CRED 6.2 The Statements of Principle of Code of Practice for Approved Persons (APER)

The purpose of this section is to provide a guide to the Statements of Principle and Code of Practice for Approved Persons (APER) which are issued for the guidance of approved persons in the conduct of their functions and follows the structure of the statements and code.

APER 1.1 provides that APER applies to approved persons.

APER 1.2 explains that section 64(2) of the Act provides that if the FSA issues Statements of Principles it must also issue a code of practice for the purpose of helping to determine whether a person's conduct complies with these Statements of Principle. The code has been issued for that purpose. It also sets out some guiding principles concerning the application of the Statements of Principle and the Code of Practice for Approved Persons. Statements of Principle 1, 2, 3 and 4 apply to all approved persons performing a controlled function for a credit union, and Statements of Principle 5, 6, and 7 apply to those approved to perform significant influence functions. All controlled functions performed for a credit union are significant influence functions (APER 1.2.4 G).

APER 2.1 sets out the seven Statements of Principle which apply to approved persons. These are all designed to ensure that approved persons undertake their roles efficiently and with integrity. All seven Principles may apply to approved persons performing functions for credit unions.

The table in APER 2.1.2 P sets out the full text of the Statements of Principle. These are repeated below for ease of reference.

1. (1)

   An approved person must act with integrity in carrying out his controlled function.

2. (2)

   An approved person must act with due skill, care and diligence in carrying out his controlled function.

3. (3)

   An approved person must observe proper standards of market conduct in carrying out his controlled function.

4. (4)

   An approved person must deal with the FSA and with other regulators in an open and cooperative way and must disclose appropriately any information of which the FSA would reasonably expect notice.

5. (5)

   An approved person performing a significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function is organised so that it can be controlled effectively.

6. (6)

   An approved person performing a significant influence function must exercise due skill, care and diligence in managing the business of the firm for which he is responsible in his controlled function.

7. (7)

   An approved person performing a significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function complies with the regulatory requirements imposed on that business.

APER 3.1 provides an introduction to the Code of Practice for Approved Persons and provides guidance on its operation. The key points for those involved with credit unions are as follows:

1. (1)

   An approved person will be in breach of a Statement of Principle only where his conduct was deliberate or where his standard of conduct was below that which would be reasonable in the circumstances.

2. (2)

   All the Statements of Principle may apply to approved persons performing a controlled function for a credit union.

APER 3.2 - APER 3.3 set out factors to be taken into account in determining whether or not an approved person's conduct complies with the Statements of Principle. Since all controlled functions relevant to credit unions are significant influence functions, all these factors are relevant to credit unions.

APER 4.1APER 4.7 set out the seven Statements of Principle in turn, and provide guidance on conduct which, in the opinion of the FSA, does not comply with each of the Statements of Principle or, in the case of APER 4.3, conduct which will tend to show compliance with the relevant Statement of Principle.

Details of the disciplinary measures which may be taken against approved persons are located in ENF 11ENF 13. Approved persons should note that disciplinary action may be taken either for their personal misconduct or for conduct which results in a credit union breaching any provisions to which it is subject.