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

APER 4.7 Statement of Principle 7

APER 4.7.1G

[deleted]10

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APER 4.7.1AGRP

10The Statement of Principle 7 (see APER 2.1A.3 P) is in the following terms: "An approved person performing an accountable significant-influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his accountable function complies with the relevant requirements and standards of the regulatory system." References in APER 4.7 to a significant-influence function are to an accountable significant-influence function to which Statement of Principle 7 applies.

APER 4.7.2ERP

In the opinion of the appropriate regulator,10 conduct of the type described in APER 4.7.3 E, APER 4.7.4 E, APER 4.7.5 E or10 APER 4.7.7 E does not comply with Statement of Principle 7 .10

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APER 4.7.2AE

10In the opinion of the FCA, conduct of the type described in APER 4.7.9 E, APER 4.7.10 E or APER 4.7.11A E does not comply with Statement of Principle 7.

APER 4.7.3ERP

Failing to take reasonable steps to implement (either personally or through a compliance department or other departments) adequate and appropriate systems of control to comply with the relevant requirements and standards of the regulatory system in respect of the regulated activities of the firm in question (as referred to in Statement of Principle 7)10 falls within APER 4.7.2 E. In the case of an approved person who is responsible, under SYSC 2.1.3 R (2) or SYSC 4.4.5 R (2)2, with overseeing the firm's obligation under SYSC 3.1.1 R or SYSC 4.1.1 R2, failing to take reasonable care to oversee the establishment and maintenance of appropriate systems and controls falls within APER 4.7.2 E.

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APER 4.7.4ERP

Failing to take reasonable steps to monitor (either personally or through a compliance department or other departments) compliance with the relevant requirements and standards of the regulatory system in respect of the regulated activities of the firm in question (as referred to in Statement of Principle 7)10 falls within APER 4.7.2 E (see APER 4.7.12 G).

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APER 4.7.5ERP

Failing to take reasonable steps adequately to inform himself about the reason why significant breaches (whether suspected or actual) of the relevant requirements and standards of the regulatory system in respect of the regulated activities of the firm in question (as referred to in Statement of Principle 7)10 may have arisen (taking account of the systems and procedures in place) falls within APER 4.7.2 E.

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APER 4.7.6ERP

Behaviour of the type referred to in APER 4.7.5 E includes, but is not limited to, failing to investigate what systems or procedures may have failed including, where appropriate, failing to obtain expert opinion on the adequacy of the systems and procedures.

APER 4.7.7ERP

Failing to take reasonable steps to ensure that procedures and systems of control are reviewed and, if appropriate, improved, following the identification of significant breaches (whether suspected or actual) of the relevant requirements and standards of the regulatory system relating to the regulated activities of the firm in question (as referred to in Statement of Principle 7),10 falls within APER 4.7.2 E (see APER 4.7.13 G and APER 4.7.14 G).10

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APER 4.7.8ERP

Behaviour of the type referred to in APER 4.7.7 E includes, but is not limited to:

  1. (1)

    unreasonably failing to implement recommendations for improvements in systems and procedures;

  2. (2)

    unreasonably failing to implement recommendations for improvements to systems and procedures in a timely manner.

APER 4.7.9ERP

In the case of the money laundering reporting officer, failing to discharge the responsibilities imposed on him by the firm1 in accordance with SYSC 3.2.6I R or SYSC 6.3.9 R21 falls within APER 4.7.2A E.10

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APER 4.7.10ERP

In the case of an approved person performing a significant influence function responsible for compliance under SYSC 3.2.8 R, SYSC 6.1.4 R or SYSC 6.1.4A R2, failing to take reasonable steps to ensure that appropriate compliance systems and procedures are in place falls within APER 4.7.2A E (see APER 4.7.13 G and10 APER 4.7.14 G).

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APER 4.7.11GRP

The appropriate regulator10 expects an approved person performing a significant influence function to take reasonable steps both to ensure his firm's compliance with the relevant requirements and standards of the regulatory system and to ensure that all staff are aware of the need for compliance.

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APER 4.7.11AERP

3Where the approved person is a proprietary trader under SUP 10A.9.10 R,10 failing to maintain and comply with appropriate systems and controls in relation to that activity falls within APER 4.7.2A E.10

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Systems of control

APER 4.7.12GRP

An approved person performing a significant influence function need not himself put in place the systems of control in his business (APER 4.7.4 E). Whether he does this depends on his role and responsibilities. He should, however, take reasonable steps to ensure that the business for which he is responsible has operating procedures and systems which include well-defined steps for complying with the detail of relevant requirements and standards of the regulatory system and for ensuring that the business is run prudently. The nature and extent of the systems of control that are required will depend upon the relevant requirements and standards of the regulatory system, and the nature, scale and complexity of the business.4

Possible breaches of regulatory requirements

APER 4.7.13GRP

Where the approved person performing a significant influence function becomes aware of actual or suspected problems that involve possible breaches of relevant requirements and standards of the regulatory system falling within his area of responsibility, then he should take reasonable steps to ensure that they are dealt with in a timely and appropriate manner (APER 4.7.7 E). This may involve an adequate investigation to find out what systems or procedures may have failed and why. He may need to obtain expert opinion on the adequacy and efficacy of the systems and procedures.

Review and improvement of systems and procedures

APER 4.7.14GRP

Where independent reviews of systems and procedures have been undertaken and result in recommendations for improvement, the approved person performing a significant influence function should ensure that, unless there are good reasons not to, any reasonable recommendations are implemented in a timely manner (APER 4.7.10 E). What is reasonable will depend on the nature of the inadequacy and the cost of the improvement. It will be reasonable for the approved person performing a significant influence function to carry out a cost benefit analysis when assessing whether the recommendations are reasonable.