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SYSC 25.1 Application and purpose

Main application rules

SYSC 25.1.1 R

1This chapter applies to:

  1. (1)

    an SMCR banking firm; and

  2. (2)

    an SMCR insurance firm that is a Solvency II firm (including a large non-directive insurer) but excluding:

    1. (a)

      an insurance special purpose vehicle; and

    2. (b)

      a firm in SYSC 23 Annex 1 5.2R (firms in run-off);

except to the extent that this chapter applies a narrower scope to a particular provision.

SYSC 25.1.2 R

1This chapter is not limited to regulated activities or other specific types of activities.

Territorial scope

SYSC 25.1.3 R

1Subject to SYSC 25.1.4R, there is no territorial limitation on the application of this chapter.

SYSC 25.1.4 R

1This chapter applies to an overseas SMCR firm in relation to the activities of a branch maintained by the firm in the United Kingdom.

How this chapter applies to overseas SMCR firms

SYSC 25.1.5 R

1Unless the context requires otherwise, the following terms in this chapter are modified as follows in relation to an overseas SMCR firm:

Reference in this chapter

Modification

firm

treated as a reference to the branch

governing body, management body, senior management and senior personnel

(a) treated as a reference to the branch’s governing body, management body, senior management or senior personnel;

(b) the Glossary definitions of these terms are adjusted so as to refer to the branch rather than the firm as a whole

group

treated as including the rest of the firm

Purpose

SYSC 25.1.6 G
  1. (1)

    1One purpose of the management responsibilities map is to help the firm and the FCA satisfy themselves that the firm has a clear organisational structure (as required by the regulatory system).

  2. (2)

    It also helps the FCA to identify who it needs to speak to about particular issues.

  3. (3)

    The management responsibilities map helps the FCA to operate its powers and requirements for individuals. For example it helps the FCA:

    1. (a)

      to identify who is accountable if something goes wrong;

    2. (b)

      to understand the role of the approved person (or candidate) in the firm and therefore to judge how to use its powers under the regime for SMCR firms, such as the power to grant or refuse approval of an SMF manager or to amend or impose conditions.

SYSC 25.2 Management responsibilities maps: Main rules

General rule

SYSC 25.2.1 R
  1. (1)

    1A UK SMCR firm must, at all times, have a comprehensive and up-to-date document (the management responsibilities map) that describes its management and governance arrangements.

  2. (2)

    An overseas SMCR firm must, at all times, have a comprehensive and up-to-date document (the management responsibilities map) that describes the management and governance arrangements for any branch it maintains in the United Kingdom.

  3. (3)

    A management responsibilities map must include:

    1. (a)

      details of the reporting lines and the lines of responsibility; and

    2. (b)

      reasonable details about:

      1. (i)

        the persons who are part of those arrangements; and

      2. (ii)

        their responsibilities.

      (See further requirements in SYSC 25.2.3R.)

SYSC 25.2.2 R

1The firm’s management responsibilities map must show clearly how any responsibilities covered by a firm’s management responsibilities map are shared or divided between different persons.

Specific requirements

SYSC 25.2.3 R

1A management responsibilities map must include:

  1. (1)
    1. (a)

      the names of all the firm’s:

      1. (i)

        approved persons (including PRA approved persons);

      2. (ii)

        members of its governing body and (if different) management body who are not approved persons;

      3. (iii)

        senior management;

      4. (iv)

        senior personnel; and

    2. (b)

      details of the responsibilities which they hold;

  2. (2)

    all responsibilities described in any current statement of responsibilities;

  3. (3)

    details of the management and governance arrangements relating to:

    1. (a)

      the FCA-prescribed senior management responsibilities; and

    2. (b)

      the PRA-prescribed senior management responsibilities;

    including the identity of the persons to whom those functions are allocated;

  4. (4)

    the reasons why (if it has done any of these things) the firm:

    1. (a)

      allocates responsibility for an FCA-prescribed senior management responsibility to more than one person jointly; or

    2. (b)

      divides responsibility for an FCA-prescribed senior management responsibility between different persons;

  5. (5)

    details about the functions allocated under, SYSC 26 (Senior managers and certification regime: Overall and local responsibility), including:

    1. (a)

      what the activities, business areas and management functions allocated under that chapter are;

    2. (b)

      the management and governance arrangements relating to them;

    3. (c)

      [deleted]

    4. (d)

      the reasons why (if it has done this) the firm allocates responsibility for any such function to more than one person jointly; and

    5. (e)

      the identity of the persons to whom those functions are allocated;

  6. (6)

    matters reserved to the governing body (including the terms of reference of its committees) and, if different, the management body;

  7. (7)

    details of how the firm’s management and governance arrangements fit together with:

    1. (a)

      its group; and

    2. (b)

      any other person in (8);

  8. (8)

    details of the extent to which the firm’s management and governance arrangements are provided by, or shared with, other members of its group or others;

  9. (9)

    details of the reporting lines and the lines of responsibility (if any) between the firm and those who carry out functions in relation to it and:

    1. (a)

      other members of its group or other third parties;

    2. (b)

      persons acting as employees or officers of, or otherwise acting for, anyone in (a); or

    3. (c)

      committees or other bodies of anyone in (a);

  10. (10)

    reasonable information about the persons described or identified in the management responsibilities map, including:

    1. (a)

      whether they are employees of the firm and, if not, by whom they are employed;

    2. (b)

      if they are certification employees of the firm; and

    3. (c)

      the responsibilities they have in relation to other group members or any other person in (8); and

  11. (11)

    details of how (1) to (10) fit together and fit into the firm’s management and governance arrangements as a whole.

SYSC 25.2.4 R

1 SYSC 25.2.3R(1) does not require the firm to include the names of approved persons under SUP 10A.1.16BR (Appointed representatives).

SYSC 25.3 [This part has been left blank deliberately]

[This part has been left blank deliberately]1

SYSC 25.4 Guidance about what should be in a management responsibilities map

Material applicable to all firms

SYSC 25.4.1 G

1The management responsibilities map should be consistent with the statements of responsibilities.

SYSC 25.4.2 G

1The statements of responsibilities and the management responsibilities map should all be prepared in a way that makes it simple to see how the responsibilities allocated in a particular statement of responsibilities fit into the overall system of management and governance of the firm.

SYSC 25.4.3 G

1The management responsibilities map should include functions that are:

  1. (1)

    included in a PRA controlled function under the PRA rules complementing SUP 10C.9 (Minimising overlap with the PRA approved persons regime) (as listed in SUP 10C.9.6G(2));

  2. (2)

    excluded from the other overall responsibility function under SUP 10C.7.1R(2) (Exclusion for approved person with approval to perform other designated senior management functions); or

  3. (3)

    excluded from the other local responsibility function under SUP 10C.8.1R(2) (Exclusion for approved person with approval to perform other designated senior management functions).

SYSC 25.4.4 G

1A firm’s management responsibilities map should demonstrate that there are no gaps in the allocation of responsibilities among its management.

SYSC 25.4.5 G

1A firm need only include summary details of the persons in SYSC 25.2.3R(1).

SYSC 25.4.6 G

1A firm’s SMF managers and members of its governing body may overlap with its senior management and senior personnel. If so, the firm does not have to give the same details twice.

SYSC 25.4.7 G

1A firm should include details about individuals in addition to the details in SYSC 25.2.3R(1), (3) and (5) if they are needed to make the management responsibilities map clear. For example, if the same individual has responsibilities in a number of different areas of the firm it may be necessary to make this clear.

SYSC 25.4.8 G

1A firm should only include summary details about statements of responsibilities under SYSC 25.2.3R(2). There is no need to duplicate the statements of responsibilities. The main aim of including material about statements of responsibilities in the management responsibilities map is to show how that material:

  1. (1)

    fits into the firm’s overall governance structure; and

  2. (2)

    for each statement of responsibilities, fits with the others.

SYSC 25.4.9 G

1A management responsibilities map should include a checklist confirming that all FCA-prescribed senior management responsibilities have been allocated or, if some have not been allocated, the reason why.

SYSC 25.4.10 G

1If:

  1. (1)

    any designated senior management function is performed by; or

  2. (2)

    any FCA-prescribed senior management responsibility is allocated to;

more than one person, a firm’s management responsibilities map should give details of how the performance or discharge of the responsibilities is to be carried out by those persons.

SYSC 25.4.11 G

1The executive director function, the other local responsibility function, the partner function and the other overall responsibility function are defined generally and generically and can be performed by several people. Therefore, there is no need to explain why several people perform one of the functions.

SYSC 25.4.12 G

1The material in SUP 10C.11.31G and SUP 10C.11.32G (recording sharing and splitting of responsibilities in statements of responsibilities) also applies to a management responsibilities map.

Branches of overseas firms

SYSC 25.4.13 G

1One effect of SYSC 25.1.5R is that an overseas SMCR firm should draw up its management responsibilities map as if the rest of the firm outside the UK branch were a separate company in its group. This means, for example, that the map should include:

  1. (1)

    details of how the branch’s management and governance arrangements fit together with the wider firm;

  2. (2)

    details of the extent to which the branch’s management and governance arrangements are provided by, or shared with, the wider firm; and

  3. (3)

    details of the reporting lines and the lines of responsibility between the branch and those who carry out functions in relation to it and the wider firm and persons acting for it.

Small firms

SYSC 25.4.14 G
  1. (1)

    1The FCA expects that the management responsibilities map of a small and non-complex firm is likely to be simple and short. It may be no more than a single sheet of paper.

  2. (2)

    See SYSC 24.3.5G for what small and non-complex mean.

SYSC 25.5 Management responsibilities map should be a single document

SYSC 25.5.1 R

1A management responsibilities map must be a single document.

SYSC 25.5.2 G
  1. (1)

    1The requirement for a management responsibilities map to be a single document does not mean that it has to be a single sheet of paper or must be capable of being reproduced as one.

  2. (2)

    A management responsibilities map may be made up of a folder with several files or items in it. The folder may be electronic.

  3. (3)

    However, a firm that creates a management responsibilities map in this way should ensure that its approach is compatible with it being a single document. In particular:

    1. (a)

      there should be a single item that identifies every item making up the management responsibilities map and shows where each item can be found;

    2. (b)

      for example, this could be a contents list of the items making up the management responsibilities map with electronic links to each of them;

    3. (c)

      the management responsibilities map should be complete by itself and should not refer to documents not forming part of it;

    4. (d)

      every item in the management responsibilities map should only contain material about the matters required by this chapter to be included in management responsibilities maps;

    5. (e)

      for example, if there is relevant material in the firm’s report and accounts, the folder should only contain the relevant parts or a link to those parts.

  4. (4)

    The folder and its contents should be easily identifiable as the firm’s management responsibilities map.

SYSC 25.5.3 G

1Although a management responsibilities map can be large and complex, SYSC 25.4.14G explains that, for small non-complex firms, it may be small and simple.

SYSC 25.6 Management responsibilities maps: Material only relevant to EEA SMCR firms

Application

SYSC 25.6.1 R

1This section applies to an EEA SMCR firm.

Purpose

SYSC 25.6.2 G
  1. (1)

    1The management responsibilities map is an important support to the FCA’s functions as Host State competent authority.

  2. (2)

    Having requirements and powers that apply directly to individuals helps to make the requirements on firms that the FCA is required or entitled to impose as Host State competent authority more effective.

  3. (3)

    As explained in SYSC 25.1.6G (Purpose), the management responsibilities map also helps the FCA to operate its powers and requirements for individuals.

  4. (4)

    By helping the FCA to better understand how the branch is structured, the management responsibilities map also helps the FCA to carry out more effective supervision of conduct of business, money laundering and other Host State responsibilities.

SYSC 25.6.3 G

1This chapter is not intended to extend the application of the common platform requirements or other parts of SYSC to matters which are reserved by an EU instrument to the firm’s Home State regulator in relation to EEA SMCR firms.

FCA-prescribed senior management responsibilities

SYSC 25.6.4 G

1 SYSC 25.2.3R (Specific requirements) requires a management responsibilities map to cover the allocation of FCA-prescribed senior management responsibilities. This is not relevant to an EEA SMCR firm as FCA-prescribed senior management responsibilities do not apply to it.

Leaving out information already supplied

SYSC 25.6.5 R

1An EEA SMCR firm may exclude from its management responsibilities map:

  1. (1)

    any information contained in its requisite details;

  2. (2)

    any information contained in any notice of changes to its requisite details under the EEA Passport Rights Regulations; and

  1. (3)

    any other information that has been supplied by the firm to the FCA or the PRA (including through the firm’s Home Statecompetent authority) if:

    1. (a)

      that information was supplied to the FCA or the PRA as a Host State competent authority; and

    2. (b)

      the Single Market Directives or any other EU legislation provides for the supply of that information to the FCA or the PRA as described in (a).

SYSC 25.6.6 G

1Information contained in SYSC 25.6.5R(1) and (2) covers:

  1. (1)

    details about the branch contained in the notice given by the firm’s Home State competent authority as part of the process for establishing the branch in the United Kingdom; and

  2. (2)

    any updates to that information under the EEA Passport Rights Regulations.

SYSC 25.6.7 G

1The management responsibilities map of an EEA SMCR firm may therefore consist of information:

  1. (1)

    that has changed since its requisite details were supplied or were last changed; or

  2. (2)

    that is not covered in the firm’s Home State competent authority’s passport notification.

SYSC 25.6.8 G

1The FCA expects that an EEA SMCR firm that excludes information from its management responsibilities map under SYSC 25.6.5R will identify in its management responsibilities map the documents supplied to the FCA or the PRA where the omitted information can be found.

SYSC 25.6.9 G

1In practice an EEA SMCR firm may find it easier to prepare its management responsibilities map without omitting any information under SYSC 25.6.5R so that all the information referred to in SYSC 25.2 (Management responsibilities maps: Main rules) can be found in a single integrated document.

SYSC 25.6.10 G

1 SYSC 25.4 (Guidance about what should be in a management responsibilities map) does not take into account the right of a firm to omit information under SYSC 25.6.5R. It assumes that the firm will prepare a single document under SYSC 25.6.9G. However SYSC 25.4 is not intended to take away the right to omit information under SYSC 25.6.5R.

SYSC 25.7 Guidance about SYSC 25 Annex 1G

SYSC 25.7.1 G

1This section gives guidance about SYSC 25 Annex 1G (Examples of the business activities and functions of an SMCR firm).

Purpose of SYSC 25 Annex 1G

SYSC 25.7.2 G
  1. (1)

    1A firm may use SYSC 25 Annex 1G as a prompt to see whether its management responsibilities map covers all its business activities.

  2. (2)

    A firm may wish to prepare its management responsibilities map using the same split of activities, where this is appropriate.

SYSC 25.7.3 G

As mentioned in SYSC 26.11.2G, a firm may also use SYSC 25 Annex 1G as a prompt when allocating responsibilities under SYSC 26 (Senior managers and certification regime: Overall and local responsibility).

SYSC 25.7.4 G

1If a firm uses SYSC 25 Annex 1G to help it prepare its management responsibilities map or when allocating responsibilities under SYSC 26 (Senior managers and certification regime: Overall and local responsibility), it should bear in mind that it is not comprehensive and that there may be other business activities and functions that are relevant to that firm but that are not included in SYSC 25 Annex 1G (see SYSC 25.7.8G).

SYSC 25.7.5 G

1The purpose of SYSC 25 Annex 1G is not say how an SMCR firm should:

  1. (1)

    prepare its management responsibilities map;

  2. (2)

    allocate responsibilities amongst its senior management; or

  3. (3)

    organise itself.

Contents of SYSC 25 Annex 1G

SYSC 25.7.6 G

1 SYSC 25 Annex 1 G sets out examples of the business activities and functions that the FCA thinks could be relevant to most large or complex firms, although the FCA does not require firms (large or small, complex or non-complex) to organise themselves in this way.

SYSC 25.7.7 G

1Most or all of these activities and functions will normally apply to a complex firm. Many of them may not apply to a non-complex firm.

SYSC 25.7.8 G
  1. (1)

    1SYSC 25 Annex 1G is not comprehensive. While it is intended to cover most front-line business activities of an SMCR firm, it does not cover all internal oversight and monitoring functions.

  2. (2)

    For example, it does not cover compliance or internal audit or the firm’s governing body or its committees.

SYSC 25.8 Management responsibilities maps: Records

SYSC 25.8.1 G

1A firm should consider past versions of its management responsibilities map as an important part of its records and as an important resource for the FCA in supervising the firm.

SYSC 25.8.2 G

1Past versions of a firm’s management responsibilities map form part of its records under the regulatory system.

SYSC 25.8.3 R
  1. (1)

    1This rule applies to a Solvency II firm (including a large non-directive insurer) to which SYSC 25.1.1R(2) (Main application rules) applies.

  2. (2)

    A firm must retain each version of its management responsibilities map for:

    1. (a)

      (in the case of a large non-directive insurer) six years; or

    2. (b)

      (in any other case) ten years;

    from the date on which it was superseded by a more up-to-date version.

  3. (3)

    A firm must be prepared to provide each version to the FCA on request for as long as the firm is required to retain it.

SYSC 25.9 Handover procedures and material

Application

SYSC 25.9.1 R

1This section applies to a firm that meets the following conditions:

  1. (1)

    it falls within SYSC 25.1.1R (Application and purpose); and

  2. (2)

    it falls within one of the following categories:

    1. (a)

      it is a UK SMCR firm; or

    2. (b)

      it is a third-country SMCR banking firm.

SYSC 25.9.2 R

1For third-country SMCR banking firms, references in this section to an SMF manager are references to the SMF manager when acting as an SMF manager for the firm’s branch in the United Kingdom.

SYSC 25.9.3

1[This has been left blank deliberately]

Rules about handover material

SYSC 25.9.4 R

1A firm must take all reasonable steps to ensure that:

  1. (1)

    a person who is becoming an SMF manager;

  2. (2)

    an SMF manager:

    1. (a)

      taking on a new job or new responsibilities; or

    2. (b)

      whose responsibilities or job are being changed; and

  3. (3)

    anyone who has management or supervisory responsibilities for the SMF manager in (1) or (2);

has, when the SMF manager starts to perform their new or revised responsibilities or job, all information and material that a person in (1) to (3) could reasonably expect to have to perform those responsibilities or that job effectively and in accordance with the requirements of the regulatory system.

SYSC 25.9.5 R
  1. (1)

    1A firm must have a policy about how it complies with SYSC 25.9.4R, including the systems and controls it uses.

  2. (2)

    A firm must make and maintain adequate records of the steps taken to comply with SYSC 25.9.4R.

SYSC 25.9.6 G

1The information and material in SYSC 25.9.4R that should be made available includes details:

  1. (1)

    about unresolved or possible breaches of the requirements of the regulatory system; and

  2. (2)

    of any unresolved concerns expressed by the FCA, the PRA or another regulatory body.

SYSC 25.9.7 G
  1. (1)

    1The main purpose of SYSC 25.9.4R is to help the SMF manager with their new or revised responsibilities or job and to help the managers of SMF managers.

  2. (2)

    The information and material should be practical and helpful and not just a record.

  3. (3)

    The material should include an assessment of what issues should be prioritised.

  4. (4)

    The information and material should include judgement and opinion, not just facts and figures.

Handover arrangements and certificates

SYSC 25.9.8 G
  1. (1)

    1Where the responsibilities or job in SYSC 25.9.4R are being taken over from another person, the firm should have arrangements for an orderly transition.

  2. (2)

    As part of these arrangements, the firm should take reasonable steps to ensure that the predecessor contributes to the information and material in SYSC 25.9.4R all that would be reasonable to expect the predecessor to know and consider relevant, including the predecessor’s opinions.

  3. (3)

    One way of doing this could be for the predecessor to prepare a handover certificate.

  4. (4)

    However, the FCA accepts that there will be cases in which it will be impractical to ask the predecessor to prepare a handover certificate.

Application of this section to other parts of a firm’s management

SYSC 25.9.9 G

1A firm should consider whether to apply the procedures in this section to other parts of its management.

SYSC 25 Annex 1 Examples of the business activities and functions of an SMCR firm

Annex 1 G

1 Business areas and management functions

Explanation

(1) Payment services

This means:

(1) payment services;

(2) issuing and administering other means of payment (for example, cheques and bankers' drafts);

(3) issuing electronic money; and

(4) current accounts.

(2) Settlement

This means clearing and settlement of any transactions described in rows (3) and (6) to (9) of this annex, in relation to the assets covered by (9).

It also includes clearing and settlement of any transactions described in row (10).

(3) Investment management

This has the same meaning as managing investments with the following adjustments:

(a) it covers all types of assets; and

(b) the exclusions in the Regulated Activities Order do not apply.

It also covers fund management.

(4) Financial or investment advice

This includes advising on investments.

(5) Mortgage advice

This has the same meaning as advising on regulated mortgage contracts but is expanded to cover land anywhere in the world and to cover security of any kind over land.

(6) Corporate investments

This means acquiring, holding, managing and disposing a firm’s investments made for its own account.

(7) Wholesale sales

This means the selling of any investment to a person other than a retail customer.

It does not include the activities in (1).

(8) Retail sales

This means the selling of any investment to a retail customer.

It includes savings accounts. It does not include the activities in (1).

(9) Trading for clients

This means dealing in investments as agent and execution of orders on behalf of clients but the list of products also includes money market instruments and foreign exchange.

(10) Market making

This has the same meaning as it does in MIFID (see the definition of market maker in article 4.1 (7)).

(11) Investment research

(12) Origination/syndication and underwriting

Origination and syndication include:

(1) entering into or acquiring (directly or indirectly) any commitment or investment with a view to transferring some or all of it to others, or with a view to others investing in the same transaction;

(2) sub-participation; and

(3) any transaction described in the Glossary definition of originator.

Underwriting includes underwriting that is not on a firm commitment basis.

A commitment or investment includes an economic interest in some or all of it.

This activity also includes the provision of services relating to such transactions.

(13) Retail lending decisions

Deciding whether, and on what terms, to lend to retail customers.

Lending includes granting credit, leasing and hire (including finance leasing).

(14) Wholesale lending decisions

Deciding whether, and on what terms, to lend to persons who are not retail customers.

Lending includes granting credit, leasing and hire (including finance leasing).

(15) Design and manufacturing of products intended for wholesale customers

Wholesale customers mean persons who are not retail customers.

(16) Design and manufacture of products intended for retail customers

(17) Production and distribution of marketing materials and communications

This includes financial promotions.

(18) Customer service

This means dealing with clients after the point of sale, including queries and fulfilment of client requests.

(19) Customer complaints handling

This includes the firm’s compliance with DISP.

It also includes:

(1) any similar procedures relating to activities that do not come under the jurisdiction of the Financial Ombudsman Service;

(2) activities that take place outside the UK; and

(3) activities that are not subject to any ombudsman service.

(20) Collection and recovering amounts owed to a firm by its customers

Dealing with customers in arrears

‘Customer’ means any person falling into any of the definitions of client in the Glossary so far as they apply to the FCA’s Handbook. The definition is extended to cover all services provided by the firm and not just those that are provided in the course of carrying on a regulated activity or an ancillary service.

(21) Middle office

This means risk management and controls in relation to, and accounting for, transactions in securities or derivatives.

(22) The firm’s information technology

This includes cybersecurity.

(23) Business continuity planning

If SYSC 4.1.6R and SYSC 4.1.7R (Business continuity) apply to the firm, this includes the systems and policies used to comply with those rules.

This business area of function includes operational continuity, resilience and strategy.

(24) Human resources

This includes recruitment, training and competence and performance monitoring.

(25) Incentive schemes for the firm’s staff

This is not limited to schemes based on sales.

(26) Contributing input data to a BMR benchmark administrator (other than an Annex II benchmark administrator)

(27) Administering a benchmark

(28) Administration of insurance

This means the activity described in SYSC 27.7.5G(1)(k) (examples of what the significant management FCA certification function can cover).

(29) Issuing commitments

This means the activity described in SYSC 27.7.5G(1)(i) (examples of what the significant management FCA certification function can cover).

(30) Processing

This means the activity described in SYSC 27.7.5G(1)(j) (examples of what the significant management FCA certification function can cover).

(31) Outsourcing, procurement and vendor management

Management of services shared with other group members

(32) Internal operations

2(33) The firm’s legal department

Note (1): The purpose of this annex is explained in SYSC 25.7 (Guidance about SYSC 25 Annex 1G) and SYSC 26.11.2G.

Note (2): A firm does not have to use the split of example activities in this annex for the purposes in Note (1). If a firm does decide to use it, the firm should adapt it to suit the firm’s management arrangements better.

For example, a firm may find the split of activities into retail and wholesale activities unsuitable. If so, the firm might:

(a) treat retail and wholesale activities together; or

(b) use its own definition of retail and wholesale activities.