Content Options

SUP 10C.8 The other local responsibility function (SMF22) and EEA branch senior manager functions (SMF21)1

Other local responsibility function (SMF22)

SUP 10C.8.1R

2A person performs the other local responsibility function in relation to a branch maintained in the United Kingdom by a third-country relevant authorised person if that person:

  1. (1)

    is performing:

    1. (a)

      a function allocated to that person under SYSC 4.8.10R (Local responsibility for a firm’s activities, business areas and management functions) in relation to the firm; or

    2. (b)

      FCA-prescribed senior management responsibility number (8) in the table in SYSC 4.8.9R (functions in relation to CASS) allocated to that person under SYSC 4.8.6R (FCA-prescribed senior management responsibilities); and

  2. (2)

    does not have an approval to perform any other designated senior management function in relation to the branch.

SUP 10C.8.2 G

The table in SUP 10C.8.3G gives:

  1. (1)

    examples of how SUP 10C.8.1R(2) works; and

  2. (2)

    other examples of how the other local responsibility function works.

SUP 10C.8.3G

Table: Examples of how the other local responsibility function applies

Example

Comments

(1) ‘A’ is allocated local responsibility for one of a branch’s main business lines. A is also appointed to perform a PRA-designated senior management function for the same branch.

A only needs approval to perform the PRA-designated senior management function.

(2) ‘A’ is outside the branch’s management structure and A’s responsibilities for the branch are limited to setting overall strategy for the branch. A does not have responsibility for implementing that strategy.

A is not performing the other local responsibility function. The reason for this is explained in SYSC 4.8.27G. SUP 10C.8.1R(2) is irrelevant to this example.

(3) A small branch undertakes two business lines (wholesale lending and corporate investments). ‘A’ is head of wholesale lending and is also an executive director of the branch. ‘B’ is head of corporate investments and does not sit on the branch management committee but reports to it on corporate investments. The branch allocates local responsibility for these functions to A and B. Neither A nor B performs any other PRA or FCA-designated senior management functions.

A only needs approval to perform the executive director function3. B needs approval to perform the other local responsibility function.

(4) A branch does not have a Head of Internal Audit. ‘P’ is allocated local responsibility for internal audit in relation to that branch.

P needs approval to perform the other local responsibility function. However, if P has already been approved to perform another PRA or FCA designated senior management function, then P will not be performing the other local responsibility function.

(5) ‘A’ is appointed to perform the executive3 director function. The same branch also allocates local responsibility for some branch functions to A.

A only needs approval to perform the executive3 director function.

(6) ‘A’ is approved to perform the other local responsibility function. Later, A is appointed to perform the executive3 director function for the same firm.

A requires approval for the other local responsibility function when A is first appointed. When A is later approved to perform the executive3 director function, A stops performing the other local responsibility function. The firm should use Form E to apply for approval for A to perform the executive3 director function.

(7) ‘A’ is appointed to perform:

(a) the compliance oversight function for one firm (Firm X) in a group (which may or may not be a relevant authorised person); and

(b) a function coming within the scope of the other local responsibility function for another firm (which is a third-country relevant authorised person) in the same group (Firm Y).

A needs approval to perform the compliance oversight function for Firm X and the other local responsibility function for Firm Y.

(8) ‘A’ is appointed to take on some functions that come within the other local responsibility function. Later, A is appointed as chief risk officer.

On A’s first appointment, A will need to be approved to perform the other local responsibility function.

On being approved as chief risk officer, A stops performing the other local responsibility function as being chief risk officer is a PRA designated senior management function.

(9) ‘A’ is appointed as an executive director. A then resigns and takes up a job with the same firm coming within the other overall responsibility function.

On A’s first appointment, A will need to be approved to perform the executive3 director function. A will need to get approval to perform the other overall responsibility function before A gives up being a director.

Note: Local responsibility is explained in SYSC 4.8.10R (Third-country relevant authorised persons: Allocation of responsibilities)

EEA branch senior manager function (SMF21):

SUP 10C.8.4R
  1. (1)

    A person performs the EEA branch senior manager function in relation to the branch in the United Kingdom of an EEA relevant authorised person if that person has significant responsibility for one or more significant business units of the branch that carry on any of the activities listed in (2).

  2. (2)

    The activities listed in this paragraph are:

    1. (a)

      designated investment business other than dealing in investments as principal, disregarding article 15 of the Regulated Activities Order;

    2. (b)

      processing confirmations, payments, settlements, insurance claims, client money and similar matters, in so far as this relates to designated investment business;

    3. (c)

      the activity of accepting deposits from banking customers and activities substantially connected to that activity to the extent that it does not fall within (a) or (b), above; and

    4. (d)

      activities that are subject to CASS.

  3. (3)

    In considering whether a person performs the functions in (2), only activities carried on from the branch are relevant.

  4. (4)

    Paragraph (2)(d) only applies in relation to the activities of a firm for which it has a top-up permission.

SUP 10C.8.5G
  1. (1)

    The definition of the EEA branch senior manager function (SMF21) is similar to that of the significant management FCA-specified significant-harm function under SYSC 5.2.35R. However, only the former is an FCA-designated senior management function.

  2. (2)

    The main differences are:

    1. (a)

      SUP 10C.8.4R(2)(d) is not included in the significant management FCA-specified significant-harm function; and

    2. (b)

      the overriding requirements in SUP 10C.3 (General material about the definition of controlled functions) do not apply to the significant management FCA-specified significant-harm function.

SUP 10C.8.6G

A person performing the EEA branch senior manager function could, for example, be:

  1. (1)

    the head of a significant business unit carrying on the activities in SUP 10C.8.4R(2); or

  2. (2)

    a member of a committee (that is, a person who, together with others, has authority to commit the branch) making decisions about those activities.

EEA branch senior manager function (SMF21): meaning of significance

SUP 10C.8.7G

When considering whether a business unit is significant for the purposes of SUP 10C.8.4R, the firm should take into account all relevant factors in the light of the firm's current circumstances and its plans for the future, including:

  1. (1)

    the risk profile of that unit;

  2. (2)

    its use or commitment of the firm’s capital;

  3. (3)

    its contribution to the profit and loss account;

  4. (4)

    the number of employees or approved persons working in the business unit;

  5. (5)

    the number of customers; and

  6. (6)

    any other factor which makes the unit significant to the conduct of the branch’s affairs.