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EG 9.9 The effect of the FCA’s decision to withdraw approval

EG 9.9.1

1When the FCA's decision to withdraw an approval has become effective, the position of the firm which applied for that approval depends on whether it directly employs the person concerned, or whether the person is employed by one of its contractors.

EG 9.9.2

1Section 59(1) is relevant where the firm directly employs the person concerned. Under the provision, a firm ('A') must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by A in relation to the carrying on by it of a regulated activity, unless the appropriate regulator (as defined in section 59(4) of the Act) approves the performance by that person of the controlled function to which the approval relates. Therefore, if the firm continues to employ the person concerned to carry out a controlled function, it will be in breach of section 59(1) and the FCA may take enforcement action against it (save where the firm concerned is a PRA-authorised person and the approval concerned falls to be given by the PRA).

EG 9.9.3

1Section 59(2) is relevant where the person is employed by a contractor of the firm. It requires a firm ('A') to take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by a contractor of A in relation to the carrying on by A of a regulated activity, unless the appropriate regulator (as defined in section 59(4) of the Act) approves the performance by that person of the controlled function to which the approval relates. Therefore, if a contractor of the firm employs the person concerned, and the contractor continues to employ the person to carry out a controlled function, the firm itself will be in breach of section 59(2) unless it has taken reasonable care to ensure that this does not happen. The FCA may take enforcement action against a firm that breaches this requirement (save where the firm concerned is a PRA-authorised person and the approval concerned falls to be given by the PRA).

EG 9.9.4

1Firms should be aware of the potential effect that these provisions may have on their contractual relationships with approved persons employed by them and with contractors engaged by them, and their obligations under those contracts.