Related provisions for SYSC 22.6.5

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SYSC 19D.3.3RRP
(1) This section applies in relation to dual-regulated firms Remuneration Code staff, except as set out in (3).(2) When establishing and applying the total remuneration policies for dual-regulated firms Remuneration Code staff, a firm must comply with this section in a way, and to the extent, that is appropriate to its size, internal organisation and the nature, the scope and the complexity of its activities (the dual-regulated firms remuneration principles proportionality rule).(3)
SYSC 19D.3.4RRP
(1) Dual-regulated firms Remuneration Code staff comprises:(a) an employee of a dual-regulated firm whose professional activities have a material impact on the firm’s risk profile, including any employee who is deemed to have a material impact on the firm’s risk profile in accordance with Regulation (EU) 604/2014 of 4 March 2014 (Regulatory technical standards to identify staff who are material risk takers); or(b) subject to (2) and (3), an employee of an overseas firm in SYSC
SYSC 19D.3.5GRP
Where an overseas firm in SYSC 19D1.1.R(1)(d) (i.e., an overseas firm that would have been a dual-regulated firm if it had been a UK domestic firm) wishes to deem an employee who earns more than €750,000 not to be dual-regulated firms Remuneration Code staff, the overseas firm may apply for a waiver of the requirement in SYSC 19D.3.4R in respect of that employee.
SYSC 19D.3.6RRP
A firm must:(1) maintain a record of its dual-regulated firms Remuneration Code staff under the general record-keeping requirements (SYSC 9); and(2) take reasonable steps to ensure that its dual-regulated firms Remuneration Code staff understand the implications of their status as such, including the potential for remuneration which does not comply with certain requirements of the dual-regulated firms Remuneration Code to be rendered void and recoverable by the firm.
SYSC 19D.3.15RRP
A firm must ensure that employees engaged in control functions:(1) are independent from the business units they oversee;(2) have appropriate authority; and(3) are remunerated:(a) adequately to attract qualified and experienced employees; and(b) in accordance with the achievement of the objectives linked to their functions, independent of the performance of the business areas they control.[Note: article 92(2)(e) of CRD and Standard 2 of the FSB Compensation Standards]
SYSC 19D.3.16ERP
(1) A firm's risk management and compliance functions should have appropriate input into setting the remuneration policy for other business areas. The procedures for setting remuneration should allow risk and compliance functions to have significant input into the setting of individual remuneration awards where those functions have concerns about the behaviour of the individuals concerned or the riskiness of the business undertaken.(2) Contravention of (1) may be relied on as
SYSC 19D.3.18GRP
(1) This Remuneration Principle is designed to manage the conflicts of interest which might arise if other business areas had undue influence over the remuneration of employees within control functions. Conflicts of interest can easily arise when employees are involved in the determination of remuneration for their own business area. Where these could arise, they need to be managed by having in place independent roles for control functions (including, notably, risk management
SYSC 19D.3.31RRP
A firm must ensure that:(1) its pension policy is in line with its business strategy, objectives, values and long-term interests;(2) when an employee leaves the firm before retirement, any discretionary pension benefits are held by the firm for a period of five years in the form of instruments referred to in SYSC 19D.3.56R(1); and(3) when an employee reaches retirement, discretionary pension benefits are paid to the employee in the form of instruments referred to in SYSC 19D.3.56R(1)
SYSC 19D.3.32RRP
(1) A firm must ensure that its employees undertake not to use personal hedging strategies to undermine the risk alignment effects embedded in their remuneration arrangements. (2) A firm must ensure that its employees do not use remuneration- or liability-related contracts of insurance to undermine the risk alignment effects embedded in their remuneration arrangements.(3) A firm must maintain effective arrangements designed to ensure that employees comply with their undertaking.[Note:
SYSC 19D.3.36RRP
A firm must ensure that the structure of an employee's remuneration is consistent with, and promotes, effective risk management.
SYSC 19D.3.37RRP
A firm must ensure that the remuneration policy makes a clear distinction between criteria for setting:(1) basic fixed remuneration that primarily reflects an employee's professional experience and organisational responsibility, as set out in the employee's job description and terms of employment; and(2) variable remuneration that reflects performance in excess of that required to fulfil the employee's job description and terms of employment and that is subject to performance
SYSC 19D.3.40GRP
(1) The non-financial criteria in SYSC 19D.3.39R(1)(b) should include: 1(a) the extent of the employee’s adherence to effective risk management, and compliance with the regulatory system and with relevant overseas regulatory requirements; and1(b) metrics relating to conduct, which should comprise a substantial portion of the non-financial criteria. 1(2) Aligning variable awards to sustainable financial performance requires firms to make appropriate ex-ante adjustments to take
SYSC 19D.3.42RRP
A firm must clearly explain the performance assessment process in SYSC 19D.3.39R to relevant employees.
SYSC 19D.3.44RRP
(1) A firm must ensure that guaranteed variable remuneration is not part of prospective remuneration plans.(2) A firm must not award, pay or provide guaranteed variable remuneration unless:(a) it is exceptional;(b) it occurs in the context of hiring new dual-regulated firms Remuneration Code staff;(c) the firm has a sound and strong capital base; and(d) it is limited to the first year of service.[Note: article 94(1)(d) and (e) of the CRD and Standard 11 of the FSB Compensation
SYSC 19D.3.45RRP
A firm must ensure that remuneration packages relating to compensation for, or buy out from, an employee's contracts in previous employment align with its long-term interests including appropriate retention, deferral and performance and clawback arrangements.[Note: article 94(1)(i) of CRD]
SYSC 19D.3.46GRP
(1) Guaranteed variable remuneration should be subject to the same requirements applicable to variable remuneration awarded by the firm including deferral, malus and clawback.(2) The FCA expects that guaranteed variable awards and retention awards should not be common practice for dual-regulated firms Remuneration Code staff and should be limited to rare, infrequent occurrences. The FCA expects a firm to provide prior notification to the FCA of any proposed retention1 awards.
SYSC 19D.3.48RRP
A firm must set an appropriate ratio between the fixed and variable components of total remuneration and ensure that:(1) fixed and variable components of total remuneration are appropriately balanced;(2) the level of the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component; and(3) subject to SYSC
SYSC 19D.3.49RRP
A firm may set a higher maximum level of the ratio between the fixed and variable components of total remuneration provided:(1) the overall level of the variable component does not exceed 200% of the fixed component of the total remuneration for each dual-regulated firms Remuneration Code staff; and(2) is approved by the shareholders or owners or members of the firm in accordance with SYSC 19D.3.50R.[Note: article 94(1)(g)(ii) of CRD]
SYSC 19D.3.50RRP
A firm must ensure that any approval by its shareholders or owners or members, for the purposes of SYSC 19D.3.49R, is carried out in accordance with the following procedure: (1) the firm must give reasonable notice to all its shareholders or owners or members of its intention to seek approval of the proposed higher ratio;(2) the firm must make a detailed recommendation to all its shareholders or owners or members that includes:(a) the reasons for, and the scope of, the approval
SYSC 19D.3.52RRP
A firm may apply a discount rate to a maximum of 25% of an employee's total variable remuneration provided it is paid in instruments that are deferred for a period of not less than five years.[Note: article 94(1)(g)(iii) of the CRD]
SYSC 19D.3.59RRP
(1) A firm must not award, pay or provide a variable remuneration component unless a substantial portion of it, which is at least 40%, is deferred over a period which is not less than:(a) for dual-regulated firms Remuneration Code staff who do not perform a PRA-designated senior management function, three to five years, with no vesting taking place until one year after the award, and vesting no faster than on a pro-rata basis.(b) for dual-regulated firms Remuneration Code staff
SYSC 19D.3.60GRP
(1) Deferred remuneration paid in:(a) shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares;(b) cash should also be subject to performance criteria.(2) The FCA would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally rise with the ratio
SYSC 19D.3.61RRP
A firm must ensure that:(1) any variable remuneration, including a deferred portion, is paid or vests only if it is sustainable according to the financial situation of the firm as a whole, and justified on the basis of the performance of the firm, the business unit and the individual concerned;(2) any variable remuneration is subject to clawback, such that it is only awarded if an amount corresponding to it can be recovered from the individual by the firm if the recovery is justified
SYSC 19D.3.62RRP
A firm must:(1) set specific criteria for the application of malus and clawback; and(2) ensure that the criteria for the application of malus and clawback in particular cover situations where the employee:(a) participated in, or was responsible for, conduct which resulted in significant losses to the firm; or(b) failed to meet appropriate standards of fitness and propriety.[Note: article 94(1)(n) of the CRD and Standards 6 and 9 of the FSB Compensation Standards][Note: The FSA
SYSC 19D.3.63ERP
(1) A firm should reduce unvested deferred variable remuneration when, as a minimum:(a) there is reasonable evidence of employee misbehaviour or material error; or(b) the firm or the relevant business unit suffers a material downturn in its financial performance; or(c) the firm or the relevant business unit suffers a material failure of risk management.(2) For performance adjustment purposes, awards of deferred variable remuneration made in shares or other non-cash instruments
SYSC 19D.3.64RRP
(1) A firm must make all reasonable efforts to recover an appropriate amount corresponding to some or all vested variable remuneration where either of the following circumstances arise during the period in which clawback applies (including any part of such period occurring after the relevant employment has ceased):(a) there is reasonable evidence of employee misbehaviour or material error; or(b) the firm or the relevant business unit suffers a material failure of risk management.(2)
SYSC 19D.3.67RRP
(1) Subject to (2) to (7), the rules in SYSC 19D Annex 1.1R to 1.6R apply in relation to the prohibitions on dual-regulated firms Remuneration Code staff being remunerated in the ways specified in:(a) SYSC 19D.3.44R (guaranteed variable remuneration);(b) SYSC 19D.3.59R (1deferred variable remuneration);(c) SYSC 19D.3.61R(2) (performance adjustment – clawback); and(d) SYSC 19D Annex 1.10R (replacing payments recovered or property transferred).(2) Paragraph (1) applies only to those
SYSC 19D.3.68GRP
(1) Sections 137H and 137I of the Act enable the FCA to make rules that render void any provision of an agreement that contravenes specified prohibitions in the dual-regulated firms Remuneration Code, and that provide for the recovery of any payment made, or other property transferred, in pursuance of such a provision.(2) SYSC 19D.3.66R and SYSC 19D.3.67R (together with SYSC 19D Annex 1) are:(a) rules referred to in (1) that render void provisions of an agreement that contravene
SYSC 19A.3.3RRP
(1) This section applies in relation to Remuneration Code staff, except as set out in (3).(2) When establishing and applying the total remuneration policies for Remuneration Code staff, a firm must comply with this section in a way and to the extent that is appropriate to its size, internal organisation and the nature, the scope and the complexity of its activities (the remuneration principles proportionality rule).(3) Paragraphs (1) and (2) do not apply to the requirement for
SYSC 19A.3.4RRP
(1) Remuneration Code staff comprises:(a) an employee of an IFPRU investment firm whose professional activities have a material impact on the firm’s risk profile, including any employee who is deemed to have a material impact on the firm’s risk profile in accordance with Regulation (EU) 604/2014 of 4 March 2014 (Regulatory technical standards to identify staff who are material risk takers); or(b) subject to (2) and (3), an employee of an overseas firm in SYSC 19A1.1.1R(1)(d) (i.e.,
SYSC 19A.3.4AGRP
Where an overseas firm in SYSC 19A1.1.1R(1)(d) (i.e., an overseas firm that would have been a IFPRU investment firm if it had been a UK domestic firm) wishes to deem an employee who earns more than €750,000 not to be Remuneration Code staff, the overseas firm may apply for a waiver of the requirement in SYSC 19A.3.4R in respect of that employee.
SYSC 19A.3.5RRP
A firm must:(1) maintain a record of its Remuneration Code staff in accordance with the general record-keeping requirements (SYSC 9); and(2) take reasonable steps to ensure that its Remuneration Code staff understand the implications of their status as such, including the potential for remuneration which does not comply with certain requirements of the Remuneration Code to be rendered void and recoverable by the firm.
SYSC 19A.3.14RRP
A firm must ensure that employees engaged in control functions:(1) are independent from the business units they oversee;(2) have appropriate authority; and (3) are remunerated:(a) adequately to attract qualified and experienced staff; and(b) in accordance with the achievement of the objectives linked to their functions, independent of the performance of the business areas they control.[Note:3article 92(2)(e) of CRD and Standard 2 of the FSB Compensation Standards]3
SYSC 19A.3.15ERP
(1) A firm's risk management and compliance functions should have appropriate input into setting the remuneration policy for other business areas. The procedures for setting remuneration should allow risk and compliance functions to have significant input into the setting of individual remuneration awards where those functions have concerns about the behaviour of the individuals concerned or the riskiness of the business undertaken.(2) Contravention of (1) may be relied on as
SYSC 19A.3.17GRP
(1) This Remuneration Principle is designed to manage the conflicts of interest which might arise if other business areas had undue influence over the remuneration of employees within control functions. Conflicts of interest can easily arise when employees are involved in the determination of remuneration for their own business area. Where these could arise they need to be managed by having in place independent roles for control functions (including, notably, risk management and
SYSC 19A.3.29RRP
A firm must ensure that:(1) its pension policy is in line with its business strategy, objectives, values and long-term interests;(2) when an employee leaves the firm before retirement, any discretionary pension benefits are held by the firm for a period of five years in the form of instruments referred to in SYSC 19A.3.47 R (1); and(3) 3when an employee reaches retirement, discretionary pension benefits are paid to the employee in the form of instruments referred to in SYSC 19A.3.47
SYSC 19A.3.30RRP
(1) A firm must ensure that its employees undertake not to use personal hedging strategies or remuneration- or liability-related contracts of insurance to undermine the risk alignment effects embedded in their remuneration arrangements.(2) A firm must maintain effective arrangements designed to ensure that employees comply with their undertaking.[Note:3article 94(1)(p) of CRD and Standard 14 of the FSB Compensation Standards]3
SYSC 19A.3.34GRP
(1) Taking account of the remuneration principles proportionality rule, the appropriate regulator7 does not generally consider it necessary for a firm to apply the rules referred to in (2) where, in relation to an individual ("X"), both the following conditions are satisfied:7(a) Condition 1 is that Xs variable remuneration is no more than 33% of total remuneration; and(b) Condition 2 is that Xs total remuneration is no more than 500,000.(2) The rules referred to in (1) are those
SYSC 19A.3.35RRP
A firm must ensure that the structure of an employee'sremuneration is consistent with and promotes effective risk management.
SYSC 19A.3.35ARRP
4A firm must ensure that the remuneration policy makes a clear distinction between criteria for setting:(1) basic fixed remuneration that primarily reflects an employee's professional experience and organisational responsibility as set out in the employee's job description and terms of employment; and(2) variable remuneration that reflects performance in excess of that required to fulfil the employee's job description and terms of employment and that is subject to performance
SYSC 19A.3.37GRP
(1) The non-financial criteria in SYSC 19A.3.36R(2) should include:6(a) the extent of the employee’s adherence to effective risk management, and compliance with the regulatory system and with relevant overseas regulatory requirements; and6(b) metrics relating to conduct, which should comprise a substantial portion of the non-financial criteria.6(2) Poor performance, such as poor risk management or other behaviours contrary to firm values, can pose significant risks for a firm
SYSC 19A.3.40RRP
A firm must ensure that guaranteed variable remuneration is not part of prospective remuneration plans.3 A firm must not award, pay or provide guaranteed variable remuneration unless:3(1) 3it is exceptional;(2) 3it occurs in the context of hiring new Remuneration Code staff;3(3) 3the firm has a sound and strong capital base; and3(4) 3it is limited to the first year of service.[Note:3article 94(1)(d) and (e) of CRD and Standard 11 of the FSB Compensation Standards]3
SYSC 19A.3.40ARRP
3A firm must ensure that remuneration packages relating to compensation for, or buy out from, an employee's contracts in previous employment align with the long term interests of the firm and are subject to appropriate retention, deferral and performance and clawback arrangements.[Note: article 94(1)(i) of CRD]
SYSC 19A.3.43GRP
The FCA expects that guaranteed variable awards and retention awards should not be common practice for Remuneration Code staff and should be limited to rare, infrequent occurrences.6
SYSC 19A.3.44RRP
A firm must set an 5appropriate ratio 5between the fixed and variable components of total remuneration and ensure that:(1) fixed and variable components of total remuneration are appropriately balanced;3(2) the level of the 5fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component3; and3(3) subject
SYSC 19A.3.44ARRP
3A firm may set a higher maximum level of the 5ratio between the fixed and variable components of total remuneration provided:555(1) the overall level of the variable component does not exceed 200% of the fixed component of the total remuneration for each Remuneration Code staff; and55(2) is approved by the shareholders or owners or members of the firm in accordance with SYSC 19A.3.44B R.[Note: article 94(1)(g)(ii) of CRD]
SYSC 19A.3.44BRRP
A firm must ensure that any approval by the its shareholders or owners or members for the purposes of SYSC 19A.3.44AR is carried out in accordance with the following procedure:535(1) the firm must give reasonable notice to all its shareholders or owners or members of its intention to seek approval of the proposed higher ratio;55(2) the firm must make a detailed recommendation to all its shareholders or owners or members that includes:(a) the reasons for, and the scope of, the
SYSC 19A.3.44DRRP
3A firm may apply a discount rate to a maximum of 25% of an employee's total variable remuneration provided it is paid in instruments that are deferred for a period of not less than five years.[Note: article 94(1)(g)(iii) of CRD]
SYSC 19A.3.49RRP
(1) A firm must not award, pay or provide a variable remuneration component unless a substantial portion of it, which is at least 40%, is deferred over a period which is not less than three to five years.(2) Remuneration under (1) must vest no faster than on a pro-rata basis. (3) In the case of a variable remuneration component: (a) of £500,000 or more;6 or(b) payable to a director of a firm that is significant in terms of its size, internal organisation and the nature, scope
SYSC 19A.3.50GRP
(1) Deferred remuneration paid in:6(a) shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares; and6(b) cash should also be subject to performance criteria.6(2) The FCA6 would generally expect a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally rise with
SYSC 19A.3.51ARRP
3A firm must:(1) ensure that any of the total variable remuneration is subject to malus or clawback arrangements;(2) set specific criteria for the application of malus and clawback; and(3) ensure that the criteria for the application of malus and clawback in particular cover situations where the employee: (a) participated in or was responsible for conduct which resulted in significant losses to the firm;(b) failed to meet appropriate standards of fitness and propriety.[Note: article
SYSC 19A.3.52ERP
(1) A firm should reduce unvested deferred variable remuneration when, as a minimum:(a) there is reasonable evidence of employee misbehaviour or material error; or(b) the firm or the relevant business unit suffers a material downturn in its financial performance; or(c) the firm or the relevant business unit suffers a material failure of risk management.(2) For performance adjustment purposes, awards of deferred variable remuneration made in shares or other non-cash instruments
SYSC 19A.3.54RRP
(1) Subject to (1A) to (3), the rules1 in SYSC 19A Annex 1.1R to 1.4R1 apply in relation to the prohibitions on Remuneration Code staff being remunerated in the ways specified in:11(a) SYSC 19A.3.40 R (guaranteed variable remuneration);(b) SYSC 19A.3.49 R (6deferred variable remuneration); and(c) (replacing payments recovered or property transferred).(1A) Paragraph (1) applies only to those prohibitions as they apply in relation to a firm that satisfies at least one of the conditions
SYSC 19A.3.55GRP
(1) Sections 137H and 137I of the Act enables the FCA6 to make rules that render void any provision of an agreement that contravenes specified prohibitions in the Remuneration Code, and that provide for the recovery of any payment made, or other property transferred, in pursuance of such a provision. SYSC 19A.3.53A R and1SYSC 19A.3.54 R (together with SYSC 19A Annex 1) are such rules1 and render1 void provisions of an agreement that contravene the specified prohibitions on guaranteed
TC 2.1.1RRP
(1) 13A firm must not assess an employee as competent to carry on an activity in TC Appendix 1 until the employee has demonstrated the necessary competence to do so and has (if required by TC Appendix 1) attained 16each module of an appropriate qualification16. This assessment need not take place before the employee starts to carry on the activity.14161613(2) A firm may assess an employee who is subject to, but has not satisfied, an appropriate qualification16requirement as competent
TC 2.1.2RRP
A firm must not allow an employee to carry on an activity in TC Appendix 1 without appropriate supervision.
TC 2.1.3GRP
Firms should ensure that employees are appropriately supervised at all times. It is expected that the level and intensity of that supervision will be significantly greater in the period before the firm has assessed the employee as competent, than after. A firm should therefore have clear criteria and procedures relating to the specific point at which the employee is assessed as competent in order to be able to demonstrate when and why a reduced level of supervision may be considered
TC 2.1.4GRP
Firms should ensure that those supervising employees carrying on an activity in TC Appendix 1 have the necessary coaching and assessment skills as well as technical knowledge and experience17 to act as a competent supervisor and assessor. In particular firms should consider whether it is appropriate to require those supervising employees not assessed as competent to attain 16an appropriate qualification 16as well except where the employee is giving personal recommendations25 on
TC 2.1.5RRP
Where an employee has not been assessed as competent to do so and: 24(1) 24gives personal recommendations25 on retail investment products to retail clients24, the firm must ensure that the individual supervising and assessing that employee has attained an appropriate qualification24; or(2) 24gives advice on P2P agreements to retail clients, the firm must ensure that the individual supervising and assessing that employee has attained an appropriate qualification for giving personal
TC 2.1.5BRRP
19A firm must ensure that an employee does not carry on any of the activities 23A to 23E in TC Appendix 1 without having an appropriate level of knowledge and competence, which includes an appropriate:(1) knowledge of MCD credit agreements and any ancillary services offered by the firm with them;(2) knowledge of the laws relating to MCD credit agreements for consumers (in particular, consumer protection);(3) knowledge and understanding of the property purchasing process;(4) knowledge
TC 2.1.5DGRP
19For the purposes of assessing the employee's knowledge and competence, professional experience means their years of employment in areas relating to the origination, distribution or intermediation of MCD credit agreements.[Note: annex III (3)(b) of the MCD]
TC 2.1.5ERRP
19A firm must, for the purposes of TC 2.1.5B R, take into account the nature of the employee's role and their level of responsibility within the firm and decide the appropriate level of knowledge and competence for that employee.[Note: annex III (2) of the MCD]
TC 2.1.5FGRP
19Where an employee, carrying on an activity in relation to a regulated mortgage contract, has attained the appropriate qualification required by TC Appendix 1, a firm may for the purposes of TC 2.1.5B R assess that employee as having knowledge and competence. Additionally, firms will need to meet any other requirements in this or other sourcebooks that are applicable, taking into account the employee’s role and responsibilities.21
TC 2.1.5HRRP
24A firm must not, for the purposes of TC 2.1.1R, assess an employee as competent to carry on activity 9A in TC Appendix 1 until the employee has attained each module of an appropriate qualification for giving personal recommendations25 on retail investment products to retail clients.
TC 2.1.5IGRP
24An employee who only carries on activity 9A in TC Appendix 1 is not a retail investment adviser. As such, the rules in this section applicable to retail investment advisers are not relevant to employees who only advise on P2P agreements.
TC 2.1.6RRP
A firm must ensure that an employee does not carry on an activity in TC Appendix 1 (other than an overseeing activity) for which there is a qualification 16requirement without first attaining16 the relevant regulatory module of24: 16(1) 24(in respect of activities other than advising on P2P agreements (activity 9A in TC Appendix 1)) an appropriate qualification; or(2) 24(in respect of advising on P2P agreements (activity 9A in TC Appendix 1)) an appropriate qualification for giving
TC 2.1.7RRP
A firm must ensure that an employee does not carry on any of the following activities without first attaining 16each module of an appropriate qualification:1616(1) [deleted]1616(1A) giving personal recommendations25 on and dealing in securities which are not stakeholder pension schemes, personal pension schemes18 or broker funds;16(1B) giving personal recommendations25 on and dealing in derivatives;(2) the activity of a broker fund adviser;(3) advising on syndicate participation
TC 2.1.8ARRP
17A firm must ensure that an employee who was assessed as competent as a retail investment adviser for the purposes of TC 2.1.1 R at 30 June 2009 does not carry on the activity of a retail investment adviser without first attaining an appropriate qualification.
TC 2.1.9RRP
(1) If a firm is satisfied that an employee meets the conditions in this rule then the requirements to have attained 16each module of an appropriate qualification 16will only apply if that employee is carrying on one of the activities specified in this rule.1616(2) The conditions are that a firm should be satisfied that an employee:(a) has at least three years' up-to-date relevant experience in the activity in question obtained while employed outside the United Kingdom;(b) has
TC 2.1.11GRP
Firms should ensure that their employees' training needs are assessed at the outset and at regular intervals (including if their role changes). Appropriate training and support should be provided to ensure that any relevant training needs are satisfied. Firms should also review at regular intervals the quality and effectiveness of such training.
TC 2.1.12RRP
A firm must review on a regular and frequent basis employees' competence and take appropriate action to ensure that they remain competent for their role.[Note: article 9(1) of the MCD]19
TC 2.1.13GRP
A firm16should ensure that maintaining competence for an employee16takes into account such matters as: 1616(1) technical knowledge and its application;(2) skills and expertise; and(3) changes in the market and to products, legislation and regulation.
SYSC 5.2.2GRP
This section is also relevant to employees of relevant authorised persons performing functions specified as FCA-specified significant-harm functions.
SYSC 5.2.3GRP
(1) This section is about the FCA's certification regime.(2) Under this regime, a firm should ensure that its employees only perform an FCA-specified significant-harm function if they have a certificate issued by that firm to perform that function.(3) The purpose of this section is to specify ‘FCA-specified significant-harm functions’ and to give guidance on the FCA's certification regime.
SYSC 5.2.4GRP
Under section 63E(1) of the Act, a firm must take reasonable care to ensure that no employee of the firm performs an FCA-specified significant-harm function under an arrangement entered into by the firm in relation to the carrying on by that firm of a regulated activity, unless the employee has a valid certificate issued by that firm to perform the function to which certificate relates.
SYSC 5.2.12GRP
(1) The Act says that a certificate is valid for a period of 12 months, beginning with the day on which it is issued. 3(2) The FCA believes that the Act allows a firm to draft a certificate to expire after fewer than 12 months. The FCA interprets the Act in this way because to require a firm to make a certificate last longer than the firm thinks best is likely to make it harder for the firm to ensure the fitness of its certification employees. That would undermine the purpose
SYSC 5.2.15GRP
Under section 63F of the Act, a firm must maintain a record of every employee who has a valid certificate issued by it.
SYSC 5.2.16GRP
(1) The FCA's approach to specifying FCA-specified significant-harm functions has the effect that several elements of a person's job may involve an FCA-specified significant-harm function or that a person may perform several FCA-specified significant-harm functions as part of the same job.(2) However, this does not mean that the FCA expects a firm to issue multiple certificates to each certification employee. Rather, in a certificate, a firm may describe the employee's functions
SYSC 5.2.17GRP
(1) In cases where a certification employee's role changes to involve a new function involving an FCA-specified significant-harm function part way through the twelve-month period for which their certificate is valid, and that new function may have different requirements relating to:(a) personal characteristics;(b) the level of competence, knowledge and experience;(c) qualifications; or(d) training;the FCA would expect the firm to assess whether the employee is fit and proper to
SYSC 5.2.17AGRP
(1) 3This paragraph gives further guidance on the flexibility a firm has in drafting its certificates.(2) A certificate may cover functions that a certification employee is not currently performing, as long as the firm has assessed the employee’s fitness for these additional functions. This is subject to (3).(3) When a firm is deciding what a certificate can cover beyond the functions that the certification employee is currently performing, it should take the factors in SYSC
SYSC 5.2.18RRP
In accordance with section 63E of the Act (Certification of employees by relevant authorised persons), a function is an FCA-specified significant-harm function only if, in relation to the carrying on of a regulated activity by a firm, that function:(1) is not a controlled function in relation to the carrying on of that regulated activity by that firm; and(2) will require the person performing it to be involved in one or more aspects of the firm's affairs, so far as relating to
SYSC 5.2.21GRP
(1) The certification regime only applies to an employee.(2) This definition includes a person who:(a) personally provides, or is under an obligation personally to provide, services to the firm in question under an arrangement made between the firm and the person providing the services or another person; and(b) is subject to (or to the right of) supervision, direction or control by the firm as to the manner in which those services are provided.
SYSC 5.2.22GRP
(1) A person who works for an appointed representative of a firm may fall into the certification regime. In practice, however, they may not meet the conditions for the certification regime to apply.(2) One condition for the certification regime to apply to a person is that the person performs a specified significant-harm function under an arrangement entered into by the firm (see SYSC 5.2.4G). However, unlike the equivalent parts of the Act for the approved persons regime, the
SYSC 5.2.24GRP
Under section 63E(7) of the Act, SYSC 5.2 does not apply to an arrangement which allows an employee to perform a function if the question of whether the employee is fit and proper to perform the function is reserved under any of the Single Market Directives or the auction regulation to an authority in a country or territory outside the United Kingdom.
SYSC 5.2.27RRP
(1) If:(a) a firm appoints an individual to perform a function which, but for this rule, would be an FCA-specified significant-harm function;(b) the appointment is to provide cover for a certification employee whose absence is reasonably unforeseen; and(c) the appointment is for less than four weeks;then the performance by that individual of such function does not constitute an FCA-specified significant-harm function.(2) This rule does not apply to FCA-specified significant-harm
SYSC 5.2.28GRP
SYSC 5.2.27R does not apply to FCA-specified significant-harm function (5) (functions requiring qualifications). Where there is an unforeseen absence of an employee performing a function for which there is a qualification requirement: (1) the firm should take reasonable care to ensure that no employee of that firm performs that function without a valid certificate; and (2) the certificate should be issued before the person starts to perform the function.
SYSC 5.2.28ARRP
(1) 3None of the FCA-specified significant-harm functions extend to an individual (“P”) in relation to a firm if:(a) P is based outside the United Kingdom for the firm; and(b) in a 12-month period, P spends no more than 30 days performing what would otherwise be an FCA-specified significant-harm function for that firm within the territorial scope of this section as described in SYSC 5.2.19R.(2) Paragraph (1) only applies to the extent that P is appropriately supervised by: (a)
SYSC 5.2.30RRP
Table: FCA-specified significant-harm functionsFunctionWhere defined(1) CASS oversightSYSC 5.2.32R(2) Benchmark submission and administrationSYSC 5.2.33R(3) Proprietary traderSYSC 5.2.34R(4) Significant managementSYSC 5.2.35R(5) Functions requiring qualificationsSYSC 5.2.39R(6) Managers of certification employeesSYSC 5.2.41R(7) Material risk takersSYSC 5.2.42R3(8) Client-dealingSYSC 5.2.44R3(9) Algorithmic tradingSYSC 5.2.49R
SYSC 5.2.37GRP
For the purposes of the definition of the significant management FCA-specified significant-harm function, the following additional factors about the firm should be considered:(1) the size and significance of the firm's business in the United Kingdom – for example, a firm carrying on designated investment business may have a large number of certification employees (for example, in excess of 100 individuals);(2) the number of regulated activities carried on, or proposed to be carried
SYSC 5.2.38GRP
When considering whether a business unit is significant for the purposes of SYSC 5.2.35R, 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) the risk profile of the unit;(2) its use or commitment of the firm's capital;(3) its contribution to the profit and loss account;(4) the number of employees, certification employees or SMF managers in the unit;(5) the number of customers of the
SYSC 5.2.41RRP
(1) The function of managing or supervising a certification employee, directly or indirectly, is an FCA-specified significant-harm function.(2) A function in (1) is not an FCA-specified significant-harm function for that firm if it is performed by an SMF manager of that firm.
SYSC 5.2.42RRP
(1) Subject to (2), each function performed by a member of a firm'sdual-regulated firms Remuneration Code staff (including any person who meets any of the criteria set out in articles 3 to 5 of Commission delegated regulation (EU) No 604/2014 (criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile)) is an FCA-specified significant-harm function.2(2) For the purposes of this section: 2(a) the definition of
SYSC 19C.3.3RRP
(1) This section applies to BIPRU Remuneration Code staff, except as set out in (3).(2) When establishing and applying the total remuneration policies for BIPRU Remuneration Code staff, a firm must comply with this section in a way and to the extent that is appropriate to its size, internal organisation and the nature, scope and complexity of its activities (the BIPRU remuneration principles proportionality rule).(3) Paragraphs (1) and (2) do not apply to the requirement for significant
SYSC 19C.3.4RRP
BIPRU Remuneration Code staff comprises categories of staff including senior management, risk-takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk-takers, whose professional activities have a material impact on the firm's risk profile.
SYSC 19C.3.5RRP
A firm must: (1) maintain a record of its BIPRU Remuneration Code staff in line with the general record-keeping requirements (SYSC 9); and(2) take reasonable steps to ensure that its BIPRU Remuneration Code staff understand the implications of their status, including the potential for remuneration which does not comply with certain requirements of the BIPRU Remuneration Code to be rendered void and recoverable by the firm.
SYSC 19C.3.6GRP
(1) In the FCA's view: (a) a firm's staff includes its employees; (b) a person who performs a significant influence function for, or is a senior manager of, a firm would normally be expected to be part of the firm'sBIPRU Remuneration Code staff; (c) the table in (2) provides a non-exhaustive list of examples of key positions that should, subject to (d), be within a firm's definition of staff who are risk takers; (d) firms should consider how the examples in the table in (2) apply
SYSC 19C.3.14RRP
A firm must ensure that employees engaged in control functions: (1) are independent from the business units they oversee;(2) have appropriate authority; and (3) are remunerated: (a) adequately to attract qualified and experienced staff; and(b) in line with the achievement of the objectives linked to their functions, independent of the performance of the business areas they control.
SYSC 19C.3.15ERP
(1) A firm's risk management and compliance functions should have appropriate input into setting the remuneration policy for other business areas. The procedures for setting remuneration should allow risk and compliance functions to have significant input into the setting of individual remuneration awards where those functions have concerns about the behaviour of the individuals concerned or the riskiness of the business undertaken.(2) Contravention of (1) may be relied on as
SYSC 19C.3.17GRP
(1) This Remuneration Principle is designed to manage the conflicts of interest which might arise if other business areas had undue influence over the remuneration of employees within control functions. Conflicts of interest can easily arise when employees are involved in the determination of remuneration for their own business area. Where these do arise they need to be managed by having in place independent roles for control functions (including, notably, risk management and
SYSC 19C.3.28GRP
Where a firm makes a loss, the FCA generally expects no variable remuneration to be awarded. Variable remuneration may nevertheless be justified, for example to incentivise employees involved in new business ventures which could be loss-making in their early stages.
SYSC 19C.3.29RRP
A firm must ensure that: (1) its pension policy is in line with its business strategy, objectives, values and long-term interests;(2) when an employee leaves the firm before retirement, any discretionary pension benefits are held by the firm for a period of five years in the form of instruments referred to in SYSC 19C.3.47R (1); and(3) when employees reach retirement, discretionary pension benefits are paid to the employee in the form of instruments in SYSC 19C.3.47R (1) and subject
SYSC 19C.3.30RRP
(1) A firm must ensure that its employees undertake not to use personal hedging strategies or remuneration- or liability-related contracts of insurance to undermine the risk-alignment effects embedded in their remuneration arrangements. (2) A firm must maintain effective arrangements designed to ensure that employees comply with their undertaking.
SYSC 19C.3.34GRP
(1) Taking account of the BIPRU remuneration principles proportionality rule, the FCA does not generally consider it necessary for a firm to apply the rules in (2) where, in relation to an individual ("X"), both the following conditions are satisfied: (a) condition 1 requires that X’s variable remuneration is no more than 33% of total remuneration; and(b) condition 2 requires that X’s total remuneration is no more than 500,000.(2) The rules referred to in (1) relate to: (a) guaranteed
SYSC 19C.3.35RRP
A firm must ensure that the structure of an employee'sremuneration is consistent with, and promotes, effective risk management.
SYSC 19C.3.37GRP
Non-financial performance metrics should form a significant part of the performance assessment process and should include adherence to effective risk management and compliance with the regulatory system and with relevant overseas regulatory requirements. Poor performance as assessed by non-financial metrics, such as poor risk management or other behaviours contrary to firm values, can pose significant risks for a firm and should, as appropriate, override metrics of financial performance.
SYSC 19C.3.39GRP
The requirement for assessment of performance to be in a multi-year framework reflects the fact that profits from a firm's activities can be volatile and subject to cycles. The financial performance of firms and individual employees can be exaggerated as a result. Performance assessment on a moving average of results can be a good way of meeting this requirement. However, other techniques, such as good quality risk adjustment and deferral of a sufficiently large proportion of
SYSC 19C.3.40RRP
A firm must not award, pay or provide guaranteed variable remuneration unless it: (1) is exceptional; (2) occurs in the context of hiring new BIPRU Remuneration Code staff; and(3) is limited to the first year of service.
SYSC 19C.3.41ERP
(1) A firm should not award, pay or provide guaranteed variable remuneration in hiring new BIPRU Remuneration Code staff (X) unless: (a) it has taken reasonable steps to ensure that the remuneration is not more generous in its amount or terms (including any deferral or retention periods) than the variable remuneration awarded or offered by X’s previous employer; and(b) it is subject to appropriate performance adjustment requirements.(2) Contravention of (1) may be relied on as
SYSC 19C.3.43GRP
Variable remuneration can be awarded to BIPRU Remuneration Code staff in the form of retention awards where it is compatible with the BIPRU Remuneration Code general requirement to do so. The FCA considers this is likely to be the case only where a firm is undergoing a major restructuring and a good case can be made for retention of particular key staff members on prudential grounds. Proposals to give retention awards should form part of any notice of the restructuring proposals
SYSC 19C.3.49RRP
(1) A firm must not award, pay or provide a variable remuneration component unless a substantial portion of it, which is at least 40%, is deferred over a period of not less than three to five years.(2) Remuneration under (1) must vest no faster than on a pro-rata basis. (3) In the case of a variable remuneration component: (a) of a particularly high amount; or(b) payable to a director of a firm that is significant in its size, internal organisation and the nature, scope and complexity
SYSC 19C.3.50GRP
(1) Deferred remuneration paid in shares or share-linked instruments should be made under a scheme which meets appropriate criteria, including risk adjustment of the performance measure used to determine the initial allocation of shares. Deferred remuneration paid in cash should also be subject to performance criteria.(2) The FCA generally expects a firm to have a firm-wide policy (and group-wide policy, where appropriate) on deferral. The proportion deferred should generally
SYSC 19C.3.52ERP
(1) A firm should reduce unvested deferred variable remuneration when, as a minimum: (a) there is reasonable evidence of employee misbehaviour or material error; or(b) the firm or the relevant business unit suffers a material downturn in its financial performance; or(c) the firm or the relevant business unit suffers a material failure of risk management.(2) For performance adjustment purposes, awards of deferred variable remuneration made in shares or other non-cash instruments
SYSC 19C.3.53GRP
(1) Variable remuneration may be justified, for example, to incentivise employees involved in new business ventures which could be loss-making in their early stages. (2) The governing body (or, where appropriate, the remuneration committee) should approve performance adjustment policies, including the triggers under which adjustment would take place. The FCA may ask firms to provide a copy of their policies and expects firms to make adequate records of material decisions to operate
SYSC 22.5.2GRP
(1) For example, this chapter does not necessarily require a firm to include in a reference the fact that an ex-employee left while disciplinary proceedings were pending or had started. Including such information is likely to imply that there is cause for concern about the ex-employee but the firm may not have established that the ex-employee was actually responsible for misconduct.(2) However, a firm may include such information in a reference if it wishes to (see SYSC 22.3.
SYSC 22.5.3GRP
A firm should, when giving a reference under this chapter, provide as complete a picture of an employee’s conduct record as possible to new employers.
SYSC 22.5.4GRP
(1) A firm supplying a reference in accordance with this chapter owes a duty under the general law to its former employee and the recipient firm to exercise due skill and care in the preparation of the reference.(2) The firm may give frank and honest views, but only after taking reasonable care both as to factual content, and as to the opinions expressed.(3) References should be true, accurate, fair and based on documented fact.
SYSC 22.5.5GRP
(1) An example of the general duty described in SYSC 22.5.4G is that fairness will normally require a firm to have given an employee an opportunity to comment on information in a reference. The firm might do this through, for example, disciplinary proceedings.(2) Paragraph (1) does not mean that the firm should provide an opportunity to comment on the reference itself, as opposed to the allegations on which it is based. (3) A firm may have given the employee an opportunity to
SYSC 22.5.7GRP
The obligation to give a reference for an employee or ex-employee applies however the employment ended or is going to end. For example, it applies whether it ended through resignation, redundancy, dismissal or fixed term work, a secondment or temporary work coming to an end.
SYSC 22.5.10GRP
(1) SYSC 22.2.2R(1) to (3) normally has a six year time limit. SYSC 22.2.2R(3)(c) removes that time limit for serious matters. This paragraph (SYSC 22.5.10G) and SYSC 22.5.11G have guidance about this. This guidance is also relevant to the time limits for updating references in SYSC 22.2.6R.(2) The removal of the time limit does not mean that the time that has elapsed since the matter occurred is irrelevant. The length of time that has elapsed is relevant to deciding whether the
SYSC 22.5.11GRP
Table: Examples of factors to take into account when deciding whether old misconduct is sufficiently serious to discloseFactors to take into accountComments(A) Whether P has committed a serious breach of individual conduct requirements.Individual conduct requirements has the same meaning as in Part Two of SYSC 22 Annex 1R (Template for regulatory references given by relevant authorised persons and disclosure requirements).Factors to take into account in deciding whether the breach
SYSC 22.5.12GRP
(1) An example of information that may be relevant under SYSC 22.2.2R(1) to (3) is the fact that the employee has breached a requirement in APER.(2) This means that any firm (not just one that is a full scope regulatory reference firm) should consider whether it needs to disclose a breach of APER when giving a reference under this chapter.
SYSC 22.5.14GRP
SYSC 22.5.13R covers all types of agreements and arrangements. For example:(1) it is not limited to an agreement or arrangement entered into when the employee leaves; (2) it applies however the employment ends (see SYSC 22.5.7G); and(3) it covers a “COT 3” Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS).
SYSC 22.5.18GRP
(1) A firm should, wherever feasible, conclude investigative procedures before the employee departs. (2) However, this chapter does not create a duty to investigate alleged misconduct by an employee or former employee.(3) There are several reasons why a firm may find it appropriate to investigate potential misconduct by an employee or former employee, including:(a) assessing the actual and potential damage resulting from misconduct;(b) identifying other individuals potentially
TC 2.2A.1RRP
(1) 1For the purposes of TC 2.1.1 R, if an employee carries on an activity in TC Appendix 1 (other than an overseeing activity), a firm must ensure that the employee attains an appropriate qualification within 482months of starting to carry on that activity.(2) For the purposes of (1), a firm must record the date on which the employee starts to carry on that activity.
TC 2.2A.2RRP
For the purposes of calculating the 48 2months referred to in TC 2.2A.1 R, a firm must:(1) aggregate periods of time spent carrying on the activity during different periods of employment; and(2) disregard any period of 60 business days or more during which the employee is not carrying on the activity due to being continuously absent from work.
TC 2.2A.3RRP
A firm must ensure that any employee who does not attain an appropriate qualification within the specified time:(1) ceases to engage in the activity to which that qualification would relate; and(2) does not resume that activity without first attaining an appropriate qualification.
TC 2.2A.4GRP
Firms may wish their employees to attain an appropriate qualification within an earlier time limit or to place limits on the number of times that qualification can be taken.
TC 2.2A.5GRP
Firms may wish employees who carry on an overseeing activity specified in TC Appendix 1 to attain an appropriate qualification within 482months of starting the activity.
SYSC 18.3.1RRP
(1) A firm must establish, implement and maintain appropriate and effective arrangements for the disclosure of reportable concerns by whistleblowers.(2) The arrangements in (1) must at least:(a) be able effectively to handle disclosures of reportable concerns including: (i) where the whistleblower has requested confidentiality or has chosen not to reveal their identity; and(ii) allowing for disclosures to be made through a range of communication methods; (b) ensure the effective
SYSC 18.3.2GRP
(1) When establishing internal arrangements in line with SYSC 18.3.1R a firm may:(a) draw upon relevant resources prepared by whistleblowing charities or other recognised standards setting organisations; and (b) consult with its UK-based employees or those representing these employees.(2) In considering if a firm has complied with SYSC 18.3.1R the FCA will take into account whether the firm has applied the measures in (1).(3) A firm may wish to clarify in its written procedures
SYSC 18.3.4GRP
A firm’s training and development in line with SYSC 18.3.1R(2)(g) should include:(1) for all UK-based employees:(a) a statement that the firm takes the making of reportable concerns seriously;(b) a reference to the ability to report reportable concerns to the firm and the methods for doing so;(c) examples of events that might prompt the making of a reportable concern;(d) examples of action that might be taken by the firm after receiving a reportable concern by a whistleblower,
SYSC 18.3.6RRP
This rule applies to a firm, an EEA relevant authorised person and a third-country relevant authorised person.2(1) A person subject to this rule (‘P’) 2must, in the manner described in (2), communicate to its UK-based employees that they may disclose reportable concerns to the PRA or the FCA and the methods for doing so. P 2must make clear that:(a) reporting to the PRA or to the FCA is not conditional on a report first being made using P’s 2internal arrangements; (b) it is possible
SYSC 18.3.6AGRP
For the purposes of SYSC 18.3.6R(1) the possibility for P’s employees to disclose reportable concerns to the PRA or to the FCA does not override any obligation of P or its employees to report breaches to P’s Home State regulator of matters reserved by an EU instrument to that regulator.
SYSC 18.3.7RRP
Firms must ensure that their appointed representatives or, where applicable, their tied agents, inform any of their UK-based employees who are workers that, as workers, they may make protected disclosures to the FCA.
SYSC 18.3.9GRP
The FCA would regard as a serious matter any evidence that a firm had acted to the detriment of a whistleblower. Such evidence could call into question the fitness and propriety of the firm or relevant members of its staff, and could therefore, if relevant, affect the firm’s continuing satisfaction of threshold condition 5 (Suitability) or, for an approved person or a certification employee, their status as such.
SYSC 18.3.10RRP
(1) This rule applies where an EEA relevant authorised person or a third-country relevant authorised person has:(a) a branch in the United Kingdom; and(b) a group entity which is a UK relevant authorised person.(2) An EEA relevant authorised person and a third-country relevant authorised person must, in the manner described in (3), communicate to the UK-based employees of its UKbranch:(a) the whistleblowing arrangements of the group entity that is a UK relevant authorised person;
SYSC 19B.1.2RRP
An AIFM must establish, implement and maintain remuneration policies and practices for AIFM Remuneration Code staff that are consistent with, and promote, sound and effective risk management and do not encourage risk-taking which is inconsistent with the risk profile of the instrument constituting the fund of the AIFs it manages.[Note: article 13(1) of AIFMD]
SYSC 19B.1.3RRP
AIFM Remuneration Code staff comprise those categories of staff whose professional activities have a material impact on the risk profiles of the AIFMs or of the AIFs the AIFM manages. This includes senior management, risk takers, control functions, and any employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers.[Note: article 13(1) of AIFMD]
SYSC 19B.1.4RRP
(1) When establishing and applying the total remuneration policies for AIFM Remuneration Code staff (inclusive of salaries and discretionary pension benefits), an AIFM must comply with the AIFM remuneration principles in a way and to the extent that is appropriate to its size, internal organisation and the nature, scope and complexity of its activities.(2) Paragraph (1) does not apply to the requirement for significant AIFMs to have a remuneration committee (SYSC 19B.1.9 R).(3)
SYSC 19B.1.10RRP
An AIFM must ensure that employees engaged in control functions are compensated according to the achievement of the objectives linked to their functions, independent of the performance of the business areas they control.[Note: paragraph 1(e) of Annex II of AIFMD]
SYSC 19B.1.18AGRP
(1) 2£500,000 is a particularly high amount for the purpose of SYSC 19B.1.18R (4).(2) Paragraph (1) is without prejudice to the possibility of lower sums being considered a particularly high amount.(3) Whilst any variable remuneration component of £500,000 or more paid to AIFM Remuneration Code staff should be subject to 60% deferral, firms should also consider whether lesser amounts should be considered to be 'particularly high', taking account, for example, of whether there
SYSC 19B.1.22RRP
An AIFM must ensure that:(1) its pension policy is in line with its business strategy, objectives, values and long-term interests of the AIFs it manages;(2) when an employee leaves the firm before retirement, any discretionary pension benefits are held by the firm for a period of five years in the form of instruments in SYSC 19B.1.17R (1); and(3) in the case of an employee reaching retirement, discretionary pension benefits are paid to the employee in the form of instruments referred
SYSC 19B.1.23RRP
An AIFM must ensure that its employees undertake not to use personal hedging strategies or remuneration- and liability-related insurance to undermine the risk alignment effects embedded in their remuneration arrangements.[Note: paragraph 1(q) of Annex II of AIFMD]
SYSC 19E.2.2RRP
(1) UCITS Remuneration Code staff comprise those categories of staff whose professional activities have a material impact on the risk profiles of: (a) the management company; or(b) the UCITS that the management company manages.(2) UCITS Remuneration Code staff must comprise: (a) senior management;(b) risk takers;(c) staff engaged in control functions; and(d) any employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk
SYSC 19E.2.3GRP
A management company need not treat a person in SYSC 19E.2.2R(2) as UCITS Remuneration Code staff if it can demonstrate that the person’s professional activities do not have a material impact on the risk profiles of: (1) the management company; or(2) the UCITS that the management company manages.
SYSC 19E.2.4RRP
(1) When establishing and applying the remuneration policies for UCITS Remuneration Code staff, a management company must comply with the UCITS remuneration principles in a way and to the extent that is appropriate to: (a) its size;(b) internal organisation; and(c) the nature, scope and complexity of its activities.(2) Paragraph (1) does not apply to the requirement for significant management companies to have a remuneration committee (SYSC 19E.2.9R).(3) The UCITS remuneration
SYSC 19E.2.10RRP
A management company must ensure that employees engaged in control functions are compensated according to the achievement of the objectives linked to their functions, independent of the performance of the business areas that are within their remit.[Note: article 14b(1)(e) of the UCITS Directive]
SYSC 19E.2.18RRP
(1) Subject to the legal structure of the UCITS and the instrument constituting the fund, a management company must ensure that a substantial portion, and in any event at least 50%, of any variable remuneration component consists of: (a) units or shares of the UCITS concerned; or (b) equivalent ownership interests in the UCITS concerned; or (c) share-linked instruments relating to the UCITS concerned; or (d) equivalent non-cash instruments relating to the UCITS concerned with
SYSC 19E.2.21GRP
(1) £500,000 should be considered a particularly high amount for the purpose of SYSC 19E.2.20R(4).(2) While any variable remuneration component of £500,000 or more paid to UCITS Remuneration code staff should be subject to 60% deferral, management companies should also consider whether lesser amounts should be considered to be ‘particularly high’. (3) Management companies should take into account, for example, whether there are significant differences within UCITS Remuneration
SYSC 19E.2.25RRP
A management company must ensure that: (1) its pension policy is in line with the business strategy, objectives, values and long-term interests of: (a) the management company; and(b) the UCITS it manages; (2) when an employee leaves the management company before retirement, any discretionary pension benefits are held by the management company for a period of five years in the form of the instruments referred to in SYSC 19E.2.18R(1); and (3) for an employee reaching retirement,
SYSC 19E.2.26RRP
A management company must ensure that its employees undertake not to use any of the following to undermine the risk alignment effects embedded in their remuneration arrangements:(1) personal hedging strategies; or (2) remuneration-related insurance; or(3) liability-related insurance.[Note: article 14b(1)(q) of the UCITS Directive]
PERG 8.14.40AGRP
1Article 72 exempts any financial promotion made by an employer to an employee in relation to a group personal pension scheme or a stakeholder pension scheme. This is subject to certain requirements as follows:(1) the financial promotion must inform the employee that the employer will make a contribution to the pension that the employee will receive from the pension scheme to which the financial promotion relates in the event of the employee becoming a member;(2) the employer
PERG 8.14.40AAGRP
6Article 72A exempts any financial promotion made to an employee by or on behalf of a person (“A”) in relation to a group personal pension scheme or a stakeholder pension scheme. This is subject to certain requirements as follows:(1) the employer and A must have entered into a written contract specifying the terms on which the communication may be made;(2) in the case of a communication made by a person (“B”) on behalf of A, A and B must also have entered into a written contract
PERG 8.14.40ABGRP
6Article 72B exempts any financial promotion made by an employer to an employee in relation to work-related insurance. This is subject to certain requirements as follows:(1) where the provider of the insurance is not the employer, the employer must not receive or have received, any direct financial benefit (including any commission, discount, remuneration or reduction in premium) as a result of making the communication; and(2) where the communication is a non-real time financial
PERG 8.14.40ACGRP
6Article 72C exempts any financial promotion made to an employee by or on behalf of a person (“A”) in relation to work-related insurance. This is subject to certain requirements as follows:(1) the employer and A must have entered into a written contract specifying the terms on which the communication may be made;(2) in the case of a communication made by a person (“B”) on behalf of A, A and B must also have entered into a written contract specifying the terms on which the communication
PERG 8.14.40ADGRP
6Article 72D exempts any financial promotion made by an employer to an employee in relation to a staff mortgage. This is subject to certain requirements as follows:(1) where the provider of the staff mortgage is an undertaking in the same group as the employer, the employer must not receive or have received, any direct financial benefit (including any commission, discount, remuneration or reduction in premium) as a result of making the communication; and(2) where the communication
PERG 8.14.40AEGRP
6Article 72E exempts any financial promotion made to an employee by or on behalf of a person (“A”) in relation to a staff mortgage. This is subject to certain requirements as follows:(1) the employer and A must have entered into a written contract specifying the terms on which the communication may be made;(2) in the case of a communication made by a person (“B”) on behalf of A, A and B must also have entered into a written contract specifying the terms on which the communication
9Article 72F exempts any financial promotion which is made to an employee by or on behalf of a person in relation to an exempt staff loan. An exempt staff loan is defined as a credit agreement which is:(1) offered by a lender to a borrower as an incident of employment with the lender, or with an undertaking in the same group as the lender11; and(2) an exempt agreement under a provision of article 60G (exempt agreements: exemptions relating to the total charge for credit) of the
PERG 8.14.40AFGRP
6The exemptions described in PERG 8.14.40A G to PERG 8.14.40AEA G9 should enable employers (and their contracted service providers) to promote employee benefits packages that include any pension schemes, work-related insurance schemes,9staff mortgages and certain staff loans9 to employees without undue concern that they may be breaching the restriction in section 21 of the Act. PERG 8.14.34 G (Communications by employers and contracted service providers to employees) has further
PERG 8.14.40BGRP
1Article 73 exempts any financial promotion made by a person in the course of carrying out his duties as an adviser for, or employee of, an advice centre. This is provided the financial promotion relates to:(1) a home finance transaction; or2(2) rights under, or rights to or interests in rights under, a life policy; or(3) a child trust fund within the meaning of section 1(2) of the Child Trust Funds Act 2004.
TC 1.1.1RRP
3This sourcebook applies to a firm where its employee carries on an activity in TC App 1 for retail clients, customers or consumers (subject to the limitations set out in TC App 3).
TC 1.1.1ARRP
4The application of this sourcebook is modified for a MiFID investment firm and a third country investment firm by the provisions in TC 4.1 where its employee carries on an activity in TC App 1 which is also an activity in TC 4.1.2R.
TC 1.1.3GRP
The competent employees rule is the main4 requirement relating to the competence of employees. The purpose of this sourcebook is to support the FCA's supervisory function by supplementing the competent employees rule for retail activities.
TC 1.1.4GRP
In this sourcebook, competence means having the skills, knowledge and expertise needed to discharge the responsibilities of an employee's role. This includes achieving a good standard of ethical behaviour.22
LR 9.4.1RRP
(1) This rule applies to the following schemes of a listed company incorporated in the United Kingdom and of any of its major subsidiary undertaking (even if that major subsidiary undertaking is incorporated or operates overseas):(a) an employees' share scheme if the scheme involves or may involve the issue of new shares or the transfer of treasury shares; and(b) a long-term incentive scheme in which one or more directors of the listed company is eligible to participate.(2) The
LR 9.4.2RRP
LR 9.4.1 R does not apply to the following long-term incentive schemes:(1) an arrangement where participation is offered on similar terms to all or substantially all employees of the listed company or any of its subsidiary undertakings whose employees are eligible to participate in the arrangement (provided that all or substantially all employees are not directors of the listed company); and(2) an arrangement where the only participant is a director of the listed company (or an
LR 9.4.4RRP
(1) This rule applies to the grant to a director or employee of a listed company or of any subsidiary undertaking of a listed company of an option to subscribe, warrant to subscribe or other similar right to subscribe for shares in the capital of the listed company or any of its subsidiary undertakings.(2) A listed company must not, without the prior approval by an ordinary resolution of the shareholders of the listed company in a general meeting, grant the option, warrant or
LR 9.4.5RRP
LR 9.4.4 R does not apply to the grant of an option to subscribe, warrant to subscribe or other similar right to subscribe for shares in the capital of a listed company or any of its subsidiary undertakings:(1) under an employees' share scheme if participation is offered on similar terms to all or substantially all employees of the listed company or any of its subsidiary undertakings whose employees are entitled to participate in the scheme; or(2) following a take-over or reconstruction,
MCOB 2A.1.1RRP
(1) An MCD mortgage lender must not remunerate its members of staff or MCD mortgage credit intermediaries in a way that impedes the MCD mortgage lender from complying with the rules.(2) An MCD mortgage credit intermediary must not remunerate its members of staff or appointed representatives in a way that impedes the MCD mortgage credit intermediary from complying with the rules.[Note: article 7(2) of the MCD]
MCOB 2A.1.2RRP
When establishing and applying remuneration policies for members of staff who are responsible for the assessment of affordability for consumers, an MCD mortgage lender must comply with the following principles:(1) be consistent with, and promote, sound and effective risk management;(2) not encourage risk-taking that exceeds the level of tolerated risk of the MCD mortgage lender;(3) be in line with the business strategy, objectives, values and long-term interests of the MCD mortgage
MCOB 2A.1.4RRP
An MCD mortgage adviser, or any other firm that is an MCD mortgage lender or an MCD mortgage arranger that provides advisory services within the meaning of article 4(21) of the MCD, must ensure that the remuneration structure of the members of staff involved does not:(1) prejudice the ability of the members of staff or the firm to act in the consumer's best interest; and(2) be contingent on sales targets.[Note: article 7(4) of the MCD]
MCOB 2A.1.5GRP
The remuneration policies of MCD mortgage lenders and MCD mortgage credit intermediaries, including those that take account of sales volumes, should not be designed in a way that would incentivise their members of staff to conclude a given number or type of MCD regulated mortgage contracts.
LR 8.6.5BGRP
7Situations when the FCA may impose restrictions or limitations on the services a sponsor can provide include (but are not limited to) where it appears to the FCA that: (1) the employees of the person applying to be a sponsor whom it is proposed will perform sponsor services have no or limited relevant experience and expertise of providing certain types of sponsor services or of providing sponsor services to certain types of company; or(2) the person applying to be a sponsor does
LR 8.6.7RRP
A sponsor, or a 8person48applying for approval as a sponsor, will not satisfy LR 8.6.5R (2) unless it has:4888(1) 8submitted a sponsor declaration to the FCA:(a) for a person applying for approval as a sponsor, within three years of the date of its application; and(b) for a sponsor, within the previous three years; and(2) 8a sufficient number of employees with the skills, knowledge and expertise necessary for it to:(a) provide sponsor services in accordance with LR 8.3; (b) understand:(i)
LR 8.6.7AGRP
8To determine whether a sponsor or a person applying for approval as a sponsor is able to satisfy LR 8.6.7R (1)(a), the FCA may consider whether any of the person'semployees have had material involvement in the provision of sponsor services that have required the submission of a sponsor declaration within the previous three years.
LR 8.6.7DGRP
8Notwithstanding LR 8.6.7C G, when considering whether a sponsor satisfies LR 8.6.7R (2)(c) the FCA expects a sponsor to have no less than two employees who are able to satisfy the key contact requirements in LR 8.6.19R (2).
LR 8.6.12RRP
8A sponsor or a person applying for approval as a sponsor will not satisfy LR 8.6.5R (3) unless it has in place:(1) clear and effective reporting lines for the provision of sponsor services (including clear and effective management responsibilities);(1A) effective systems and controls which require employees with management responsibilities for the provision of sponsor services to understand and apply the requirements of LR 8; (2) effective systems and controls for the appropriate
LR 8.6.20GRP
8The FCA expects an employee carrying out the role of key contact to have provided a sponsor service in the previous three years.
SYSC 22.6.1GRP
(1) 1A firm may have concluded that an employee is unfit or has breached COCON or APER (as described in questions (E) to (F) of Part One of SYSC 22 Annex 1R (Template for regulatory references given by relevant authorised persons and disclosure requirements)). The firm may later become aware of facts or matters causing it to revise its original conclusions.(2) If so, the firm may decide not to disclose in a reference its conclusion or may qualify its conclusion with supplementary
SYSC 22.6.2GRP
(1) A firm may have concluded that an employee is unfit or has breached COCON or APER (as described in questions (E) to (F) of Part One of SYSC 22 Annex 1R (Template for regulatory references given by relevant authorised persons and disclosure requirements)). However the firm may consider that the disclosure is incomplete without including mitigating circumstances.(2) For example, if the firm is reporting a breach of COCON it may consider that the breach is very uncharacteristic
SYSC 22.6.3GRP
(1) If a firm has taken disciplinary action of the type referred to in question (F) in Part One of SYSC 22 Annex 1R (Template for regulatory references given by relevant authorised persons and disclosure requirements) against an employee and is asked to give a reference about that employee, the firm should (if it has not already done so) consider whether the basis on which it took that action amounts to a breach of any individual conduct requirements covered by question (F).
SYSC 22.6.4GRP
(1) SYSC 22.2.2R(1) to (3) may require a full scope regulatory reference firm to disclose information that goes beyond the mandatory minimum information in Part One of SYSC 22 Annex 1R (Template for regulatory references given by relevant authorised persons and disclosure requirements).(2) This may mean, for instance, that a firm should in some cases disclose a conclusion that an employee or former employee has breached COCON or APER where that conclusion was reached outside the
PERG 8.12.10GRP
Financial promotions other than unsolicited real time financial promotions are exempt where they follow up an earlier financial promotion which, in compliance with another exemption (such as that for promotions made to high net worth individuals or sophisticated investors – see PERG 8.14.21 G and PERG 8.14.27 G), contains certain indications or information. This is provided the financial promotion:(1) is made by the person who made or directed the earlier financial promotion;(2)
PERG 8.12.21GRP
Financial promotions made only to or directed only at certain types of person who are sophisticated enough to understand the risks involved are exempt. These are:(1) authorised persons;(2) exempt persons (where the financial promotion relates to a controlled activity which is a regulated activity for which the person is exempt);(3) governments and local authorities; and(4) persons whose ordinary business involves carrying on a controlled activity of the kind to which the financial
PERG 8.12.33GRP
The main purpose of the exemption appears to be to guard against the possibility that, during the course of a broadcast interview or a live website presentation, a financial promotion is made inadvertently by a director or employee of a company or other business undertaking when he is not acting in the capacity of a journalist (see PERG 8.12.25 G). The exemption applies if the financial promotion relates only to:(1) shares of the undertaking or of another undertaking in the same
PERG 8.12.34GRP
The exemption applies where the financial promotion:(1) comprises words which are spoken by the director or employee and not broadcast, transmitted or displayed in writing; or(2) is displayed in writing only because it is part of an interactive dialogue to which the director or employee is a party and in the course of which he is expected to respond immediately to questions put by a recipient of the communication.This is provided that the financial promotion is not part of an
PERG 8.12.35GRP
The exemption also requires that the director or employee is identified as such in the financial promotion before it is communicated.
PERG 8.12.37GRP
The second part of the exemption (referred to in PERG 8.12.34G (2)) envisages that the director or employee will be holding the equivalent of a conversation conducted in writing. Typically this will involve the exchange of e-mails. It is possible that this part of the exemption could be used by companies making so-called webcasts over the Internet. However, this would only be the case if the service through which the webcast is provided is a regularly updated news or information
SYSC 22.1.4GRP
One effect of SYSC 22.1.3R is that the obligation to provide a reference can apply even if the employee worked in an overseas office of the employer.
SYSC 22.1.6RRP
For an incoming firm or any other overseas firm, SYSC 22.2.2R (Obligation to give references) only applies if the current or former employee in question (defined as “P” in SYSC 22.2.2R) is or was an employee of its branch in the United Kingdom and only relates to their activities as such.
SYSC 22.1.7RRP
(1) In order to decide whether someone is an employee of a branch, the Glossary definition of employee is applied to the branch as if the branch and the firm of which it forms part were separate firms.(2) For the purpose of (1), paragraph (4A)(c) of the definition of employee (someone employed elsewhere in the group) does not apply.
SYSC 18.5.1RRP
A firm must include a term in any settlement agreement with a worker that makes clear that nothing in such an agreement prevents a worker from making a protected disclosure.
SYSC 18.5.2ERP
(1) Firms may use the following wording, or alternative wording which has substantively the same meaning, in any settlement agreement:“For the avoidance of doubt, nothing precludes [name of worker] from making a “protected disclosure” within the meaning of Part 4A (Protected Disclosures) of the Employment Rights Act 1996. This includes protected disclosures made about matters previously disclosed to another recipient.”(2) Compliance with (1) may be relied on as tending to establish
SYSC 18.5.3RRP
(1) Firms must not request that workers enter into warranties which require them to disclose to the firm that:(a) they have made a protected disclosure; or(b) they know of no information which could form the basis of a protected disclosure.(2) Firms must not use measures intended to prevent workers from making protected disclosures.
SYSC 22.8.7GRP
If:(1) a firm (A) is thinking of employing someone (P);(2) P is employed by a group services company (D) that is not a firm; (3) P (in their capacity as an employee of D) performs a function or service for a firm (B) in the same group as D such that P is also an employee of B; and(4) A intends to appoint (P) to a position that entitles A to obtain a reference from B;then: (5) (if A is a full scope regulatory reference firm) A should ask both B and D for a reference;(6) B is obliged
SYSC 22.8.8GRP
SYSC 22.8.7G also applies where:(1) D is not in the same group but has seconded P to B; and(2) P (in their capacity as an employee of D) performed any function or services for B such that P was also an employee of B.
SYSC 22.8.9GRP
If:(1) a firm (A) is thinking of appointing someone (P) to a position that entitles A to obtain a reference from another firm (B); and (2) P was an employee of other members of B’s group as well as of B;then:(3) (if A is a full scope regulatory reference firm) A should ask all the group members that employed P for a reference; (4) B should give a reference if A asks it to (whether or not A is a full scope regulatory reference firm); (5) P’s employers in that group (including any