TC 4.1 Specified requirements for MiFID investment firms and for third country investment firms

TC 4.1.1 R RP

1For a firm in relation to its MiFID or equivalent third country business the rules set out in column 1 of the table in TC 4.1.4R below are amended as set out in column 2.

TC 4.1.2 R RP

In this section, references to relevant individuals are natural persons who, on behalf of the firm:

  1. (1)

    make personal recommendations to retail clients in relation to financial instruments; or

  2. (2)

    provide information to retail clients about financial instruments, investment services or ancillary services; or

who are otherwise responsible for the supervision of a relevant individual who has not acquired the necessary knowledge and competence to act in a capacity prescribed in (1) or (2).

TC 4.1.3 R RP

References in TC 4.1.4R to a relevant individual’s knowledge and competence are to the knowledge and competence necessary to ensure that the firm, on behalf of which the relevant individual acts, is able to meet its obligations under:

  1. (1)

    those rules which implement articles 24 and 25 of MiFID (including those rules which implement related provisions under the MiFID Delegated Directive); and

  2. (2)

    related provisions of the MiFID Org Regulation.

TC 4.1.4 R RP

Unless the context requires otherwise the rules in column 1 of the table are amended as set out in column 2:

Column 1

Column 2

Relevant rule

Amendments

TC 2.1.1R(1)

Insert the following at the end of TC 2.1.1R(1):

“In addition, a firm must not assess a relevant individual as competent unless the firm has satisfied itself that the relevant individual possesses the knowledge and competence to enable the firm to meet its obligations under SYSC 5.1.5ABR. This means that the relevant individual has also:

(a) obtained appropriate experience which means that the relevant individual has successfully demonstrated the ability to carry on the activities through previous work experience. This work must have been performed, on a full-time equivalent basis, for a minimum period of 6 months; and

(b) attained an appropriate qualification which means a qualification or other test or training course that meets the criteria set out by the ESMA guidelines.

The level of knowledge and competence needed to fulfil the firm’s obligations reflects the scope and degree of the activities, as described in TC 4.1.2R above, carried out by the relevant individual.”

TC 2.1.2R

The provision is amended by adding after TC 2.1.2R:

“A relevant individual, who has not acquired the necessary knowledge or competence to carry out the activities in TC 4.1.2R above, cannot provide those activities under supervision for a period exceeding 48 months.”

TC 2.1.5R(1)

The provision is amended by adding after TC 2.1.5R:

“Where a relevant individual has not acquired the necessary knowledge and competence to carry out the activities described in TC 4.1.2R above:

(a) the firm must ensure that the individual supervising the relevant individual:

(i) has been assessed as competent to provide such personal recommendation or information;

(ii) has the necessary skills and resources to act as a competent supervisor; and

(iii) takes responsibility for the personal recommendation or information, referred to in TC 4.1.2R above, provided by the relevant individual under supervision as if the supervisor is providing the personal recommendation including any suitability report (COBS 9) or information; and

(b) the firm must ensure that the supervision provided to a relevant individual is tailored to the services provided by the individual.”

TC 4.1.5 G

2 Rules in this section relate to the requirements in SYSC 5.1.5ABR.

TC 4.1.6 G

2For relevant individuals of an incoming EEA firm, with an establishment maintained by that firm (or its appointed representative) in the United Kingdom, the matters covered by SYSC 5.1.5ABR are matters reserved for the United Kingdom as the Host State regulator.

TC 4.2 Specified requirements for firms carrying on insurance distribution activities

TC 4.2.1 R

1For a firm which carries on insurance distribution activities the rules and guidance set out in column 1 of the table in TC 4.2.5R below are amended as set out in column 2.

TC 4.2.2 R

1 TC 4.2.1R is limited as set out in TC App 2 and TC App 3.

TC 4.2.3 R

1In this section, and the provisions in column 1 of TC 4.2.5R, relevant employees are employees and other persons:

  1. (1)

    directly involved in the carrying on of the firm’sinsurance distribution activities; or

  2. (2)

    within the management structure responsible for the firm’sinsurance distribution activities; or

  3. (3)

    responsible for the supervision of a relevant employee acting in the capacity as set out in (1).

TC 4.2.4 R

1In TC 4.2 ‘employee’:

  1. (1)

    is not restricted to an individual working under a contract of employment; and

  2. (2)

    includes (without limitation) any natural or legal person whose services are placed at the disposal of the firm, under an arrangement between the firm and a third party; and

  3. (3)

    also includes appointed representatives and their employees.

TC 4.2.5 R

Column 1

Column 2

Relevant rules or guidance

Amendments either extending the scope, or adding and/or replacing rules and guidance in Column 1

TC 2.1.1R(1)

The provision is amended by adding after TC 2.1.1R(1):

‘A firm must ensure that a relevant employee’s appropriate knowledge and ability includes the requirements set out in SYSC 28.2.3R and is appropriate to the:

(a) role and activity carried out by the relevant employee within the firm; and

(b) type of distribution and the nature of the products sold.’

TC 2.1.15R ; TC 2.1.17R; TC 2.1.24R and TC 2.1.25R

The rules apply as if references to retail investment advisers included ‘relevant employees’.

TC 2.1.15R

(1)

For firms whose relevant employees are not also retail investment advisers, the rule applies as if ‘35 hours’ was a reference to ‘15 hours’.

(2)

The rule is amended by adding at the end:

‘Where the relevant employee is also a retail investment adviser, the minimum 35 hours appropriate continued professional development requirement in TC 2.1.15R must include a minimum 15 hours covering the requirements in SYSC 28.2.3R.’

TC 2.1.16G

For relevant employees acting in that capacity, the guidance is replaced by the following:

‘To meet the requirements in TC 2.1.15R (as modified by TC 4.2.5R) a relevant employee’s continued training and development can encompass various types of facilitated learning opportunities including courses, e-learning and mentoring.’

TC 2.1.18G , TC 2.1.19G, and TC 2.1.23G

The guidance applies as if references to retail investment advisers included ‘relevant employees’.

TC 2.1.24R

The rule is amended by adding after TC 2.1.24R(2):

‘the firm must be in a position to make available to the FCA, on request, the name of the person responsible for this record keeping requirement.’

TC 3.1.1R

The provision is amended by adding after TC 3.1.1R(3):

‘a firm must keep an up-to-date record of the continued professional training or development completed by each relevant employee in each 12 month period,

(a)

for not less than 3 years after the relevant employee stops carrying out the activity; and

(b)

the firm must be in a position to provide any version of the record to the FCA on request.’

TC 4.2.6 R

1Where the relevant employee is also a retail investment adviser the rules and guidance in TC 4.2.5R apply as follows (unless otherwise stated in TC 4.2.5R):

  1. (1)

    the unamended TCrules and guidance in column 1 of TC 4.2.5R apply in relation to the person when acting in the capacity of a retail investment adviser; and

  2. (2)

    the amended TCrules and guidance in column 2 apply in relation to the person when acting in the capacity of a relevant employee.

TC 4.2.7 G

1 Rules and guidance in this section relate to the requirements in SYSC 28 (Minimum knowledge and competence requirements for carrying out insurance distribution activities).