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SUP 10C.11 1Statements of responsibilities

What a statement of responsibilities is

SUP 10C.11.1G
  1. (1)

    Section 60(2A) of the Act (Applications for approval) says that, if a firm is applying for approval from the FCA or the PRA for a person to perform a designated senior management function, the regulator to which the application is being made must require the application to contain, or be accompanied by, a statement setting out the aspects of the affairs of the firm which it is intended that the person will be responsible for managing in performing the function.

  2. (2)

    That statement is a statement of responsibilities.

  3. (3)

    A statement of responsibilities includes a statement amended under 62A of the Act (see SUP 10C.11.5G).

What this section covers

SUP 10C.11.2G
  1. (1)

    This section is about the FCA's requirements for statements of responsibilities.

  2. (2)

    However, where applications and notifications relate both to FCA-designated senior management functions and to PRA ones, the regulators’ requirements are consistent with each other.

  3. (3)

    The general material in this section (SUP 10C.11.13G to SUP 10C.11.35G) applies to statements of responsibilities submitted in all the cases covered by this section. It covers statements of responsibilities submitted as part of an application for approval or variation and revised statements of responsibilities.

Applications for approval

SUP 10C.11.3D

An application by a firm for the FCA's approval under section 59 of the Act (Approval for particular arrangements) for the performance of an FCA-designated senior management function must be accompanied by a statement of responsibilities (SUP 10C Annex 5D).

SUP 10C.11.4G
  1. (1)

    SUP 10C.10 (Application for approval and withdrawing an application for approval) explains the procedures for applying for approval.

  2. (2)

    SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications for approval should be submitted.

  3. (3)

    See the table in SUP 10C.11.19G for examples of how the requirements of this section about including statements of responsibilities in applications for approval apply in different situations.

Revised statements of responsibilities: Introduction

SUP 10C.11.5G

Under section 62A of the Act, a firm must provide the FCA with a revised statement of responsibilities if there has been any significant change in the responsibilities of an FCA-approved SMF manager. More precisely:

  1. (1)

    if a firm has made an application (which was granted) to the FCA for approval for a person to perform an FCA-designated senior management function;

  2. (2)

    the application contained, or was accompanied by, a statement of responsibilities; and

  3. (3)

    since the granting of the application, there has been any significant change in the aspects of the firm's affairs which the FCA-approved SMF manager is responsible for managing in performing the function;

the firm should provide the FCA with a revised statement of responsibilities.

Revised statements of responsibilities: Meaning of significant change

SUP 10C.11.6G
  1. (1)

    This paragraph sets out non-exhaustive examples of potential changes which, in the FCA's view, may be significant and thus require the submission of a revised statement of responsibilities.

  2. (2)

    A variation of the FCA-approved SMF manager's approval, either at the firm's request or at the FCA's or PRA's initiative, resulting in the imposition, variation or removal of a condition or time limit, may involve a significant change.

  3. (3)

    Fulfilling or failing to fulfil a condition on approval may involve a significant change.

  4. (4)

    The addition, re-allocation or removal of any of the following (or part of one):

    1. (a)

      an FCA-prescribed senior management responsibility;

    2. (b)

      a PRA-prescribed senior management responsibility or a PRA-prescribed UK branch senior management responsibility; or2

    3. (c)

      responsibility for a function under SYSC 4.7.8R (Allocation of overall responsibility for a firm’s activities, business areas and management functions);

    may involve a significant change.

  5. (5)

    The sharing or dividing of a function in (4) that was originally performed by one person between two or more persons may involve a significant change.

  6. (6)

    Ceasing to share a function in (4) that was originally shared with another, or others, may involve a significant change.

  7. (7)

    A change is likely to be significant if it reflects a significant change to the job that the person is doing for the firm. Some factors relevant here include:

    1. (a)

      the importance to the firm of the functions being given up or taken on;

    2. (b)

      whether the FCA-approved SMF manager's seniority in the firm's management changes;

    3. (c)

      whether there are changes to the identity, number or seniority of those whom the FCA-approved SMF manager manages; and

    4. (d)

      whether there are changes to the skills, experience or knowledge needed by the FCA-approved SMF manager for the job.

Revised statements of responsibilities: Procedure

SUP 10C.11.7D
  1. (1)

    A firm must provide a revised statement of responsibilities under section 62A of the Act under cover of Form J (SUP 10C Annex 5D).

  2. (2)

    A firm must not use Form J where the revisions are to be made as part of arrangements involving an application:

    1. (a)

      for approval for the FCA-approved SMF manager concerned to perform another designated senior management function for the same firm; or

    2. (b)

      to vary (under section 63ZA of the Act (Variation of senior manager’s approval at request of relevant authorised person)) an approval for the FCA-approved SMF manager concerned to perform a designated senior management function for the same firm.

SUP 10C.11.8G

Broadly, the intention of SUP 10C.11.7D(2) is that there is no need for Form J if the revised statement of responsibilities is being submitted together with Form A, Form E or Form I for the same firm.

SUP 10C.11.9G
  1. (1)

    SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how revised statements of responsibilities should be submitted.

  2. (2)

    See the table in SUP 10C.11.19G for examples of how the requirements of this section about submitting revised statements of responsibilities apply in different situations.

  3. (3)

    In particular, the table in SUP 10C.11.19G gives examples of how SUP 10C.11.7D(2) works.

Variation of approval

SUP 10C.11.10D

An application by a firm to the FCA for the variation of an existing approval under section 63ZA of the Act (Variation of a senior manager’s approval at request of relevant authorised person) must be accompanied by a statement of responsibilities.

SUP 10C.11.11G
  1. (1)

    See SUP 10C.13 (Variation of conditional and time-limited approvals) for more details about applications to vary an approval.

  2. (2)

    SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications to vary an approval should be submitted.

  3. (3)

    See the table in SUP 10C.11.19G for examples of how the requirements of this section about submitting statements of responsibilities with applications to vary an approval apply in different situations.

Ceasing to carry on some functions

SUP 10C.11.12R

If:

  1. (1)

    an FCA-approved SMF manager ceases to perform a designated senior management function for a firm; but

  2. (2)

    continues to perform an FCA-designated senior management function for that firm;

the firm must (under Form J) submit a statement of responsibilities for the remaining functions.

One document for each SMF manager for each firm

SUP 10C.11.13D
  1. (1)

    A firm must prepare statements of responsibilities (including revised ones) for one of its FCA-approved SMF managers as a single document covering every designated senior management function for which:

    1. (a)

      that FCA-approved SMF manager has approval; or

    2. (b)

      for which an application for approval is being made;

    for that firm.

  2. (2)

    The statement must be up to date for each designated senior management function.

SUP 10C.11.14G
  1. (1)

    SUP 10C.11.13D means that, at any time, a firm should have a single document for an SMF manager that:

    1. (a)

      contains statements of responsibilities for all designated senior management functions for which that SMF manager has approval; and

    2. (b)

      where relevant, contains statements of responsibilities for all designated senior management functions for which the firm is applying for approval.

  2. (2)

    The document in (1) should cover PRA-designated senior management functions as well as FCA-designated senior management functions.

  3. (3)

    The document should be updated:

    1. (a)

      under section 62A of the Act (see SUP 10C.11.5G); and

    2. (b)

      whenever the firm has to submit statements of responsibilities under this section.

  4. (4)

    The FCA and the PRA have coordinated their arrangements so that a firm can prepare a single document that will meet the requirements of both regulators about statements of responsibilities.

  5. (5)

    The table in SUP 10C.11.19G gives examples of how these requirements work.

SUP 10C.11.15G

If a person is an SMF manager for several firms in a group that are relevant authorised persons, there should be a separate document for each firm.

SUP 10C.11.16G

There should be a separate document for each SMF manager in a firm. A firm should not combine statements of responsibilities for several SMF managers.

SUP 10C.11.17G

The requirement for a single document does not prevent the document having an attachment sheet for additional information where SUP 10C Annex 5D (the FCA's template for statements of responsibilities) allows this.

Submitting statements of responsibilities: examples of how the requirements work

SUP 10C.11.18G

The table in SUP 10C.11.19G gives examples of how the requirements in this section for submitting statements of responsibilities work in different cases.

SUP 10C.11.19G

Table: examples of how the requirements for submitting statements of responsibilities work

1Example

Comments

(1) A firm applies for approval for A to perform the executive director function and the money laundering function.

There should be a single statement of responsibilities document that covers the two functions.

The combined document should be included with the application for approval.

(2) Firm X applies for approval for A to perform the executive director function. Firm Y applies for approval for A to perform the money laundering function. Both firms are relevant authorised persons.

There should be separate statements of responsibilities for each firm.

This is the case even if Firm X and Firm Y are in the same group.

(3) A firm applies for approval for A to perform an FCA-designated senior management function and a PRA-designated senior management function.

The arrangements in SUP 10C.9 for FCA functions to be absorbed into PRA ones do not apply and so there are separate applications to the FCA and PRA.

The single statement of responsibilities document should cover both the FCA and the PRA functions.

(4) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm. This will also result in substantial changes to A’s duties as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to perform the money laundering function.

The single statement of responsibilities document should cover both functions. The part relating to A’s duties as an executive director should be updated.

(5) A has approval to perform the executive director function. Later, A is to be appointed to perform the PRA's chief risk officer designated senior management function for the same firm. This will also result in substantial changes to A’s duties as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to perform the PRA function.

The firm should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the application to the PRA.

The single statement of responsibilities document should cover both the FCA and the PRA functions. The part relating to A’s duties as an executive director should be updated.

(6) A has approval to perform the money laundering function. The approval to perform the money laundering function is subject to a condition. The firm is applying to vary that condition.

The firm should include a revised statement of responsibilities with the application.

The firm should not use Form J. It should submit a revised statement of responsibilities along with the application to vary the approval.

(7) A has approval to perform the executive director function and the money laundering function for the same firm. The approval to perform the money laundering function is subject to a condition. The firm is applying to vary that condition. As part of the same arrangements, there are to be substantial changes to A’s job as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to vary the approval for the money laundering function.

The single statement of responsibilities document should be updated and should cover both functions.

(8) A has approval to perform the executive director function and the PRA's chief risk officer designated senior management function for the same firm. The arrangements in SUP 10C.9 for FCA functions to be absorbed into PRA ones do not apply and so there are separate FCA and PRA approvals.

The approval to perform the PRA's chief risk officer designated senior management function is subject to a condition. The firm is applying to vary that condition. As part of the same arrangements, there are to be substantial changes to A’s job as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to vary the PRA function.

The firm should not submit the revised document separately to the FCA. Instead it should include it as part of the application to the PRA.

The single statement of responsibilities document should cover both the FCA and the PRA functions and should be updated.

(9) A has approval to perform the executive director function and the money laundering function for the same firm.

Sometime later, A is to give up the money laundering function and take up the PRA's chief risk officer designated senior management function. This will involve major changes to A’s role as executive director.

The answer to example (5) applies.

The application to the PRA to perform the PRA function should be accompanied by a single document that:

(1) contains the statement of responsibilities for the new function;

(2) contains the revised statement of responsibilities for the executive director function; and

(3) reflects the fact that A is no longer performing the money laundering function.

(10) A firm has approval for A to perform the executive director function and the money laundering function.

A then ceases to perform the money laundering function but continues to perform the executive director function.

The firm must submit:

(a) Form C for the money laundering function;

(b) Form J; and

(c) a single updated statement of responsibilities document that covers the executive director function.

(11) A has approval to perform the executive director function and the PRA's chief risk officer designated senior management function for the same firm. Later, A gives up his role as chief risk officer.

The firm must submit:

(a) Form C for the PRA function;

(b) Form J; and

(c) a single updated statement of responsibilities document that covers the executive director function.

The firm should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the notification to the PRA.

(12) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm.

The application is rejected.

The single statement of responsibilities document submitted as part of the application will no longer be correct as it reflects the proposed new approval.

If the only changes to the single document in the version sent with the application are ones, clearly and exclusively tied to the new function, the firm will not need to amend the document as the changes will automatically fall away.

In any other case (for instance if the application is approved conditionally), it is likely that the firm will need to update it using Form J.

In any case, the FCA may contact the firm to agree a revised single statement of responsibilities document.

(13) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm.

This will not result in any changes to A’s duties as an executive director. However, there have been some insignificant changes to A’s role as an executive director since the firm submitted the most recent single statement of responsibilities document. The changes are not connected to A’s appointment to perform the money laundering function.

The answer for example (4) applies.

The single statement of responsibilities document should be updated to cover the changes to A’s duties as executive director, as well as covering A’s new money laundering role. It does not matter that the changes to A’s role as an executive director are not significant.

(14) A has approval to perform the executive director function. Later, A’s business unit grows in size and so the firm needs to apply for A to be approved to perform the PRA's Head of Key Business Area designated senior management function. However, A’s responsibilities do not change.

The firm should submit a revised single statement of responsibilities document along with the application to perform the PRA function.

The firm should submit a single statement of responsibilities document that covers both the FCA and the PRA functions.

It should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the application to the PRA.

2(15) Firm X has a branch in the United Kingdom. Firm Y is a UK authorised subsidiary3 of firm X.

Firm X is a third-country relevant authorised person and firm3 Y is a UK relevant authorised person.

Both firms apply for approval for the same individual (P) to perform the executive3 director function.

There should be separate statement of responsibilities for P for each firm.

The single statement of responsibilities document means the single document described in SUP 10C.11.13D

Need for a complete set of current statements of responsibilities

SUP 10C.11.20R

A firm must, at all times, have a complete set of current statement of responsibilities for all its SMF managers.

SUP 10C.11.21G
  1. (1)

    A complete set of current statement of responsibilities means all statements of responsibilities that the firm has provided to the FCA or PRA as revised under section 62A of the Act.

  2. (2)

    A statement of responsibilities is not current if the person in question no longer performs any of the controlled function to which it relates.

Past versions

SUP 10C.11.22G
  1. (1)

    A firm should consider past versions of its statements of responsibilities as an important part of its records and as an important resource for the FCA in supervising the firm.

  2. (2)

    Past versions of a firm's statements of responsibilities form part of its records under SYSC 9.1 (General rules on record-keeping).

What statements of responsibilities should contain: general

SUP 10C.11.23G

A statement of responsibilities should:

  1. (1)

    show clearly how the responsibilities that the SMF manager performs as part of their FCA-designated senior management function fit in with the firm's overall governance and management arrangements; and

  2. (2)

    be consistent with the firm's management responsibilities map.

(See SYSC 4.5.9G, SYSC 4.6.12G and SYSC 4.6.27G2 for more about this.)

SUP 10C.11.24G
  1. (1)

    A statement of responsibilities (including its attachment sheet for additional information) should:

    1. (a)

      be complete by itself;

    2. (b)

      not refer to documents not forming part of it; and

    3. (c)

      only contain material about the matters that this chapter, the corresponding PRA requirements and the Act say should be included in it.

  2. (2)

    For example, if it is necessary to include relevant material from the firm's report and accounts, the statement of responsibilities should not attach the whole of the report and accounts or cross refer to them. Instead it should include a summary of the relevant part only.

SUP 10C.11.25G

A statement of responsibilities should be:

  1. (1)

    practical and useable by the FCA;

  2. (2)

    without unnecessary detail; and

  3. (3)

    succinct and clear.

SUP 10C.11.26G
  1. (1)

    SYSC or another part of the regulatory system will generally impose requirements (referred to as ‘prescribed requirements’ in this paragraph) that relate to a particular post or set of responsibilities.

  2. (2)

    For instance, these include:

    1. (a)

      the responsibilities that go with the FCA required functions; and

    2. (b)

      the FCA-prescribed senior management responsibilities, the PRA-prescribed senior management responsibilities and the PRA-prescribed UK branch senior management responsibilities2.

  3. (3)

    The allocation of responsibilities under a statement of responsibilities should not reduce or alter the scope of any applicable prescribed requirements.

  4. (4)

    If:

    1. (a)

      the responsibilities that the SMF manager carries out as described in the statement of responsibilities go beyond the prescribed requirements; or

    2. (b)

      the firm includes additional information about any prescribed requirements;

    the additional responsibilities or additional information should not:

    1. (c)

      reduce or alter the scope of the prescribed requirements; or

    2. (d)

      dilute or undermine the prescribed requirements.

SUP 10C.11.27G
  1. (1)

    A firm's statements of responsibilities for its SMF managers should together demonstrate that there are no gaps in the allocation of responsibilities among its SMF managers.

  2. (2)

    A firm's statements of responsibilities should be interpreted, where possible, so as to avoid any gaps in the allocation of responsibility for its activities among its SMF managers.

  3. (3)

    Paragraphs (1) and (2) are not relevant to EEA relevant authorised persons.2

SUP 10C.11.28G
  1. (1)

    A statement of responsibilities of an SMF manager should include details about any:

    1. (a)

      FCA-prescribed senior management responsibilities, PRA-prescribed senior management responsibilities and PRA-prescribed UK branch senior management responsibilities2 allocated to the SMF manager;

    2. (b)

      functions that are included in a PRA controlled function under SUP 10C.9 (Minimising overlap with the PRA approved persons regime); and

    3. (c)

      responsibility for a function allocated to the SMF manager under SYSC 4.7.8R (Allocation of overall responsibility for a firm’s activities, business areas and management functions) or SYSC 4.8.10R (Local responsibility for a branch’s activities, business areas and management functions)2.

  2. (2)

    Paragraph (1)(c) applies even if the responsibility is excluded from the other overall responsibility function under SUP 10C.7.1R(2) (Exclusion for approved person with approval to perform other controlled functions) or from the other local responsibility function under SUP 10C.8.1R(2) (Exclusion for approved person with approval to perform other controlled functions2).

SUP 10C.11.29G
  1. (1)

    The definition of every FCA-designated senior management function contains a responsibility which is inherent, inseparable from and intrinsically built into the specific role.

  2. (2)

    In many ways, this inherent responsibility is the most important responsibility of any given SMF manager, as it provides a rationale as to why that specific function is subject to pre-approval by the FCA in the first place.

  3. (3)

    Even where an SMF manager has not been allocated any other responsibilities by the firm, the responsibility inherent in the definition of their FCA-designated senior management function means that they will be accountable for that aspect of the firm's activities.

  4. (4)

    For instance, even if a person approved to perform the compliance oversight function has no other responsibilities allocated to them, they will be accountable for the Handbook requirements for the compliance oversight function.

SUP 10C.11.30G
  1. (1)

    The FCA may request a firm to include specific responsibility for a regulatory outcome in the statement of responsibilities of the relevant SMF managers.

  2. (2)

    For example, where the FCA asks a firm to take remediation action following an internal or supervisory review or a report under section 166 of the Act (Reports by skilled persons) and considers it appropriate for an SMF manager to take responsibility for that action, it may ask the firm to add an additional, customised, explicit responsibility to the relevant SMF manager's statement of responsibilities.

What statements of responsibilities should contain: dividing and splitting responsibilities

SUP 10C.11.31G
  1. (1)

    Where a responsibility or function is shared or divided between an SMF manager and others, the statements of responsibilities for each SMF manager concerned should make this clear.

  2. (2)

    Where a responsibility or function is divided between an SMF manager and others, the statements of responsibilities for each SMF manager concerned should make it clear for what part of which responsibility or function that SMF manager has responsibility.

  3. (3)

    Together, the statements of responsibilities should show which responsibility or function is shared or divided between which SMF managers or other persons. It should be clear which responsibility or function and which SMF managers or other persons are involved.

SUP 10C.11.32G
  1. (1)

    Where:

    1. (a)

      an FCA-prescribed senior management responsibility; or

    2. (b)

      any function allocated under SYSC 4.7.8R (Allocation of overall responsibility for a firm’s activities, business areas and management functions) or SYSC 4.8.10R (Local responsibility for a branch’s activities, business areas and management functions)2;

    is divided or shared between several SMF managers, the statement of responsibilities for each SMF manager should:

    1. (c)

      explain why this has been done; and

    2. (d)

      give full details of the arrangements, including the names of the other persons and their FCA/PRA Individual Reference Numbers (IRN) (if known).

  2. (2)

    Where a responsibility or function is shared between several SMF managers, this should be recorded in the same way in the statements of responsibilities of each of them. This should also be consistent with the firm's management responsibilities map.

SUP 10C.11.33G
  1. (1)

    Where two or more SMF managers share a responsibility, each will be individually responsible for everything included in that responsibility, including anything inherent in that responsibility (see SUP 10C.11.29G for inherent responsibilities).

  2. (2)

    Where:

    1. (a)

      a responsibility is divided between several SMF managers; but

    2. (b)

      some part of the responsibility has not clearly been allocated to any of them;

    it should be assumed that that part is the joint responsibility of all of them.

What statements of responsibilities should contain: Non-executive directors

SUP 10C.11.34G

In general, the FCA expects the statement of responsibilities of a non-executive director who is an SMF manager to be less extensive than those of an executive SMF manager.

SUP 10C.11.35G

The FCA does not require any of the general duties of a non-executive director described in section 2 of COCON 1 Annex 1 (The general role of a NED) to be included in the non-executive director's statement of responsibilities.