CREDS 8.3 Approved persons

The purpose of this section is to set out further guidance relating to the approved persons regime that is specific to credit unions. Credit unions should also read Chapter 10 of the Supervision manual (SUP) concerning approved persons.

The effect of section 59 of the Act and SUP 10 is that a credit union must apply to the FSA for the approval of one or more individuals to perform the functions which are known as controlled functions. Controlled functions fall within two groups:

1. (1)

   The significant influence functions describe the roles performed by the governing body and senior managers of the firm who exert a significant influence over the regulated activities of the firm.

2. (2)

   The customer functions describe the roles of individuals who deal with customers or with the property of customers. These customer functions do not extend to activities in relation to accepting deposits or general insurance and therefore will not be relevant to credit unions with permission for accepting deposits only.

The complete list of all controlled functions is located in SUP 10.4.5 R. Guidance on those controlled functions most likely to be relevant to credit unions is provided below.

SUP 10.6: the governing functions:

1. (1)

   SUP 10.6.4 R: the director function, This is the function of acting in the capacity of a director of a credit union.

2. (2)

   SUP 10.6.8 R: the non-executive director function. It is unusual for a credit union to appoint non-executive directors as such. But this function would include membership of a credit union's supervisory committee and any other committee which scrutinises the approach of executive management, the credit union's performance, and its standards of conduct.

3. (3)

   SUP 10.6.11 R: the chief executive function. Acting in the capacity of chief executive, whether or not using that title. This role includes anyone having the responsibility, alone or jointly with one or more others, under the immediate authority of the committee of management, for the conduct of the whole of the business.

SUP 10.7: the required functions:

1. (1)

   SUP 10.7.1 R: the apportionment and oversight function. This is the function of dealing with apportionment of responsibilities under SYSC 4.4.3 R, and of overseeing the establishment and maintenance of systems and controls under SYSC 4.1.1 R.

2. (2)

   SUP 10.7.13 R: the money laundering reporting function. This is the function of acting in the capacity of the money laundering reporting officer of a credit union.

SUP 10.8: the systems and controls function. This is the function of acting as an employee with responsibility for reporting to the committee of management in relation to:

1. (1)

   the credit union's financial affairs; or

2. (2)

   setting and controlling its risk exposure; or

3. (3)

   adherence to internal systems and controls, procedures and policies.

Where an employee performs the systems and controls function the FSA would expect the credit union to ensure that the employee had sufficient expertise and authority to perform that function effectively, for example by occupying the role of a director or senior manager.

SUP 10.9: the significant management functions: This controlled function will only apply to the credit union if the function is not being performed by a member of the committee of management and the credit union has followed the guidance in SUP 10.9.3 G.