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CRED 6.3 Approved persons

CRED 6.3.1G

The purpose of this section is to provide a guide to those parts of the Supervision manual (SUP) concerning approved persons as they apply to credit unions, and follows the structure of that manual. This section should be read in conjunction with SUP 10.

Introduction

CRED 6.3.2G

SUP 10.1.1 R - SUP 10.1.26 R provides an introduction to the application of the approved persons regime. The effect of the rules is that a credit union must apply to the FSA for the approval of one or more individuals to perform the functions which are known as controlled functions. In broadest outline these controlled functions are roles which enable an individual to exert significant influence on the conduct of the credit union's affairs. A complete list of these functions is set out in SUP 10.4.5 R, although not all of these are relevant to credit unions. This guide concentrates only on the controlled functions which are relevant for the majority of credit unions. The largest credit unions should consider whether a wider range of controlled functions is relevant to them.

Purpose of the regime

CRED 6.3.3G

SUP 10.2 outlines the purpose of the direct regulation of individuals which is to supplement the regulation of credit unions themselves. Individuals will need to be approved to undertake tasks which are key to the operation of a credit union.

Controlled functions

CRED 6.3.4G

SUP 10.3 provides, in this context, that a function is a controlled function only when it is undertaken by a credit union in relation to a regulated activity. Controlled functions fall within two groups. The significant influence functions describe the roles performed by the governing body and senior managers of the firm who exert a significant influence over the regulated activities of the firm. The customer functions describe the roles of individuals who deal with customers or with the property of customers. These customer functions do not extend to activities in relation to accepting deposits or general insurance and therefore will not be relevant to credit unions with permission for accepting deposits only.

Specification of functions

CRED 6.3.5G

SUP 10.4 specifies all the controlled functions and provides that its requirements apply only in relation to the performance of the controlled functions for which an individual is approved.

CRED 6.3.6G

The complete list of all controlled functions is located in SUP 10.4.5 R. Guidance on those controlled functions most likely to be relevant to credit unions is provided below:

CRED 6.3.7G

SUP 10.6: the governing functions:

  1. (1)

    SUP 10.6.4 R: the Director functionThis is the function of acting in the capacity of a director of a credit union.

  2. (2)

    SUP 10.6.8 R: the non-executive director functionIt is unusual for a credit union to appoint non-executive directors as such. But this function would include membership of a credit union's supervisory committee and any other committee which scrutinises the approach of executive management, the credit union's performance, and its standards of conduct.

  3. (3)

    SUP 10.6.11 R: the chief executive functionActing in the capacity of chief executive, whether or not using that title. This role includes anyone having the responsibility, alone or jointly with one or more others, under the immediate authority of the committee of management, for the conduct of the whole of the business.

CRED 6.3.8G

SUP 10.7: the required functions:

  1. (1)

    SUP 10.7.1 R: the apportionment and oversight function. The apportionment of responsibilities (see CRED 4.2 andSYSC 2.1.1 R).The function of dealing with 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.

  2. (2)

    SUP 10.7.13 R: the money laundering reporting function.The function of acting in the capacity of the money laundering reporting officer of a credit union.

SUP 10.8: the systems and controls function

CRED 6.3.9G

The function of acting as an employee with responsibility for reporting to the committee of management in relation to:2

2
  1. (1)

    its financial affairs;2

    22
  2. (2)

    setting and controlling its risk exposure; or2

    22
  3. (3)

    adherence to internal systems and controls, procedures and policies.2

    22
CRED 6.3.9AG

2Where an employee performs the systems and controls function FSA would expect the credit union to ensure that the employee had sufficient expertise and authority to perform that function effectively, for example be a director or senior manager.

CRED 6.3.10G

SUP 10.9: the significant management functions:

This controlled function2 will only apply to the credit union if the function is2 not being performed by a member of the committee of management and the credit union has followed the guidance in SUP 10.9.3 G.

22
CRED 6.3.11G

[deleted]1

1
CRED 6.3.12G

The following are the forms that will most commonly be needed by credit unions.

Form A

SUP 10 Annex 4

Application to perform controlled functions under the approved person regime.

Form B

SUP 10 Annex 5

Notice to withdraw an application to perform controlled functions under the approved persons regime.

Form C

SUP 10 Annex 6

Notice of ceasing to perform controlled functions.

Form D

SUP 10 Annex 7

Notification of changes in personal information or application details.

Copies of these forms may be obtained from the FSA website or from the Individual Vetting and Approval Department.

CRED 6.3.13G

SUP 10.12 outlines procedures concerning the application for approval and withdrawing an application for approval. Applications should be made by the credit union and not by individual applicants. Details are provided concerning the procedure that FSA will adopt when granting or refusing applications.

CRED 6.3.14G

SUP 10.13 outlines procedures concerning changes to an approved person's details. Where changes to an approved person's role involve the person performing one or more different controlled functions from those for which they have been given approval, then a new application must be made to FSA. This will be for approval to perform the new controlled functions.

CRED 6.3.15G

SUP 10.14 points readers in the direction of frequently asked questions and answers, in particular which part of the FSA to approach with any questions which remain unanswered.