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APER 4.2 Statement of Principle 2

APER 4.2.1G

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APER 4.2.1AG

4The Statement of Principle 2 (see APER 2.1A.3 R3) is in the following terms: "An approved person must act with due skill, care and diligence in carrying out his accountable functions."

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APER 4.2.2G

3In the opinion of the FCA, conduct of the type described in APER 4.2.3G, APER 4.2.5G, APER 4.2.6G, APER 4.2.8G, APER 4.2.10G, APER 4.2.11G or APER 4.2.14G does not comply with Statement of Principle 2.

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APER 4.2.2AG

3 4In the opinion of the FCA, conduct of the type described in described in APER 4.2.13 G does not comply with Statement of Principle 2.

APER 4.2.3G

3Failing to inform:

  1. (1)

    a customer; or

  2. (2)

    his firm (or its auditors or an actuary appointed by his firm under SUP 4 Actuaries)1);

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of material information in circumstances where they were aware, or ought to have been aware, of such information, and of the fact that they should provide it, falls within APER 4.2.2G.

APER 4.2.4G

3Behaviour of the type referred to in APER 4.2.3 G includes, but is not limited to:

  1. (1)

    failing to explain the risks of an investment to a customer;

  2. (2)

    failing to disclose to a customer details of the charges or surrender penalties of investment products;

  3. (3)

    mismarking trading positions;

  4. (4)

    providing inaccurate or inadequate information to a firm, its auditors or an actuary appointed by his firm under SUP 4 (Actuaries)1;

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  5. (5)

    failing to disclose dealings where disclosure is required by the firm's personal account dealing rules.

APER 4.2.5 G

3Recommending an investment to a customer, or carrying out a discretionary transaction for a customer, where the approved person does not have reasonable grounds to believe that it is suitable for that customer, falls within APER 4.2.2 G.

APER 4.2.6G

3Undertaking, recommending or providing advice on transactions without a reasonable understanding of the risk exposure of the transaction to a customer falls within APER 4.2.2 G.

APER 4.2.7G

3Behaviour of the type referred to in APER 4.2.6 G includes, but is not limited to, recommending transactions in investments to a customer without a reasonable understanding of the liability (either potential or actual) of that transaction.

APER 4.2.8G

3Undertaking transactions without a reasonable understanding of the risk exposure of the transaction to the firm falls within APER 4.2.2 G.

APER 4.2.9G

3Behaviour of the type referred to in APER 4.2.8 G includes, but is not limited to, trading on the firm's own account without a reasonable understanding of the liability (either potential or actual) of the transaction.

APER 4.2.10G

3Failing without good reason to disclose the existence of a conflict of interest in connection with dealings with a client falls within APER 4.2.2 G.

APER 4.2.11G

3Failing to provide adequate control over a client's assets falls within APER 4.2.2 G.

APER 4.2.12G

3Behaviour of the type referred to in APER 4.2.11 G includes, but is not limited to:

  1. (1)

    failing to segregate a client's assets;

  2. (2)

    failing to process a client's payments in a timely manner.

APER 4.2.13G

3Continuing to perform a controlled function despite having failed to meet the standards of knowledge and skill set out in the Training and Competence sourcebook (TC) for that controlled function falls within APER 4.2.2AG.

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APER 4.2.14G

32Failing to pay due regard to the interests of a customer, without good reason, falls within APER 4.2.2 G.