MIGI 6.2 The approved persons requirements

The controlled functions are divided into 'customer functions' and 'significant influence functions'. Only the significant influence functions apply to insurance and mortgage intermediaries, so the customer functions are not covered in this Guide. There is a full list of the controlled functions in SUP 10.4.5 R to which you should refer to help you decide which controlled functions are relevant to your firm.

The significant influence functions are carried on by individuals who exercise a significant influence over the conduct of a firm's affairs, such as a director or partner. You need to be an approved person to perform a significant influence function. The significant influence functions are divided into four types:

1. (1)

   governing functions (SUP 10.6);

2. (2)

   required functions (SUP 10.7);

3. (3)

   systems and controls functions (SUP 10.8); and

4. (4)

   significant management functions (SUP 10.9).

If you are a sole trader you will only need to be an approved person yourself if you employ other approved persons. The employees of a sole trader carrying on insurance or mortgage mediation activities will generally not be carrying on controlled functions. So, if you are a sole trader you are unlikely to need any approved persons (but see also paragraph 6.2.11 below). For further details see SUP 10.6.30 R to SUP 10.6.32 G.

As noted above, only the significant influence functions apply to insurance and mortgage intermediaries. Only the governing functions and the required functions are likely to be relevant to small mortgage and insurance intermediaries with simple organisational structures (but see paragraphs 6.2.7 to 6.2.9 of this Chapter).

Fewer controlled functions apply to firms that are 'secondary insurance intermediaries' than to 'primary insurance intermediaries'. A primary insurance intermediary is one whose main business is insurance mediation activities. A secondary intermediary is one whose main business is not insurance mediation activities and who does not carry on any regulated activities other than insurance mediation activities, for example a motor dealer that also sells car insurance.

Although in most cases only the controlled functions in the above table will be relevant to a small mortgage or insurance intermediary, other controlled functions could, in certain circumstances, also apply.

For example, in more complex firms, if significant managerial responsibilities are delegated to non-executive directors or individuals who are not on the firm's governing body (see SUP 10.6.2 R and SUP 10.6.3 G), these individuals must get approval from us if they are to perform:

1. (1)

   systems and controls functions (see SUP 10.8 and SYSC 3.2); or

2. (2)

   significant management functions (see SUP 10.9 and SYSC 2.1).

If you are approved to perform a governing function, for example as a director, you will not require separate approval to perform the systems and controls and significant management functions.

An insurance intermediary (other than a sole trader) must make a director or senior manager responsible for the firm's insurance mediation activities. Typically, responsibility should be given to a person approved to perform a governing function. Where insurance mediation is not your main business activity, responsibility for insurance mediation should be allocated to the approved person performing the apportionment and oversight function (CF8). In the case of a sole trader, the sole trader him or herself will be responsible for the firm's insurance mediation activity, regardless of whether or not he or she is an approved person. The FSA Register will identify the person who has this responsibility. You should refer to PRU 9.1 for further details.