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Status: You are viewing the version of the handbook as on 2016-02-03.

APER 3.1 Introduction

APER 3.1.1G

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APER 3.1.1AGRP

8This Code of Practice for Approved Persons is issued under section 64 of the Act (Conduct: statements and codes) for the purpose of helping to determine whether or not an approved person's conduct complies with a Statement of Principle. The code sets out descriptions of conduct which, in the FCA's opinion, do not comply with the relevant Statements of Principle. The code also sets out certain factors which, in the opinion of the FCA, are to be taken into account in determining whether an approved person's conduct complies with a particular Statement of Principle. The description of conduct, the factors and related provisions are identified in the text by the letter 'E' as explained in chapter 6 of the Reader's Guide.

APER 3.1.2GRP

The Code of Practice for Approved Persons in issue at the time when any particular conduct takes place may be relied on so far as it tends to establish whether or not that conduct complies with a Statement of Principle.

APER 3.1.3GRP

The significance of conduct identified in the Code of Practice for Approved Persons as tending to establish compliance with or a breach of a Statement of Principle will be assessed only after all the circumstances of a particular case have been considered. Account will be taken of the context in which a course of conduct was undertaken, including the precise circumstances of the individual case, the characteristics of the particular accountable function8 and the behaviour to be expected in that function.

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APER 3.1.4GRP
  1. (1)

    An approved person will only be in breach of a Statement of Principle where he is personally culpable. Personal culpability arises where an approved person's conduct was deliberate or where the approved person's standard of conduct was below that which would be reasonable in all the circumstances (see DEPP 6.2.4 G (Action against approved persons under section 66 of the Act2)).

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  2. (2)

    For the avoidance of doubt, the Statements of Principle do not extend the duties of approved persons beyond those which the firm owes in its dealings with customers or others.

APER 3.1.5GRP

In particular, in determining whether or not an approved person's conduct complies with a Statement of Principle, the appropriate regulator8 will take into account the extent to which an approved person has acted in a way that is stated to be in breach of a Statement of Principle.

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APER 3.1.6GRP

The Code of Practice for Approved Persons (and in particular the specific examples of behaviour which may be in breach of a generic description of conduct in the code) is not exhaustive of the kind of conduct that may contravene the Statements of Principle. The purpose of the code is to help determine whether or not a person's conduct complies with a Statement of Principle. The code may be supplemented from time to time. The appropriate regulator8 will amend the code if there is a risk that unacceptable practice may become prevalent, so as to make clear what conduct falls below the standards expected of approved persons by the Statements of Principle.

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APER 3.1.7G

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APER 3.1.7AGRP

8Statements of Principle 1 to 4 apply to all approved persons. A person performing an accountable significant-influence function is also subject to the additional requirements set out in Statements of Principle 5 to 7 in performing that accountable function. Those responsible under SYSC 2.1.3 R or SYSC 4.4.5 R (Apportionment of responsibilities) for the firm's apportionment obligation will be specifically subject to Statement of Principle 5 (and see, in particular, APER 4.5.6 E). In addition, it will be the responsibility of any such approved person to oversee that the firm has appropriate systems and controls under Statement of Principle 7 (and see, in particular, APER 4.7.3 E).

APER 3.1.8G

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APER 3.1.8AGRP

8In applying Statements of Principle 5 to 7, the nature, scale and complexity of the business under management and the role and responsibility of the individual performing an accountable higher management function within the firm will be relevant in assessing whether an approved person's conduct was reasonable. For example, the smaller and less complex the business, the less detailed and extensive the systems of control need to be. The FCA will be of the opinion that an individual performing an accountable significant-influence function may have breached Statements of Principle 5 to 7 only if his conduct was below the standard which would be reasonable in all the circumstances. (See also APER 3.3.1 E (3) to APER 3.3.1 E (5).)

APER 3.1.9GRP

UK domestic firms with a premium listing of equity shares6 are subject to the UK Corporate Governance Code4, whose internal control provisions are amplified in the publication entitled ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting (September 2014)’6 issued by the Financial Reporting Council4. Firms regulated by the appropriate regulator8 in this category will 6be subject to that code as well as to the requirements and standards of the regulatory system. In forming an opinion whether approved persons have complied with its requirements, the appropriate regulator8 will give due credit for their following corresponding provisions in the UK Corporate Governance Code 4and related guidance.

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