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

SIFA 7.1 Approved Persons

SIFA 7.1.1G

An Authorised Firm has approved persons and other staff. Approved persons carry out controlled functions and therefore have responsibilities for the firm complying with and working within the Rules.

SIFA 7.1.2G

An approved person is a person whose performance of one or more controlled functions we have approved. Our approval should be obtained before the individual performs the activity.

SIFA 7.1.3G

You need to apply to have an individual approved to perform a controlled function as follows:

  1. (1)

    before a firm is authorised we must approve the individuals who are going to carry out controlled functions and then register them for the appropriate controlled functions; and

  2. (2)

    you need to complete and submit a new form in order to obtain FSA approval if an individual joins the firm, changes a controlled function or moves to a different firm. There is a special provision to cover absence of up to 12 weeks for senior functions where approval is not required (SUP 10.5.5 and SUP 10.5.6 ).

Controlled functions

SIFA 7.1.4G

The full list of controlled functions can be found under SUP 10.4.5 . The functions with most relevance to small firms are likely to be the:

  1. (1)

    Governing functions (CF 1-7) e.g. director, chief executive, partner, sole trader;

  2. (2)

    Required functions (CF 8-12) e.g. compliance officer, money laundering reporting officer; and

  3. (3)

    Customer functions (CF 21-27).

SIFA 7.1.5G

The most common controlled customer functions in IFAs are CF21 (Investment adviser function) and CF22 (Investment adviser trainee function), but some IFAs may also have functions CF23 (Corporate finance adviser function), CF24 (Pension transfer specialist function), and CF27 (Investment management function).

SIFA 7.1.6G

The 'Governing functions' and the 'Required functions' are also known as 'Significant Influence functions' because the persons performing these functions are likely to exercise significant influence over the business.

Becoming and ceasing to be an approved person

SIFA 7.1.7G

The Supervision manual (SUP) establishes the 'approved persons regime'. There are five standard forms (A-E). You can find the forms on our website under 'Industry Help', 'Forms', 'Supervision manual Approved persons regime forms'; or on our CD-ROM under 'Library', 'Current Library', 'Forms', 'Supervision', 'Approved Persons Regime'. Firms can also register with the FSA to submit the Approved Persons forms via the Internet. Details of this facility can be obtained from the E-regulation Contact Centre on 0845 606 9966 or by email to: e-regulation@fsa.gov.uk

SIFA 7.1.8G

Form

When to use the form

A

To perform a controlled function. The individual who is to be appointed to perform the controlled function should complete the form and it should be authorised by an individual with a Governing function within the firm. Form A is also used if an already Approved Person is increasing their functions but sections 4 and 5 of the Form will not always require completion

B

To withdraw an application to perform a controlled function (i.e. to withdraw the application before it has been approved by the FSA). Both the firm and the individual candidate must sign this form.

C

To cease to perform a controlled function or to reduce the number of functions that an individual performs (i.e. to withdraw controlled functions from an approved person). Only the firm is required to sign this form.

D

To change an approved person's details

E

To notify a person remaining with the same firm but changing a controlled function (e.g. to apply for a change from CF22 trainee investment adviser to CF21 investment adviser).

How long will an application take?

SIFA 7.1.9G

Under section 61 of the Act, the FSA must respond to applications to be an approved person within three months. In practice, the guideline time scale is much shorter, with the majority of applications being processed within 7 working days.

Which parts of the Handbook are relevant?

SIFA 7.1.10G

The following parts of the Handbook are relevant:

  1. (1)

    SUP Table 10.11.2 G highlights which form you should use and when as does SUP 10 Ann 2.

  2. (2)

    SUP 10.3 to SUP 10.10 describe the 27 controlled functions and the boundaries of the approved persons regime.

  3. (3)

    SUP 10.11 to SUP 10.14 set out the procedures for applying for approval, changing the details that we hold about an approved person, and withdrawing from approval.

  4. (4)

    SUP 10 Ann 1 lists frequently asked questions on the requirements of the approved persons regime.

Principles for approved persons

SIFA 7.1.11G

The Principles for firms (see Chapter 4 of this Overview) are matched by a set of principles for Approved Persons. Statements of Principle and Code of Practice for Approved Persons (APER) include the Statements of Principle in APER 2. The Code of Practice in APER 3 and APER 4 provides guidance on the factors, which in our opinion, should be taken into account when assessing whether an approved person has complied with the Statements of Principle.

SIFA 7.1.12G

STATEMENTS OF PRINCIPLE

• An approved person must act with integrity in carrying out his controlled function.

• An approved person must act with due skill, care and diligence in carrying out his controlled function.

• An approved person must observe proper standards of market conduct in carrying out his controlled function.

• An approved person must deal with the FSA and with other regulators in an open and co-operative way and must disclose appropriately any information of which the FSA would reasonably expect notice.

• An approved person performing a significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function is organised so that it can be controlled effectively.

• An approved person performing a significant influence function must exercise due skill, care and diligence in managing the business of the firm for which he is responsible in his controlled function.

• An approved person performing a significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function complies with the relevant standards and requirements of the regulatory system.

Further information and other issues

SIFA 7.1.13G

You can obtain further information as follows:

  1. (1)

    You can find a list of frequently asked questions at AUTH 6 Annex 1 G. If this does not answer your question, you should contact our Enquiries and Applications Department by telephone on 020 7066 0019 or e-mail iva@fsa.gov.uk.

  2. (2)

    The number of approved persons carrying out controlled functions CF 21-27 registered by a firm may be a factor in the level of fees payable by the firm.

Record keeping requirements: apportionment of responsibilities

SIFA 7.1.14G

You must keep an up-to-date record of how responsibilities have been apportioned between directors and senior managers ( SYSC 2.2.1 R). This may take the form, for example, of an organisation chart or diagram ( SYSC 2.2.2 G).

SIFA 7.1.15G

Frequently, it is to the managing director that the firm allocates the function of dealing with the apportionment of responsibilities and overseeing the establishment and maintenance of systems and controls (SYSC 2.1).

SIFA 7.1.16G

The following section of this Overview is also relevant:

•'Authorisation' - Chapter 5