation towards the FSA (such as reporting directly on matters
to the FSA)
nor will this cause the FSA to
call for all internal audit reports as a matter of routine.
- 21/06/2001
SUP 10.8.8
See Notes
This
function is often performed by a senior
manager who is given the title of Head of Internal Audit or
Internal Auditor (but the fact that an individual may use one of these titles
does not necessarily mean that he is performing a controlled function).
- 21/06/2001
SUP 10.9
Significant management functions
- 01/12/2004
Application
SUP 10.9.1
See Notes
SUP 10.9 applies only to a firm which, under SYSC
2.1.1 R, apportions a significant responsibility,
within the description of a
significant management function, to a senior manager of a significant
business unit.
- 21/06/2001
SUP 10.9.2
See Notes
The FSA anticipates
that there will be only a few firms needing
to seek approval for an individual to perform a
significant management function
. In
most firms,
those approved for the governing
functions, required
functions and, where appropriate, the
systems
and controls functions
are likely to exercise
all the significant influence at senior management level.
- 21/06/2001
SUP 10.9.3
See Notes
However, the scale, nature
and complexity of the firm's
business may be such that a firm apportions under SYSC
2.1.1 R a significant responsibility to an individual who is not approved
to perform the governing
functions, required
functions or, where appropriate, the
systems
and controls functions. If so,v the firm should consider whether
the functions of that individual fall within a
significant management function. For the
purposes of the description of the significant
management functions, the following additional factors about
the firm should
be considered:
(1) the size and significance of the firm's business in the United Kingdom; for example,
a firm carrying
on designated investment
business may have a large number of approved persons (for example, in excess of
100 individuals); or a firm carrying
on general insurance business may
have gross written premiums in
excess of £100mn;
(2) the number of regulated activities carried on, or proposed
to be carried on, by the firm and
(if relevant) other members of the group;
(4) its management structure (for example
matrix management); and
(5) the size and significance of its international
operations, if any.
- 21/06/2001
SUP 10.9.4
See Notes
When considering whether a business unit
is significant, the firm should
take into account all relevant factors in the light of the firm's current circumstances and its plans
for the future,
including:
(1) the risk profile of the unit; or
(2) its use or commitment of a firm's capital; or
(3) its contribution to the profit and loss
account; or
(5) the number of customers of the unit; or
(6) any other factor which makes the unit significant to the
conduct of the firm's affairs
so far as relating to the regulated
activity.
- 21/06/2001
SUP 10.9.5
See Notes
The question may arise whether a manager
who is based overseas will be performing a controlled
function (such as the significant
management (designated investment business) function) and should
therefore be an approved
person. This is especially true where the firm operates matrix management. The fact
there is a person performing
the apportionment and oversight
function, and who has responsibility for activities subject
to regulation by the FSA,
may have a bearing on this. It is a factor to take into account when assessing
the likely influence of the overseas manager.
- 21/06/2001
SUP 10.9.6
See Notes
Generally, in relation to a branch of a firm, or a firm which is part of
an overseas group,
where an overseas manager is
responsible for strategy, he will not need to be an approved person. However, where he is responsible for implementing that strategy
in the United Kingdom,
and has not delegated that responsibility to a senior manager in the United Kingdom, he is likely to be performing a
controlled function.
- 21/06/2001
SUP 10.9.7
See Notes
See also SUP
10.7.3 G to
SUP 10.7.5 G
in relation
to matrix management.
- 21/06/2001
Reporting requirement
SUP 10.9.8
See Notes
A firm must,
by no later than 31 July each year, provide the FSA with:
(1) the name of every individual who is approved to perform any
of its significant management
functions; and
(2) brief details of the job performed by
that individual, as at 30 June of that year;
unless it has,
within the 12 months preceding
30 June, already provided the FSA with
that information.- 21/06/2001
SUP 10.9.9
See Notes
The broad description of each significant management function means
that an individual may perform a different function within the significant management function without
needing prior approval. However, the FSA does
require a notification of the job performed by such people once a year. Typically,
a firm will
give this information to the FSA as
a matter of routine during the year but, if not, SUP
10.9.8 R requires it to do so by 31 July. The rule requires the firm to provide a report
only in respect of individuals performing a significant management function: if there
are none, there is no need to provide a report.
- 21/06/2001
Significant management (designated investment business) function (CF16)
SUP 10.9.10
See Notes
(1) The significant
management (designated investment business) function is the
function of acting as a senior
manager with significant responsibility for a significant business
unit which carries on designated
investment business other than dealing in investments as principal, disregarding
article 15 of the Regulated
Activities Order (Absence of holding out etc), (and agreeing to
do so).
(2) This function does not include
any of the activities described in any other controlled function.
- 01/05/2003
SUP 10.9.11
See Notes
Where SUP 10.9.1 R and SUP
10.9.10 R apply, the FSA would expect the senior manager of a significant trading
department, such as equities in a large international firm, possibly with the title of Chief InvestmentOfficer, to be performing
this function. Other examples are senior
managers with responsibility for investment banking, fixed income, derivatives, commodities, trading, custody, asset management,
marketing and sales. The Regional Heads of Sales of an insurer are also likely to be performing
this function. The senior
manager may, for example, be responsible for about 100 individuals approved to perform the investment adviser function.
The FSA would
not expect an individual below this level to need to be approved to perform
the significant management
(designated investment business) function. The fact that an
individual may use one of these titles does not necessarily mean that he is
performing a controlled
function. Whether he does so depends on the circumstances of
the firm and
the application of SUP 10.9.1 R.
For the position in relation to proprietary traders, see SUP
10.9.13 G.
- 15/11/2001
Significant management (other business operations) function (CF17)
SUP 10.9.12
See Notes
(1)
The significant management (other business
operations) function is the function of acting as a senior manager with significant
responsibility for a significant business unit which carries on:
(a)
dealing
in investments as principal, disregarding article 15 of the Regulated Activities Order (Absence
of holding out etc), (or agreeing to do so);
or
(b) an activity which is not designated investment business.
(2) A person may
be a senior manager for
the purposes of this rule even
if he is not managing any or any substantial number of staff, provided he
has responsibility for managing all, or a very substantial proportion, of
the assets or exposures or decision making of the unit.
(3) This function does not include any of
the activities described in any other controlled
function.
- 01/05/2003
SUP 10.9.13
See Notes
Where SUP 10.9.1 R and SUP
10.9.12 R apply, the senior manager could, for example, be the
head of a unit carrying on the activities of: retail banking, personal lending,
corporate lending; leasing assets, issuing credit cards, trade finance, loan
syndicates or debt, salvage or loan recovery, or proprietary trading; or a
member of a committee (that is, a person who,
together with others, has authority to commit the firm) making decisions in these functions.
The senior manager could
also be a proprietary trader whose trading limits are such that he may put,
or potentially put, his firm at
significant risk. This function would not extend to every proprietary trader.
- 01/12/2002
SUP 10.9.13A
See Notes
PRU 9.1.3 R
provides that an insurance intermediary, other than a sole trader, must allocate to a director or senior manager the responsibility
for the firm's insurance mediation activity.PRU 9.1.4 R provides that the firm may allocate this
responsibility to the person performing
the
significant management (other business
operations) function.
- 21/06/2001
SUP 10.9.13B
See Notes
Where
the person performing
the
significant management (other business
operations) function
is also responsible
for the firm's insurance mediation activity,
the words "(insurance mediation)" will be inserted after this controlled function (see PRU 9.1.7 G).
- 21/06/2001
Significant management (insurance underwriting) function (CF18)
SUP 10.9.14
See Notes
(1)
The insurance
underwriting function is the function of acting in the capacity
of a senior manager with
significant responsibility for the effecting by an insurer, or by a managing agent on behalf of a member of the Society of Lloyd's, of contracts of insurance other
than contractually based
investments.
(2) This function does not include any of
the activities described in any other controlled
function.
- 21/06/2001
SUP 10.9.15
See Notes
Where SUP 10.9.1 R and SUP
10.9.14 R apply, the FSA would expect the senior manager with responsibility for a
significant underwriting unit such as marine underwriting in a large insurer
to be performing this function. Other examples are senior managers with underwriting responsibility
for aviation, motor, property, third party liability, term insurance and health
care.
- 21/06/2001
Significant management (financial resources) function (CF19)
SUP 10.9.16
See Notes
(1)
The significant management (financial resources)
function is the function of acting in the capacity of a senior manager with significant
responsibility for the making of material decisions on the commitment of a firm's financial resources,
its financial commitments, its asset acquisitions, its liability management
and its overall cash and capital planning.
(2) This function does not include any of
the activities described in any other controlled
function, including, in particular, the finance function.
- 21/06/2001
SUP 10.9.17
See Notes
Where SUP 10.9.1 R and SUP
10.9.16 R apply, the individual performing this function
would typically be the Chief Treasurer, or a member of a high level committee
(that is, a person who,
together with others, has authority to commit the firm) such as an Asset and Liability Committee
or an Executive Committee or Credit Committee. In the case of the Society of Lloyd's, it
would include being a member of the Market Board (or a successor committee
performing the functions of the Market Board).
- 01/12/2002
Significant management (settlements) function (CF20)
SUP 10.9.18
See Notes
(1)
The significant management (settlements)
function is the function of acting in the capacity of a senior manager with significant
responsibility for processing confirmations, payments, settlements, insurance
claims, client money and
similar matters.
(2) This function does not include any of
the activities described in any other controlled
function, including, in particular, the significant management (financial resources) function.
- 21/06/2001
SUP 10.9.19
See Notes
The
tasks within this controlled
function are often referred to as the back office functions.
Where SUP 10.9.1 R and SUP
10.9.18 R apply, the person performing this function may be known,
for example, as the Head of Payments, Head of Settlements, or Head of Claims.
The fact that an individual may use one of these titles does not necessarily
mean that he is performing a controlled
function. Whether he does so depends on the circumstances of
the firm and
the application of SUP 10.9.1 R.
- 21/06/2001
SUP 10.9.20
See Notes
The significant management (settlements)
function does not include claims
representatives.
- 19/01/2003
SUP 10.10
Customer functions
- 01/12/2004
SUP 10.10.1
See Notes
SUP 10.10 (
Customer functions) applies with respect to activities carried
on from an establishment maintained by the firm (or by its appointed representative) in the United Kingdom.
- 01/12/2002
SUP 10.10.2
See Notes
Without SUP 10.10.1
R the description of the
customer
functions
would extend to functions wherever
they are performed.
The effect of SUP 10.10.1 R is
that the descriptions
arelimited, in
relation to regulated activities with
an overseas element, in a manner which is broadly consistent with the scope
of conduct of business regulation.
- 01/12/2002
SUP 10.10.3
See Notes
The customer functions have to do with giving advice on, dealing and arranging deals in and managing investments; they have no application to banking business such as deposit taking and lending, nor to general insurance business.
- 21/06/2001
The customer conditions (the second and third conditions)
SUP 10.10.4
See Notes
Each
customer function is one which will involve
the person performing
it in dealing with
customers,
(and for the corporate
finance adviser function, clients), or dealing
with property of
customers
, of a firm in a manner substantially
connected with the carrying on of a regulated
activity of the firm.
- 21/06/2001
SUP 10.10.5
See Notes
SUP 10.10.4
R gives effect to sub-sections (6) and (7) of section
59 of the Act (referred
to in that section as the second and third conditions).
Customer is
given the meaning in the Glossary (which
is not the same as the definition given in section 59 (11) of the Act).
- 21/06/2001
SUP 10.10.6
See Notes
The FSA interprets
the phrase "dealing with" as including having contact with customers and extending beyond "dealing"
as used in the phrase "dealing in investments". "Dealing in" is used in Schedule
2 to the Act to
describe in general terms the regulated
activities which are specified in Part II of the Regulated Activities Order.
- 21/06/2001
Investment adviser function (CF21)
SUP 10.10.7
See Notes
(1) The investment
adviser function is the function of:
(b) performing functions within the customer trading function in
connection with advising
on investments other than
non-investment
insurance contract.
(2) This function does not include:
(a) the investment
adviser (trainee) function; and
(b) the pension
transfer specialist function.
(3) This function does not extend to an individual
who is based overseas and who, in a 12 month period,
spends no more than 30 days in
the United Kingdom to
the extent that he is appropriately supervised by a person approved for this function.
- 01/12/2002
SUP 10.10.8
See Notes
The function of advising on investments would include, for
example, giving advice to clients in
connection with corporate
finance business. It does not include managing investments (see the investment management function)
or advising on syndicate participation at Lloyd's (see the adviser
on syndicate participation at Lloyd's function).
- 21/06/2001
SUP 10.10.9
See Notes
When considering an application for approval in relation to
this controlled function,
the FSA may
ask for evidence of the individual's competence. TC 2.4.1 R provides that a firm must
ensure that an employee is
not allowed to engage in an activity unless the employee has been assessed as competent in
that activity, in accordance with TC 2.4.5 R,
or is appropriately supervised. TC 2.4.5 R provides
that a firm must,
before an employee can
be assessed as competent, ensure that the employee has been assessed as able to apply
the knowledge and skills necessary to engage without supervision in the relevant
activity and has passed an appropriate examination.
- 01/07/2004
SUP 10.10.10
See Notes
The FSA would
expect an individual from overseas to be accompanied on a visit to a customer. TC 2.5.5 R (1) provides that the firm will
have to be satisfied that the individual has at least three years' up-to-date
relevant experience obtained outside the United
Kingdom. However, the remaining provisions of TC 2.5.5 R (1) are disapplied in these circumstances (except for an individual
who gives advice to private
customers on packaged
products or is a broker
fund adviser). The effect of this is that the individual who
may previously have been required to comply fully with the United Kingdom examination requirements,
now need not pass the relevant regulatory module of an appropriate examination
(see TC
2.5.5 R (3) and TC 2.5.5 R (4)).
- 01/07/2004
Investment adviser (trainee) function (CF22)
SUP 10.10.11
See Notes
The investment
adviser (trainee) function is the function of advising on investments other than a non-investment insurance contract where
the individual performing the function has not yet been assessed as competent
in accordance with the rules in
the Training and Competence sourcebook (TC).
- 21/06/2001
SUP 10.10.12
See Notes
If a firm notifies the FSA that an individual who is performing
the investment adviser
(trainee) function has passed the appropriate examination, and
has been assessed as competent, the FSA will
treat this as an application for the individual to perform the investment adviser function.
A Form E (SUP 10 Annex 8 G)
may be used for this purpose.
- 21/06/2001
Corporate finance adviser function (CF23)
SUP 10.10.13
See Notes
(1) The corporate
finance adviser function is the function of:
(b) performing functions within the customer trading function in
connection with giving that advice.
(2) This function does not extend to an individual
who is based overseas and who, in a 12 month period,
spends no more than 30 days in
the United Kingdom to
the extent that he is appropriately supervised by a person approved for this function.
- 01/12/2002
SUP 10.10.13A
See Notes
The FSA would
expect an individual from overseas to be accompanied on a visit to a customer. TC 2.5.5 R (1) provides that the firm will
have to be satisfied that the individual has at least three years' up-to-date
relevant experience obtained outside the United
Kingdom. However, the remaining provisions of TC 2.5.5 R (1) are disapplied in these circumstances. The effect of this is that
the individual, who may previously have been required to comply fully with
the United Kingdom examination
requirements, now need not pass the relevant regulatory module of an appropriate
examination (seeTC 2.5.5 R (3) and (4)).
- 01/07/2004
Pension transfer specialist function (CF24)
SUP 10.10.14
See Notes
The pension
transfer specialist function is the function of giving advice
or performing related activities in connection with:
(1)
pension
transfers; or
(2) opt-outs;
for private customers.- 21/06/2001
Adviser on syndicate participation at Lloyds's function (CF25)
SUP 10.10.15
See Notes
The adviser
on syndicate participation at Lloyd's function is the function
of giving advice to a person to
become, or continue or cease to be, a member of a particular Lloyd's
syndicate.
- 21/06/2001
Customer trading function (CF26)
SUP 10.10.16
See Notes
- (1) The customer trading function is the function of dealing, as principal or as agent, and arranging (bringing about) deals in investments other than a non-investment insurance contract with or for, or in connection with, private customers and intermediate customers where:
- (a) the dealing or arranging deals is governed by COB 7 (Dealing and managing); and
- (b) the person performing the function is not advising on or managing investments unless approved to perform the investment adviser function or the investment management function.
- (2) This function does not extend to an individual who is based overseas and who, in a 12 month period, spends no more than 30 days in the United Kingdom to the extent that he is appropriately supervised by a person approved for this function.
- 01/12/2002
SUP 10.10.17
See Notes
A person who
advises on or manages investments must
be approved to perform the investment
adviser function or the investment
management function (see SUP 10.10.7
R and SUP 10.10.20
R) and does not need to be separately approved for the customer trading function (see SUP 10.10.16 R).
- 21/06/2001
SUP 10.10.18
See Notes
COB 7 applies
to a firm conducting designated investment business.
Where a firm's proprietary
trader may deal with a private or intermediate customer,
the firm should
ensure that the trader is approved under the customer trading function.
- 21/06/2001
SUP 10.10.19
See Notes
The customer
trading function does not extend to the individual who, on the
instructions of the customer,
simply inputs the customer's instructions
into an automatic execution system where no discretion is or may be exercised
by the individual carrying out the activity. Nor does it extend to merely
introducing a customer to
a firm or
distributing advertisements.
- 21/06/2001
Investment management function (CF27)
SUP 10.10.20
See Notes
(1) The investment
management function is the function of:
(a) acting in the capacity of an investment manager; and
(b) performing functions within:
in connection
with acting as an investment
manager.(i) the investment
adviser function; and
(ii) the customer trading function;
(2) This function does not extend to an individual who
is based overseas and who, in a 12 month period,
spends no more than 30 days in
the United Kingdom to
the extent that he is appropriately supervised by a person approved for this function.
- 01/12/2002
SUP 10.10.21
See Notes
Note that the definition of investment manager is
a person who,
in summary, manages designated
investments on a discretionary or non-discretionary basis under
the terms of a discretionary or non-discretionary management agreement. If
a person seeks
to perform the controlled
function of advising
on investments outside of the agreement, he will need to be
approved for the investment
adviser function.
- 01/12/2002
SUP 10.10.22
See Notes
The FSA would
expect an individual from overseas to be accompanied on a visit to a customer. TC 2.5.5 R (1) provides that the firm will
have to be satisfied that the individual has at least three years' up-to-date
relevant experience obtained outside the United
Kingdom. However, the remaining provisions of TC 2.5.5 R (1) are disapplied in these circumstances. The effect of this is that
the individual, who may previously have been required to comply fully with
the United Kingdom examination
requirements, now need not pass the relevant regulatory module of an appropriate
examination (see TC 2.5.5 R (3) and (4)).
- 01/07/2004
SUP 10.11
Procedures relating to approved persons
- 01/12/2004
Forms
SUP 10.11.1
See Notes
The forms listed in SUP
10.11.2 G are referred to in SUP
10.11 (Procedures relating to approved persons) to SUP 10.14 (Further questions).
- 21/06/2001
SUP 10.11.2
See Notes
Approved persons forms
| Form A | SUP 10 Ann 4D | Application to perform controlled functions under the approved persons regime |
| Form B | SUP 10 Ann 5R | Notice to withdraw an application to perform controlled functions under the approved persons regime |
| Form C | SUP 10 Ann 6R | Notice of ceasing to perform controlled functions |
| Form D | SUP 10 Ann 7R | Notification of changes in personal information or application details |
| Form E | SUP 10 Ann 8G | Internal transfer of an approved person |
- 21/06/2001
SUP 10.11.3
See Notes
A summary of the forms and their purposes
is in SUP 10 Annex 2 G. A summary of FSA procedures is in SUP
10 Annex 3. For the method of notification to the FSA, see SUP 15.7 (Form and method of notification).
- 21/06/2001
SUP 10.11.4
See Notes
Unless the context otherwise requires,
in SUP 10.11 (Procedures relating to approved persons) to SUP 10.14 (Further questions) where
reference is made to a firm,
this also includes an applicant for Part
IV permission, and other persons seeking
to carry on regulated activities as
an authorised person.
- 21/06/2001
SUP 10.11.5
See Notes
Forms B, C, D and E can only be submitted
in respect of an approved
person by the firm that
submitted an approved person's original
application (that is, Form A).
- 21/06/2001
SUP 10.11.6
See Notes
Copies of Forms A, B, C, D and E may
be obtained from the FSA website or from the Authorisation
and Approvals Department. To
contact the Authorisation
and Approvals Department for general enquiries:
(1) telephone 020 7066 0019; or
(2) fax 020 7066 0017; or
(3) write to:
Authorisation and Approvals
Department
The Financial Services
Authority
25 The North Colonnade
Canary Wharf
LONDON E14 5HS; or
(4) e-mail iva@fsa.gov.uk
- 01/12/2004
SUP 10.12
Application for approval and withdrawing an application for approval
- 01/12/2004
When to apply for approval
SUP 10.12.1
See Notes
- 21/06/2001
How to apply for approval
SUP 10.12.2
See Notes
- 21/06/2001
Who should make the application?
SUP 10.12.3
See Notes
In accordance with section 60 of the Act (Applications for approval),
applications must be submitted by, or on behalf of, the firm itself, not by the candidate. Usually this will be the firm that is employing
the candidate to
perform the controlled
function. Where a firm has
outsourced the performance of a controlled
function, the details of the outsourcing determine where responsibility
lies and whom the FSA anticipates
will submit approved persons forms. SUP 10.12.4 G describes some common
situations. The firm which
is outsourcing is referred to as "A" and the person to whom the performance of the function
has been outsourced, or which makes the arrangement for
the function to be performed, is referred to as "B". In each situation, A
must take reasonable care to ensure that, in accordance with section 59(2)
of the Act,
no person performs
a controlled function under
an arrangement entered
into by its contractor in relation to the carrying on by A of a regulated activity, without
approval from the FSA.
See also SYSC 3.2.4 G and if applicable IPRU (BANK) OS, IPRU (BSOC) OS, and for insurers
SYSC 3A.9
.
- 31/12/2004
SUP 10.12.4
See Notes
Outsourcing arrangements
| Outsourcing arrangements | Submitting form | |
| Firm A to firm B | The FSA will consider A to have taken reasonable care if it enters into a contract with B under which B is responsible for ensuring that the relevant controlled functions are performed by approved persons, and that it is reasonable for A to rely on this | Firm B submits approved persons forms on behalf of firm A |
| Outsourcing by A to B (both being a member of the same United Kingdom group and each having its registered office in the United Kingdom) | See SUP 10.3.4 G | See SUP 15.7.8 G |
|
(i)
A to B, where B is a non-authorised
person not part of the samegroup as
A (ii) A to B, where A is a branch of an overseas firm in the United Kingdom, and B is an overseas undertaking of the samegroup (iii) A to B, where A is a UK authorised subsidiary of an overseas firm, and B is an overseas undertaking of the same group | Responsibility for (as opposed to the performance of) any activity outsourced to B will remain with A. See SYSC 3.2.4 G | A ensures that an individual approved under one of the significant influence functions has responsibility for the outsourced arrangement and A submits a form in relation to that individual |
- 21/06/2001
SUP 10.12.4A
See Notes
Where the notification of an appointed representative (SUP
12.7.1 R) is linked to an application for approval
(SUP 10.12 (Applications for approval
and withdrawing an application for approval)), any delay in receiving the
notification under SUP 12.7.1 R may delay the FSA's approval of the
individuals employed by that appointed
representative who will be performing controlled functions for the firm.
- 01/12/2002
Processing an application
SUP 10.12.5
See Notes
The Act allows
the FSA three months from the time it
receives a properly completed application to consider it and come to a decision.
The FSA must
either grant the application or, if it proposes not to grant an application,
issue a warning notice (see
DEC 2
). The FSA will deal with cases
more quickly than this whenever circumstances allow and will try to meet the
standard response times published on the website and in its Annual Report.
However, if an application is incomplete when received, or the FSA has knowledge that,
or reason to believe that, the information is incomplete, then the processing
time will be longer than the published standard response times.
- 21/06/2001
SUP 10.12.6
See Notes
Application forms must always be completed
fully and honestly. Further notes on how to complete the form are contained
in each form. If forms are not completed fully and honestly, applications
will be delayed
and, in some cases, possibly rejected.A person who provides information
to the FSA that
is false or misleading may commit a criminal offence.
- 01/03/2005
SUP 10.12.7
See Notes
- 21/06/2001
SUP 10.12.8
See Notes
- 21/06/2001
SUP 10.12.9
See Notes
The FSA may
grant an application only if it is satisfied that the candidate is a fit and proper person to perform the controlled function stated
in the application form. Responsibility lies with the firm making the application to satisfy the FSA that the candidate is fit and proper
to perform the controlled
function applied for.
- 21/06/2001
SUP 10.12.10
See Notes
- 21/06/2001
Decisions on applications
SUP 10.12.11
See Notes
Whenever it grants an application, the FSA will confirm this
in writing to all interested
parties.
- 21/06/2001
SUP 10.12.12
See Notes
If the FSA proposes to refuse an application in
relation to one or more controlled
functions, it must follow the procedures for issuing warning and decision notices to all interested parties. The requirements relating
to warning and decision notices and the process for referrals to the Financial Services and Markets Tribunal are in
DEC 2 and DEC 5 respectively.
- 21/06/2001
Withdrawing an application for approval
SUP 10.12.13
See Notes
- 21/06/2001
SUP 10.12.14
See Notes
- 21/06/2001
SUP 10.13
Changes to an approved person's details
- 01/12/2004
Moving within a firm
SUP 10.13.1
See Notes
An approved
person's job may change from time to time as a result, for instance,
of a change in personal job responsibilities or a firm's regulated
activities. Where the changes will involve the person performing one
or more different controlled
functions from those for which approval has already been granted,
then an application must be made to the FSA for
approval for the person to
perform those controlled
functions. The firm must
take reasonable care to ensure that an individual does not begin performing
a controlled function until
the FSA has
granted approved person status
to that individual in respect of that controlled
function. This applies to individuals seeking approval in respect
of a controlled function within
the firm for
which they already perform controlled
functions. If the approved
person is ceasing to perform controlled functions, as well as applying
for approval in
respect of additional controlled
functions, then refer to SUP 10.13.3
D.
- 21/06/2001
SUP 10.13.2
See Notes
Form A must be used to apply for an individual to perform
further controlled functions for
a firm for
which he already performs a controlled
function as an approved
person (see SUP 10.12.2
D). It is not mandatory to complete all parts of the
form. See the notes attachedto theform for full details.
- 21/06/2001
SUP 10.13.3
See Notes
A firm must
use Form E where an approved
person is both ceasing to perform one or more controlled functions and needs to be approved
in relation to one or more new controlled
functions within the same firm or group.
- 01/11/2004
Moving between firms
SUP 10.13.4
See Notes
If it is proposed that an approved person will no longer be performing a controlled function under
an arrangement entered
into by one firm or
one of its contractors, but will be performing the same or a different controlled function under
an arrangement entered
into by a new firm or
one of its contractors (whether or not the new firm is in the same group as the old firm), the new firm will be required to make a fresh application
for the performance of the controlled
function by that person.
- 21/06/2001
SUP 10.13.5
See Notes
In certain circumstances, when the FSA already has the information
it would usually require, a shortened version of Form A may be completed. See the notes attached to the form for full details.
- 21/06/2001
Ceasing to perform a controlled function
SUP 10.13.6
See Notes
A firm must
submit to the FSA a
completed Form C no later than
seven business days after
an approved person ceases
to perform a controlled
function.
- 21/06/2001
SUP 10.13.7
See Notes
(1) A firm must
notify the FSA as
soon as practicable after it becomes aware, or has information which reasonably
suggests, that it will submit a qualified Form C in respect of an approved person.
(2) Form C is qualified if the information
it contains:
(a) relates to the fact that the firm has dismissed, or
suspended, the approved
person from its employment; or
(b) relates to the resignation by the approved person while under
investigation by the firm,
the FSA or
any other regulatory body;
or
(c) otherwise reasonably suggests that it
may affect the FSA's assessment
of the approved person's fitness
and propriety.
- 01/12/2002
SUP 10.13.8
See Notes
Notification under SUP
10.13.7 R may be made by telephone, fax or email and
should be made, where possible, within one business day of the firm becoming aware of the information. If
the firm does
not submit Form C, it should inform the FSA in
due course of the reason. This could be done using Form D, if appropriate.
- 21/06/2001
SUP 10.13.9
See Notes
A firm is
responsible for notifying the FSA if
any approved person has
ceased to perform a controlled
function under an arrangement entered
into by its appointed
representative or former appointed
representative
- 21/06/2001
SUP 10.13.10
See Notes
A firm can
submit Form C or Form E to the FSA in
advance of the cessation date. When a person ceases
the arrangement under
which he performs a controlled
function, he will automatically cease to be an approved person in relation
to that controlled function.
A person can
only be an approved person in
relation to a specific controlled
function. Therefore, a person is
not an approved person during
any period between ceasing to perform one controlled function (when he is performing
no other controlled function)
and being approved in
respect of another controlled
function.
- 21/06/2001
SUP 10.13.11
See Notes
Sending forms promptly will help to ensure
that any fresh application can be processed within the standard response times.
- 21/06/2001
SUP 10.13.12
See Notes
(1) If a firm (A):
(b) requests another firm (B), as a former employer of that person, for a reference
or other information in connection with that appointment; and
(c) indicates to B the purpose of the request;
B must, as soon
as reasonably practicable, give to A all relevant information of which it
is aware.(2) When giving the information to A under
(1), B must have regard to the purpose of the request and in particular to:
(a) any outstanding liabilities of that person from commission
payments;
(c) section 5 of Form A in SUP
10 Annex 4 (Application to perform controlled functions
under approved persons regime);
(d)
FIT 2
(Main assessment criteria); and
(e) if SUP 16.8.1 G (1) (Persistency reports from insurers) applies to B,
the persistency of any life
policies sold by that person.
- 01/12/2002
SUP 10.13.13
See Notes
A firm supplying
a reference in accordance with SUP 10.13.12
R owes a duty to its former employee and the recipient firm to exercise due skill and care in the
preparation of the reference. The reference should be accurate and based on
documented fact. The firm may
give frank and honest views, but only after taking reasonable care both as
to factual content, and as to the opinions expressed, and verifying the information
upon which they are based.
- 21/06/2001
Changes to an approved person's personal details
SUP 10.13.14
See Notes
If an approved person's title, name or national
insurance number changes, the firm for
which the person performs
a controlled function must
notify the FSA on
Form D of that change
within seven business days of
the firm becoming
aware of the matter.
- 21/06/2001
SUP 10.13.15
See Notes
The duty to notify in SUP
10.13.14 R does not apply to changes to an approved person's private
address.
- 21/06/2001
SUP 10.13.16
See Notes
If a firm becomes aware of information which would
reasonably be material to the assessment of an approved person's, or a candidate's, fitness and propriety (see FIT), it must inform the FSA on Form D as soon as practicable.
- 21/06/2001
SUP 10.13.17
See Notes
The duty to notify in SUP
10.13.16 R extends to any circumstances that would normally
be declared when giving the information required for section 5 of Form A or
matters considered in FIT 2.
- 21/06/2001
SUP 10.13.18
See Notes
(1) If, in relation to a firm which has completed Form A (SUP 10 Annex
4), any
of the details in
section 3.01 (Arrangementsand controlled
functions) are to change, the firm must notify the FSA on Form D .
(2) The notification must be made as soon as reasonably practicable
after the firm becomes
aware of the proposed change.
(3) Paragraphs (1) and (2) also apply to
a firm in
respect of an approved person,
to whom the grandfathering arrangements applied as if the firm had completed a Form A for that person.
- 01/12/2002
SUP 10.13.19
See Notes
An example of where a firm should use Form D is when an individual
who is appointed by one appointed
representative becomes employed by another appointed representative but continues to
perform the investment
adviser function for the firm.
The firm should
notify the FSA by
completing Section 1.07 of Form D.
- 01/12/2002
SUP 10.13.20
See Notes
The grandfathering arrangements applying
to an approved person referred
to in SUP 10.13.18 R are contained in Part
VI (Approved persons) of the Financial Services and Markets Act (Transitional
Provisions) (Authorised Persons etc.) Order 2001 (SI 2001/2636). Article 72
of that Order provides, in general terms, that, where a person was performing a function at the beginning
of 1 December 2001 which became a controlled
function under the Act,
the continued performance of that function by that person was taken to be approved by the FSA. That person therefore became
an approved person without
the need for a Form A.
- 01/12/2002
SUP 10.14
Further questions
- 01/12/2004
SUP 10.14.1
See Notes
A list of frequently asked questions
and answers is at SUP 10 Annex 1.
- 21/06/2001
SUP 10.14.2
See Notes
If the firm or its advisers have further questions,
they should contact the FSA'sIndividual Vetting
and Approval department(see SUP
10.11.6 G).
- 21/06/2001
SUP 10 Annex 1
Frequently asked questions
- 01/12/2004
See Notes
| Question | Answer | |
| Requirements of the regime | ||
| 1 | Does pre-approval apply to individuals taking up a new controlled function within the same firm? | Yes. Pre-approval applies in all circumstances (see section 59 of the Act (Approval for particular arrangements)) except under the temporary ('12 weeks') provision. See SUP 10.5.5 R and question 2. |
| 2 | What are the procedures for 'emergency situations'? | Individuals may perform significant influence function for up to 12 weeks in any consecutive 12 month period without requiring approval. When it becomes clear that a person will be performing the function on a permanent basis, then an application for approval should be made. However, there is no provision for individuals to perform the customer functions on a continuing basis without approval. See SUP 10.5.5 R. |
| 3 | Can a person be approved for more than one controlled function? | Yes. A firm will need to seek approval in respect of each controlled function a person is to perform. |
| 4 | Do the controlled functions apply to an incoming EEA firm that is providing cross border services into the United Kingdom? | No. The approved persons regime does not apply to cross border services. See SUP 10.1.6 R. |
| 5 | May any activity be outsourced by a firm? | Yes. But if that activity constitutes a regulated activity, the person to whom it is outsourced will itself need permission. |
| 6 | Can a significant influence function be outsourced? | It is a question of fact in each case who is performing a significant influence function. These functions are mostly described at a high level of responsibility, that is, for example, the director of a company or a partner in a partnership. The persons performing these functions cannot avoid their ultimate responsibility and therefore the need for approval. However, some of the significant influence functions may be performed by a person who is specifically brought in to do the job, for example the chief executive function (where it is to be performed by a body corporate) and the actuarial and with-profits actuary functions. |
| 7 | Do Lloyd's underwriting agents still require registration with Lloyd's? | Yes. Approval for a controlled function is not sufficient. |
| 8 | What should a firm do if it is unsure whether an individual needs approval? | The firm should contact the Authorisation and Approvals Department. See SUP 10.11.6 G. |
| Submitting an application | ||
| 9 | Who applies for approval? | The firm. See section 60 of the Act (Applications for approval). |
| 10 | What is the role of the candidate in the application process? | Before the firm submits Form A it must verify the information contained in it. As part of this verification, the Form provides for the candidate to confirm the accuracy of the information given by the firm so far as it relates to him. |
| 11 | What checks musta firm make on a candidate before submitting an application for approval from the FSA? | The FSA expects firms to perform due and diligent enquiries into their candidates. Note also the requirements of ENF 8.12.2 G and TC2.2.1 R. |
| 11A | Should these checks include a check of criminal records? | It is for senior management to decide what checks should be made. By virtue of the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (see Articles 3 and 4 of the Order), the FSA and the industry also have a right to ask about spent, as well as unspent, criminal convictions for employment purposes about candidates for approved person status (see Question 5.01a of Form A (Application to perform controlled functions under the approved persons regime)). Note also the provisions of ENF 8.12.2 G (Publication) and TC2.2.1 R (Recruitment). |
| 12 | What is the "fit and proper" test for approval? | Section 61(1) of the Act (Determination of applications) provides that the FSA may grant an application only if it is satisfied that the candidate is a fit and proper person to perform the relevant function. In determining this question, the Act sets out the matters to which the FSA may have regard (section 61(2)) and the FSA has given guidance on this in FIT. |
| 13 | If a firm is unsure whether or not something may have an impact upon an individual's fitness and propriety, should it be disclosed? | Yes, always. The deliberate non-disclosure of material facts is taken very seriously by the FSA as it is seen as possible evidence of current dishonesty. Therefore, if in doubt, disclose. |
| 14 | What happens if adverse information comes to light after the application form has been submitted or after the individual has been approved? | The firm must inform the FSA at the earliest opportunity. See SUP 10.13.16 R. |
| 15 | Will the FSA consider an application in respect of a candidate who has not yet signed a contract with the firm? | Yes, as the FSA will consider the arrangement under which the candidate will perform the function. However, the FSA will not consider speculative or provisional applications - such as for the candidates in an election to a mutual society Board.The FSA must be informed immediately of any material changes to the information provided on the application form which arises before the application has been determined. All changes must be communicated to the FSA by the firm making the application (seeSUP 15.6.4 R). Failure to notify the FSA may result in a delay in processing or rejection or both. |
| 16 | How can we get a supply of application forms (Form A)? | These can either be ordered through the Authorisation and Approvals Departmentor obtained from the FSA website at www.fsa.gov.uk. There is no charge for an application form. |
| 17 | Is there a separate fee for making an application for approved person status? | No. |
| 18 | Must all gaps in previous employment be explained? | Yes. |
| FSA procedures | ||
| 19 | Does the FSA verify the information provided to it? | Yes, as far as possible, information is verified. |
| 20 | Will the FSA handle information confidentially? | Yes. The FSA is obliged to handle all information confidentially and is subject to the provisions of the Data Protection Act 1998. |
| 21 | How long will the FSA take to process an application for approved person status? | Generally the FSA will handle this within seven business days for significant influence functions and four business days for customer functions. However, if information is missing, or the information provided gives the FSA cause for concern, processing time will almost always be longer. In each case, the FSA will notify the firm of any extension to the processing times. |
| 22 | Will the firm and individual be notified if there is a delay in processing the application form? | Yes. The FSA will contact the firm explaining the position and, where appropriate, giving the reasons for delay. It will then be the responsibility of the firm to keep the candidate and any other interested party informed. |
| 23 | How are non-routine cases handled? | Refer to DEC 2 Annex 2 . |
| 24 | Can the FSA apply conditions to an approved person? | No. The application can either be granted or refused. The Act provides no equivalent to the limitations or requirements which may be included in permissions. If the application is refused, the firm may re-apply in respect of the same individual but a different controlled function. If it is considering doing this, the firm is encouraged to discuss the matter with the FSA.Where there are reasonable grounds for doing so, the FSA may require a firm to provide information about an approved person (see section 165 of the Act (Power to require information)). |
| 25 | Will the firm be issued with confirmation of approval? | Yes. The firm will be sent a letter setting out the effective date of approval together with the controlled function for which the individual has been approved. It will then be the firm's responsibility to inform the individual and any other interested party, for example any appointed representative. |
| Withdrawing an application | ||
| 26 | Can a firm withdraw its application? | Yes, but only with the consent of the candidate. See section 61(5) of the Act (Determination of applications). |
| 27 | What happens if the individual refuses to consent to the withdrawal of the application? | The FSA will consider with all interested parties what to do. If it proposes to refuse the application, it will give a warning notice to all interested parties. See section 62 of the Act (Applications for approval: procedure and right to refer to the Tribunal). |
| 28 | Can the firm withdraw only part of an application - say, in relation to a specific controlled function? | The FSA will allow the firm to amend its application at any time before determination with the consent of all other interested parties. Whether the amendment will have the effect of amounting to a fresh application will be considered on a case by case basis. |
| Conduct of approved persons | ||
| 29 | How and when must the firm report to the FSA potentially adverse information about an approved person's fitness and propriety? | Normally, the firm should report such matters to the FSA on Form D once it is reasonably satisfied as to the information's validity. See SUP 10.13.16 R. See also, Principle for Businesses 11 (PRIN) and Statements of Principle 4 (APER). However, if an approved person is dismissed, is suspended, or resigns while under investigation by the firm, the FSA or another regulatory body, or there are any other matters that might affect the individual's fitness and propriety to perform a controlled function, the firm should inform the FSA (SUP 10.13.7 R) that it will be submitting a Form C containing adverse information. Full details must then be provided within seven business days, on the Form C. See SUP 10.13.6 R. |
| 30 | For how long are individuals accountable to the FSA after ceasing to be an approved person? | A person is guilty of misconduct if, while an approved person, he fails to comply with a Statement of Principle or is knowingly concerned in the contravention by a firm of a requirement in the Act or the Handbook. But the FSA may not bring proceedings after two years from when it first knew of the misconduct. |
| Activity | Paragraph 1 of the table in TC 2.1.4R | Controlled Function | SUP |
| Advising and dealing | (a) - (c), (d) and (e), (f) - (o) | investment adviser function (CF21) investment adviser (trainee) function (CF22) |
10.10.7R 10.10.11R |
| Managing | (d) and (e) | investment management function (CF27) | 10.10.20R |
| Advising (without dealing) | (f) - (h) | investment adviser function (CF21) | 10.10.7R |
| investment adviser (trainee) function (CF22) | 10.10.11R | ||
| (i) | corporate finance adviser function (CF23) | 10.10.13R | |
| (j) - (m) | investment adviser function (CF21) | 10.10.7R | |
| investment adviser (trainee) function (CF22) | 10.10.11R | ||
| (n) | adviser on syndicate participation at Lloyd's function (CF25) | 10.10.15R | |
| (o) | pension transfer specialist function (CF24) | 10.10.14R |
- 01/10/2005
SUP 10 Annex 2
Approved person regime: summary of forms and their use
- 01/12/2004
Approved person regime: summary of forms and their use
See Notes
- 21/06/2001
SUP 10 Annex 3
Summary of procedures on applications for approved status
- 01/12/2004
See Notes
- 21/06/2001
SUP 10 Annex 4
Form A: Application to perform controlled functions under the approved person regime
- 01/12/2004
See Notes
This annex consists only of one or more
forms. Forms are to be found through the following address:
Supervision forms - Notes from direction in SUP 10.12
Supervision forms - Notes from direction in SUP 10.12
- 01/07/2004
SUP 10 Annex 5
Form B: Notice to withdraw an application to perform controlled functions under the approved persons regime
- 01/12/2004
See Notes
This annex consists only of one or more
forms. Forms are to be found through the following address:
Supervision forms - SUP 10 Annex 5
Supervision forms - SUP 10 Annex 5
- 01/07/2004
SUP 10 Annex 6
Form C: Notice of ceasing to perform controlled functions
- 01/12/2004
See Notes
This annex consists only of one or more
forms. Forms are to be found through the following address:
Supervision forms - SUP 10 Annex 6
Supervision forms - SUP 10 Annex 6
- 01/12/2002
SUP 10 Annex 7
Form D: Notification of changes in personal information or application details
- 01/12/2004
See Notes
This annex consists only of one or more
forms. Forms are to be found through the following address:
Supervision forms - SUP 10 Annex 7
Supervision forms - SUP 10 Annex 7
- 01/12/2002
SUP 10 Annex 8
Form E: Internal transfer of an approved person
- 01/12/2004
See Notes
This annex consists only of one or more
forms. Forms are to be found through the following address:
Supervision forms - SUP 10 Annex 8
Supervision forms - SUP 10 Annex 8
- 01/12/2002