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

SUP 10.7 Required functions

Apportionment and oversight function (CF8)

SUP 10.7.1R

The apportionment and oversight function is the function of acting in the capacity of a director or senior manager responsible for either or both of the apportionment function and the oversight function set out in SYSC 2.1.3 R.

SUP 10.7.2G

SYSC 2.1.3 R provides that a firm must appropriately allocate to one or more individuals the functions of dealing with the apportionment of responsibilities under SYSC 2.1.1 R, and of overseeing the establishment and maintenance of systems and controls under SYSC 3.1.1 R. Where there is a chief executive, he or she must be one of the individuals to whom the functions are allocated (unless the functions are allocated to someone of greater seniority): see SYSC 2.1.6 G.

SUP 10.7.3G

The fact that there is a person performing the apportionment and oversight function, and who has responsibility for activities subject to regulation by the FSA, may have a bearing on whether a manager who is based overseas will be performing a controlled function. It is a factor to take into account when assessing the likely influence of the overseas manager.

SUP 10.7.4G

Generally, in relation to a UK establishment of an overseas firm or a firm which is part of an overseas group, where an overseas manager's responsibilities in relation to the United Kingdom are strategic only, he will not need to be an approved person. However, where, in accordance with SYSC 3, he is responsible for implementing that strategy in the United Kingdom, and has not delegated that responsibility to a senior manager in the United Kingdom, he is likely to be performing a controlled function, such as, for example, the chief executive function.

SUP 10.7.4AG

4PRU 9.1.3 R provides that an insurance intermediary, other than a sole trader, must allocate to a director or senior manager the responsibility for the firm's insurance mediation activityPRU 9.1.4 R (2) provides that the firm may allocate this responsibility to the person performing the apportionment and oversight function.

SUP 10.7.4BG

4Where the person performing the apportionment and oversight function is also responsible for the firm's insurance mediation activity, the words "(insurance mediation)" will be inserted after this controlled function (see PRU 9.1.7 G).

SUP 10.7.5G

See also SUP 10.9.5 G and SUP 10.9.6 G in relation to matrix management in the context of significant management functions.

EEA investment business oversight function (CF9)

SUP 10.7.6R

The EEA investment business oversight function is the function of acting in the capacity of an individual who is responsible, in accordance withSYSC 2.1.3 R (2), for overseeing the establishment and maintenance of systems and controls in relation to designated investment business carried on from a branch in the United Kingdom of an incoming EEA firm.

SUP 10.7.7G

Where an overseas individual has not delegated this function to a senior manager in the United Kingdom, he is likely to be performing this controlled function. However, the FSA anticipates that any individual carrying out this function will normally be located in the United Kingdom. He may be the local chief executive or one or more of the individuals approved to perform the significant management (designated investment business) function. If the local chief executive (or other individual) is approved for this function, this does not mean that all his responsibilities are the concern of the FSA. SUP 10.1.9 R preserves the principle of Home State prudential regulation whenever it applies and in respect of each controlled function.1

Compliance oversight function (CF10)

SUP 10.7.8R

The compliance oversight function is the function of acting in the capacity of a director or senior manager who is allocated the function set out in SYSC 3.2.8 R.

SUP 10.7.9G

SYSC 3.2.8 R provides that a firm which carries on designated investment business with or for customers must allocate to a director or senior manager the function of having responsibility for oversight of the firm's compliance and reporting to the governing body in respect of that responsibility.2

SUP 10.7.10G

Compliance in SYSC 3.2.8 R means compliance with the rules in COB, COLL or CIS and CASS. The FSA anticipates that some firms will include oversight of compliance with PRIN, MAR, and other requirements and standards, within its compliance function. These other responsibilities would not, however, be brought within the compliance oversight function (see also 36SUP 10.4.3 G).

SUP 10.7.11G

Some firms, particularly firms with complex structures or which are part of a group, may find it appropriate to seek approval for the group head of compliance and other persons to perform the compliance oversight function. Examples of other persons include the senior manager responsible for compliance in a firm which is a subsidiary within the group and a senior manager in a reporting line, where compliance is organised along product lines.1

SUP 10.7.12G

Although a firm may choose to use the services of an external compliance consultant, the responsibility for the compliance oversight function must, in accordance with SYSC 3.2.8 R, rest with one or more directors or senior managers of the firm.

Money laundering reporting function (CF11)

SUP 10.7.13R

The money laundering reporting function is the function of acting in the capacity of the money laundering reporting officer of a firm.

SUP 10.7.14G

The rules in the Money Laundering sourcebook (ML) provide that a firm must have a money laundering reporting officer unless:

  1. (1)

    it is a sole trader with no employees; or

  2. (2)

    its regulated activities are certain insurance business only; or

  3. (3)

    it is an incoming firm providing only services into the United Kingdom; or

  4. (4)

    its regulated activities are insurance mediation activity in relation to a general insurance contract or pure protection contract or mortgage mediation activity.4

SUP 10.7.15G

The specific responsibilities of the money laundering reporting officer are set out in ML 7.1.

SUP 10.7.16G

ML 7.1.9 R provides that a money laundering reporting officer must have a "sufficient level of seniority" within the firm, so that he can carry out his controlled function effectively.

7Actuarial7 function (CF12) and with-profits actuary function (CF12A)7

SUP 10.7.17R

The actuarial function is7 the function of acting in the capacity of an 7actuary appointed by a firm under SUP 4.3.1 R to perform the duties set out inSUP 4.3.13 R.7.

777
SUP 10.7.17AR

The with-profits actuary function is the function of acting in capacity of an actuary appointed by a firm under SUP 4.3.1 R to perform the duties set out in SUP 4.3.16A R.

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SUP 10.7.18G

The effect of SUP 4.1.1 R (Application) and SUP 4.3.1 R (Appointment of an actuary) is that a long-term insurer (unless it is a certain kind of friendly society) must appoint one or more actuaries to perform the actuarial function in respect of all classes of its long-term insurance business and the with-profits actuary function in respect of all classes of its with-profits business7. The kinds of friendly society to which the provisions do not apply are:

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  1. (1)

    a registered friendly society which is a non-directive friendly society; and

  2. (2)

    an incorporated friendly society that is a flat rate benefits business friendly society.

SUP 10.7.19G

The appointment of an actuary to perform either of these functions7 is personal , and the appointee is typically either an employee of the firm or a partner or employee in a firm of actuaries.7

777
SUP 10.7.20G

The actuarial function and the with-profits actuary function 7 do not extend to the giving of actuarial advice to a firm by an actuary who has not been appointed to perform these functions7. A person who gives actuarial advice, whether occasionally or regularly, other than in his capacity 7as an actuary appointed to perform these functions would not be performing a controlled function7.

77777
SUP 10.7.21G

The rules and guidance concerning the rights and duties of an actuary appointed to perform either of these functions are set out in SUP 4.3.13 R to SUP 4.3.18 G.7

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5Lloyd's actuary function (CF12B)

SUP 10.7.22R

5The Lloyd's actuary function is the function of acting in the capacity of the actuary appointed under SUP 4.6.1 R to perform the duties set out in SUP 4.6.7 R.

SUP 10.7.23G

5The effect of SUP 4.6.1 R is that the Society of Lloyd's must appoint an actuary (the "Lloyd's actuary").