EG 9.3 Prohibition orders and withdrawal of approval - approved persons

2When the FCA has concerns about the fitness and propriety of an approved person, it may consider whether it should prohibit that person from performing functions in relation to regulated activities, withdraw its approval, or both. In deciding whether to withdraw its approval and/or make a prohibition order, the FCA will consider in each case whether its statutory objectives can be achieved adequately by imposing disciplinary sanctions, for example, public censures or financial penalties, or by issuing a private warning.

2When the FCA1 decides whether to make a prohibition order against an approved person and/or withdraw their1 approval, the FCA will consider all the relevant circumstances of the case. These may include, but are not limited to those set out below.

1. (1)

   The matters set out in section 61(2) of the Act.

2. (2)

   Whether the individual is fit and proper to perform functions in relation to regulated activities. The criteria for assessing the fitness and propriety of approved persons are set out in FIT 2.1 (Honesty, integrity and reputation); FIT 2.2 (Competence and capability) and FIT 2.3 (Financial soundness).

3. (3)

   Whether, and to what extent, the approved person has:

   1. (a)

      failed to comply with the Statements of Principle or COCON, as applicable,3 issued by the FCA with respect to the conduct of approved persons; or

      1
   2. (b)

      been knowingly concerned in a contravention by the relevant firm of a requirement imposed on the firm by or under the Act (including the Principles and other rules), the AIFMD UK regulation or any qualifying EU provision specified, or of a description specified, for the purpose of section 66(2) by the Treasury by order.

4. (4)

   Whether the approved person has engaged in market abuse.

5. (5)

   The relevance and materiality of any matters indicating unfitness.

6. (6)

   The length of time since the occurrence of any matters indicating unfitness.

7. (7)

   The particular controlled function the approved person is (or was) performing, the nature and activities of the firm concerned and the markets in which he operates.

8. (8)

   The severity of the risk which the individual poses to consumers and to confidence in the financial system.

9. (9)

   The previous disciplinary record and general compliance history of the individual including whether the FCA, any previous regulator, designated professional body or other domestic or international regulator has previously imposed a disciplinary sanction on the individual.

10. (10)

    Where the approved person is an SMF manager, whether they would be a fit and proper person to perform functions in relation to regulated activities if the FCA varied their approval by imposing one or more conditions. If so, whether it is appropriate for the FCA to exercise its power to impose such conditions, instead of making a prohibition order or withdrawing the approved person’s approval. 1

2The FCA may have regard to the cumulative effect of a number of factors which, when considered in isolation, may not be sufficient to show that the individual is not fit and proper to continue to perform a controlled function or other function in relation to regulated activities. It may also take account of the particular controlled function which an approved person is performing for a firm, the nature and activities of the firm concerned and the markets within which it operates.

2Due to the diverse nature of the activities and functions which the FCA regulates, it is not possible to produce a definitive list of matters which the FCA might take into account when considering whether an individual is not a fit and proper person to perform a particular, or any, function in relation to a particular, or any, firm.

2The following are examples of types of behaviour which have previously resulted in the3 FCA the deciding to issue a prohibition order or withdraw the approval of an approved person:

1. (1)

   Providing false or misleading information to the FCA; including information relating to identity, ability to work in the United Kingdom, and business arrangements;

2. (2)

   Failure to disclose material considerations on application forms, such as details of County Court Judgments, criminal convictions and dismissal from employment for regulatory or criminal breaches. The nature of the information not disclosed can also be relevant;

3. (3)

   Severe acts of dishonesty, e.g. which may have resulted in financial crime;

4. (4)

   Serious lack of competence; and

5. (5)

   Serious breaches of the APER or COCON,3 for approved persons, such as failing to make terms of business regarding fees clear or actively misleading clients about fees; acting without regard to instructions; providing misleading information to clients; consumers or third parties; giving clients poor or inaccurate advice; using intimidating or threatening behaviour towards clients and former clients; failing to remedy breaches of the general prohibition or to ensure that a firm acted within the scope of its permissions.

2Certain matters that do not fit squarely, or at all, within the matters referred to above may also fall to be considered. In these circumstances the FCA will consider whether the conduct or matter in question is relevant to the individual's fitness and propriety.

2Where it considers it is appropriate to withdraw an individual's approval to perform a controlled function within a particular firm, it will also consider, at the very least, whether it should prohibit the individual from performing that function more generally. Depending on the circumstances, it may consider that the individual should also be prohibited from performing other functions.

2The FCA will consult the PRA before withdrawing an approval given by the PRA.