Principle 3 requires firms to take reasonable care to organise and control their affairs responsibly and effectively. This Principle is amplified by our rules in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC), which provides further details on what internal systems and controls we require regulated firms to have in place.
clearly apportion responsibilities amongst its directors and senior managers;
ensure the business and affairs of the firm can be adequately monitored;
allocate to the chief executive (if there is one), or a director or senior manager, the functions of dealing with the apportionment of responsibilities and overseeing the establishment and maintenance of systems and controls. This function may be allocated to one or more persons, but if your firm has a chief executive officer he must be one of them (or the only one if you appoint only one person);
make and keep updated a record of these arrangements (for example, in an organisational chart); and
take reasonable care to create and maintain such systems and controls as are appropriate to its business.
The rules and guidance in SYSC 3.2 cover some of the main issues that a firm is expected to consider in establishing and maintaining the systems and controls appropriate to its business. These include:
We do not, therefore, expect the same kind of systems and controls in both small and large firms. The important point is that a firm's systems and controls should be fit for purpose given the size and the business of the firm. In the case of a sole trader, one person is responsible for all aspects of the firm, but we expect there to be adequate systems to allow that person to manage and monitor the firm.