SIFA 5.4 Senior Management Arrangements, Systems and Controls

These are set out in the Senior Management Arrangements, Systems and Controls Sourcebook (SYSC). This part of the Handbook expands the meaning of Principle 3.

This means that a firm must (in line with SYSC 2 and SYSC 3):

• apportion responsibilities among its directors and senior managers so it is clear who has which of these responsibilities and the business and affairs of the firm can be adequately monitored and controlled;
• allocate to the Chief Executive or most senior person the functions of apportioning responsibilities and overseeing the establishment and maintenance of systems and controls;
• make and keep updated a record of these arrangements, for example, by means of an organisation chart and job descriptions; and
• take reasonable care to create and maintain such systems and controls as are appropriate to its business.

The rules and guidance in SYSC 3.2 cover some of the main issues which a firm is expected to consider in establishing and maintaining the systems and controls appropriate to its business. These include:

• the size of the firm;
• the scale and complexity of its business;
• the need to counter the risk the firm might be used to further financial crime;
• the need to establish and maintain systems for compliance with regulatory requirements;
• the suitability of employees;
• audit requirements; and
• record-keeping.

We do not expect small and large firms to have similar systems and controls. The important point is that they should be fit for purpose given the size and business of the firm. With a sole practitioner, one person is responsible for all aspects of the firm but we expect there to be systems that allow that person to monitor and manage the firm adequately.

Parts of the Handbook may be relevant to a firm's management of operational risk. These include COB 2 (Rules which apply to all firms conducting designated investment business), COB 3 (Financial promotion) and COB 5 (Advising and selling).