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Status: You are viewing the version of the handbook as on 2019-01-01.

SYSC 26.6 Meaning of local and overall responsibility: General

UK firms

SYSC 26.6.1G

1The meaning in practice of overall responsibility for a function of a UK SMCR firm depends on whether that function is under the management of the firm’s governing body or not.

SYSC 26.6.2G
  1. (1)

    1Certain EU legislation requires the governing body of a firm to have ultimate responsibility for, and the prime and leading role in, managing the firm.

  2. (2)

    In particular this is the case under:

    1. (a)

      article 88 of the CRD (Governance arrangements);

    2. (b)

      article 9 of MiFID (management body); and

    3. (c)

      article 40 of the Solvency II Directive (Responsibility of the administrative, management or supervisory body).

  3. (3)

    This means that the governing body of a UK SMCR firm subject to these requirements will manage the conduct of the whole of the business of the firm. In turn that means that the parts of this chapter dealing with a function that is not managed by the firm’s governing body will not be relevant to it.

SYSC 26.6.3G

1The FCA recognises that for some UK SMCR firms not subject to the requirements in SYSC 26.6.2G, some activities, business areas and functions of a firm may not be under the management of its governing body. This may be the case where, for example:

  1. (1)

    the firm does not have a governing body; or

  2. (2)

    the firm’s shareholders play a key role in managing it through, for example, a group management committee.

Branches of overseas firms

SYSC 26.6.4G
  1. (1)

    1SYSC 26.3.2R(1) refers to the activities, business areas and management functions of the branch that are under the management of the branch’s governing body. However, the FCA recognises that for some branches, some activities, business areas and functions of the branches may not be under the management of the branch’s governing body. This may be the case where the branch does not have its own governing body or where it is organised in such a way that certain functions are under the management of a person or body outside the branch’s management structure. In those circumstances, it would not be appropriate to require the firm to allocate overall responsibility for that matter to a person who is part of the management structure of the branch.

  2. (2)

    The requirements to allocate responsibility for activities, business areas and functions of a branch under SYSC 26.3.2R(1) and (2) respectively are intended to allow for the difference described in (1). In particular:

    1. (a)

      SYSC 26.3.2R(1) is intended to cater for the situation where a particular activity, business area or function of the branch is under the management of the branch’s governing body. In that situation, the firm should allocate responsibility for that matter under SYSC 26.3.2R(1); and

    2. (b)

      SYSC 26.3.2R(2) is intended to cater for the situation where a particular activity, business area or function of the branch is not under the management of branch’s governing body. In that situation, the firm should allocate responsibility for that matter under SYSC 26.3.2R(2).

Further guidance

SYSC 26.6.5G

1SYSC 26.7 gives guidance on the effect of SYSC 26.3 (Main rules) when a function is under the governing body’s management. SYSC 26.8 gives guidance on the effect of SYSC 26.3 when the function is not.

Day-to-day or ultimate control

SYSC 26.6.6G

1Having overall or local responsibility under this chapter for a matter does not necessarily mean:

  1. (1)

    having ultimate authority over it; or

  2. (2)

    having day-to-day management control of that function.

SYSC 26.6.7G

1In particular, the ultimate decision-making body of many UK SMCR firms is their governing body, acting collectively.