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Status: You are viewing the version of the handbook as on 2005-06-30.

ENF 7.7 The effect of the FSA's decision to withdraw approval

ENF 7.7.1G

Unless the decision has been referred to the Tribunal, the FSA's decision to withdraw its approval from an approved person will come into effect on the date specified in the final notice (seeDEC 2.3.11 G). Where the decision has been referred to the Tribunal, the FSA is not permitted (under section 133(9) of the Act (Proceedings: general provisions) to take the action specified in the decision notice until that reference, and any appeal against the Tribunal's decision, has been finally disposed of.

ENF 7.7.2G

When the FSA's decision to withdraw an approval has become effective, the position of the firm on whose application the approval was granted differs depending on whether it directly employs the person concerned, or whether the person is employed by one of its contractors.

  1. (1)

    If the firm directly employs the person concerned:

    1. (a)

      Under section 59(1) of the Act (Approval for particular arrangements), 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 carrying on by A of a regulated activity, unless the FSA approves the performance by that person of the controlled function to which the arrangement relates.'

    2. (b)

      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 FSA may take enforcement action against it.

  2. (2)

    If the person concerned is employed by a contractor of the firm.

    1. (a)

      Under section 59(2), a firm ('A') must: '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 FSA approves the performance by that person of the controlled function to which the arrangement relates.'

    2. (b)

      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 FSA may take enforcement action against a firm that breaches this requirement.

ENF 7.7.3G

Firms 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 these contracts.

ENF 7.7.4G

As stated in ENF 7.4.2 G, the FSA is required to give a copy of its decision notice to the firm that applied for the approval, and also to a contractor of the firm if the person concerned is employed by the contractor.