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

SUP 10.1 Application

General

SUP 10.1.1R

This chapter applies to every firm.

SUP 10.1.2G

This chapter is also relevant to every approved person.

SUP 10.1.3G

The rules in this chapter specify descriptions of functions under section 59 of the Act (Approval for particular arrangements). The effect of these rules, and the provisions of Part V of the Act (Performance of Regulated Activities), is that every firm, except an overseas firm to which SUP 10.1.6 R applies, must apply to the FSA for the approval of one or more persons to perform a controlled function on its behalf.4

SUP 10.1.4G

The directions in this chapter relate to the manner in which a firm must apply for the FSA's approval under section 59 of the Act and other procedures.

SUP 10.1.5G

Overseas firms: UK services

SUP 10.1.6R

This chapter does not apply to an overseas firm in relation to regulated activities which are carried on in the United Kingdom other than from an establishment maintained by it or its appointed representative in the United Kingdom.

Overseas firms: UK establishments

SUP 10.1.7R

Only the following controlled functions apply to an overseas firm which maintains an establishment in the United Kingdom from which regulated activities are carried on:

  1. (1)

    the chief executive function;

  2. (2)

    the required functions;

  3. (3)

    the significant management (designated investment business) function;

  4. (4)

    the significant management (settlements) function in so far as the activities relate to designated investment business; and

  5. (5)

    the customer functions.

Incoming EEA firms, incoming Treaty firms and UCITS qualifiers

SUP 10.1.9R

This chapter does not apply to:

  1. (1)

    an incoming EEA firm; or

  2. (2)

    an incoming Treaty firm; or

  3. (3)

    a UCITS qualifier;

if and in so far as the question of whether a person is fit and proper to perform a particular function in relation to that firm is reserved, under any of the Single Market Directives, the Treaty or the UCITS Directive to an authority in a country or territory outside the United Kingdom.

SUP 10.1.10G

SUP 10.1.9 R reflects the provisions of section 59(8) of the Act and, in relation to an incoming Treaty firm and a UCITS qualifier, the Treaty and the UCITS Directive. It preserves the principle of Home State prudential regulation. In relation to an incoming EEA firm exercising an EEA right, or an incoming Treaty firm exercising a Treaty right, the effect is to reserve to the Home State regulator the assessment of the fitness and propriety of a person performing a function in the exercise of that right. A member of the governing body, or the notified UKbranchmanager, of an incoming EEA firm, acting in that capacity, will not therefore have to be approved by the FSA under the Act.

SUP 10.1.11G

But an incoming EEA firm, or incoming Treaty firm, will have had to consider the impact of the Host State rules with which it is required to comply when carrying on a passported activity or Treaty activity through a branch in the United Kingdom. An incoming EEA firm will have been notified of those provisions under Part II of Schedule 3 to the Act in the course of satisfying the conditions for authorisation in the United Kingdom.

SUP 10.1.12G

An incoming EEA firm will have to consider, for example, the position of a branch manager based in the United Kingdom who may also be performing a function in relation to the carrying on of a regulated activity not covered by the EEA right of the firm. In so far as the function is within the description of a controlled function, the firm will need to seek approval for that person to perform that controlled function.

Incoming EEA firms: passported activities from a branch

SUP 10.1.13R

Incoming EEA firms etc with top-up permission activities from a UK branch

SUP 10.1.14R

In relation to the activities of a firm for which it has a top-up permission, only the following controlled functions apply:

  1. (1)

    the required functions, other than the apportionment and oversight function;

  2. (2)

    the significant management (designated investment business) function;

  3. (3)

    the significant management (settlements) function in so far as the activities relate to designated investment business; and

  4. (4)

    the customer functions.

SUP 10.1.15G

5An incoming EEA firm may require a Part IV permission in respect, for example, of its commodities business. The list of controlled functions which apply mirror those which apply to overseas firms, without the chief executive function. In the case of a firm with top-up permission, the FSA anticipates that the equivalent responsibility of the chief executive for the relevant business would be assumed by the person performing the EEA investment business oversight function.

Appointed representatives

SUP 10.1.16R

The descriptions of the following functionsapply to an appointed representative of a firm, except an introducer appointed representative, as they apply to a firm:

  1. (1)

    the governing functions, subject to SUP 10.1.16A R; and

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  2. (2)

    the customer functions other than the investment management function.

SUP 10.1.16AR
  1. (1)

    5SUP 10.1.16 R is modified in relation to an appointed representative meeting the conditions in (2) so that only one of the following governing functions:

    1. (a)

      director function; or

    2. (b)

      chief executive function; or

    3. (c)

      partner function; or

    4. (d)

      director of unincorporated association function;

    applies, as appropriate, to an individual within that appointed representative who will be required to be an approved person.

  2. (2)

    The conditions are that:

    1. (a)

      the scope of appointment of the appointed representative includes insurance mediation activity in relation to non-investment insurance contracts but no other regulated activity, and

    2. (b)

      the principal purpose of the appointed representative is to carry on activities other than regulated activities.

SUP 10.1.17G
  1. (1)

    The effect of SUP 10.1.16 R is that the directors (or their equivalent) and senior managers (or their equivalent) of an appointed representative must also be approved under section 59 of the Act for the performance of certain controlled functions.

  2. (2)

    SUP 10.1.16 R has a limited application to an appointed representative appointed by a firm to carry on insurance mediation activity or mortgage mediation activity. The description of the customer functions do not apply to such an appointed representative as these functions do not apply to a firm carrying on these regulated activities.5

  3. (3)

    The effect of SUP 10.1.16A R is that only one director (or equivalent) of an appointed representative to which that rule applies must be approved under section 59 of the Act for the performance of a governing function.5

Members of a profession

SUP 10.1.18

This chapter, except in respect of the required functions, does not apply to an authorised professional firm in respect of its non-mainstream regulated activities.

SUP 10.1.19G

SUP 10.1.18 R is relevant to the person, such as a partner in a professional firm, whose only regulated activities are incidental to his professional services, and where the principal purpose of the firm is to carry on activities which are not regulated activities. Any regulated activities which that person carries on are not within the description of a controlled function (except with respect to the required functions).

SUP 10.1.20G

For further guidance on the supervision and regulation of activities carried on by a member of a designated professional body, see PROF 5.

Oil market participants, service companies, energy market participants, subsidiaries of local authorities or registered social landlords and insurance intermediaries.5

SUP 10.1.21R

The descriptions of significant influence functions, other than the required functions, do not extend to activities carried on by a firm whose principal purpose is to carry on activities other than regulated activities and which is:

  1. (1)

    an oil market participant; or

  2. (2)

    a service company; or

  3. (3)

    an energy market participant; or 5

  4. (4)

    a wholly owned subsidiary of:5

    1. (a)

      a local authority; or5

    2. (b)

      a registered social landlord; or5

  5. (5)

    a firm with permission to carry on insurance mediation activity in relation to non-investment insurance contracts but no other regulated activity.52

SUP 10.1.22G

It will be a matter of fact in each case whether, having regard to all the circumstances, including in particular where the balance of the business lies, a firm's principal purpose is to carry on activities other than regulated activities. If a firm wishes to rely on SUP 10.1.21 R, it should be in a position to demonstrate that its principal purpose is to carry on activities other than regulated activities.

2

Committees of the Society of Lloyd's

SUP 10.1.23R
  1. (1)

    For the purpose of SUP 10.6.4 R (the director function), "director" includes an executive member of a committee to which the Council of the Society of Lloyd's directly delegates authority to carry out the Society's regulatory functions.

    3
  2. (2)

    For the purpose of SUP 10.6.8 R (the non-executive director function), "non-executive director" includes a non-executive member of a committee to which the Council of the Society of Lloyd's directly delegates authority to carry out the Society's regulatory functions.

SUP 10.1.24G

The effect of SUP 10.6.4 R is that the function of an executive member of the Council of the Society of Lloyd's comes within the description of the director function. SUP 10.1.23R (1) provides that the function of an executive member of certain committees of the Society of Lloyd's with regulatory functions also comes within the description of the director function. SUP 10.6.8 R and SUP 10.1.23R (2) are the equivalent provisions for the non-executive member of certain committees of the Society of Lloyd's with regulatory functions.

Insolvency practitioners

SUP 10.1.26R

This chapter does not apply to a function performed by:

  1. (1)

    a person acting as an insolvency practitioner within the meaning of section 388 of the Insolvency Act 1986; or

  2. (2)

    a person acting as a nominee in relation to a voluntary arrangement under Parts I (Company Voluntary Arrangements) and VIII (Individual Voluntary Arrangements) of the Insolvency Act 1986; or

  3. (3)

    a person acting as an insolvency practitioner within the meaning of Article 3 of the Insolvency (Northern Ireland) Order 1989; or

  4. (4)

    a person acting as a nominee in relation to a voluntary arrangement under Parts II (Company Voluntary Arrangements) and VIII (Individual Voluntary Arrangements) of the Insolvency (Northern Ireland) Order 1989.