SIFA 7.1 Approved Persons
You need to apply to have an individual approved to perform a controlled function as follows:
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(1)
before a firm is authorised we must approve the individuals who are going to carry out controlled functions and then register them for the appropriate controlled functions; and
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(2)
you need to complete and submit a new form in order to obtain FSA approval if an individual joins the firm, changes a controlled function or moves to a different firm. There is a special provision to cover absence of up to 12 weeks for senior functions where approval is not required (SUP 10.5.5 and SUP 10.5.6 ).
Controlled functions
The full list of controlled functions can be found under SUP 10.4.5 . The functions with most relevance to small firms are likely to be the:
The most common controlled customer functions in IFAs are CF21 (Investment adviser function) and CF22 (Investment adviser trainee function), but some IFAs may also have functions CF23 (Corporate finance adviser function), CF24 (Pension transfer specialist function), and CF27 (Investment management function).
Becoming and ceasing to be an approved person
The Supervision manual (SUP) establishes the 'approved persons regime'. There are five standard forms (A-E). You can find the forms on our website under 'Industry Help', 'Forms', 'Supervision manual Approved persons regime forms'; or on our CD-ROM under 'Library', 'Current Library', 'Forms', 'Supervision', 'Approved Persons Regime'. Firms can also register with the FSA to submit the Approved Persons forms via the Internet. Details of this facility can be obtained from the E-regulation Contact Centre on 0845 606 9966 or by email to: e-regulation@fsa.gov.uk
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Form |
When to use the form |
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A |
To perform a controlled function. The individual who is to be appointed to perform the controlled function should complete the form and it should be authorised by an individual with a Governing function within the firm. Form A is also used if an already Approved Person is increasing their functions but sections 4 and 5 of the Form will not always require completion |
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B |
To withdraw an application to perform a controlled function (i.e. to withdraw the application before it has been approved by the FSA). Both the firm and the individual candidate must sign this form. |
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C |
To cease to perform a controlled function or to reduce the number of functions that an individual performs (i.e. to withdraw controlled functions from an approved person). Only the firm is required to sign this form. |
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D |
To change an approved person's details |
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E |
To notify a person remaining with the same firm but changing a controlled function (e.g. to apply for a change from CF22 trainee investment adviser to CF21 investment adviser). |
How long will an application take?
Which parts of the Handbook are relevant?
The following parts of the Handbook are relevant:
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(1)
SUP Table 10.11.2 G highlights which form you should use and when as does SUP 10 Ann 2.
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(2)
SUP 10.3 to SUP 10.10 describe the 27 controlled functions and the boundaries of the approved persons regime.
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(3)
SUP 10.11 to SUP 10.14 set out the procedures for applying for approval, changing the details that we hold about an approved person, and withdrawing from approval.
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(4)
SUP 10 Ann 1 lists frequently asked questions on the requirements of the approved persons regime.
Principles for approved persons
The Principles for firms (see Chapter 4 of this Overview) are matched by a set of principles for Approved Persons. Statements of Principle and Code of Practice for Approved Persons (APER) include the Statements of Principle in APER 2. The Code of Practice in APER 3 and APER 4 provides guidance on the factors, which in our opinion, should be taken into account when assessing whether an approved person has complied with the Statements of Principle.
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• An approved person must act with integrity in carrying out his controlled function. • An approved person must act with due skill, care and diligence in carrying out his controlled function. • An approved person must observe proper standards of market conduct in carrying out his controlled function. • An approved person must deal with the FSA and with other regulators in an open and co-operative way and must disclose appropriately any information of which the FSA would reasonably expect notice. • 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. • 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. • 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 relevant standards and requirements of the regulatory system. |
Further information and other issues
You can obtain further information as follows:
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(1)
You can find a list of frequently asked questions at AUTH 6 Annex 1 G. If this does not answer your question, you should contact our Enquiries and Applications Department by telephone on 020 7066 0019 or e-mail iva@fsa.gov.uk.
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(2)
The number of approved persons carrying out controlled functions CF 21-27 registered by a firm may be a factor in the level of fees payable by the firm.
Record keeping requirements: apportionment of responsibilities
You must keep an up-to-date record of how responsibilities have been apportioned between directors and senior managers ( SYSC 2.2.1 R). This may take the form, for example, of an organisation chart or diagram ( SYSC 2.2.2 G).
Frequently, it is to the managing director that the firm allocates the function of dealing with the apportionment of responsibilities and overseeing the establishment and maintenance of systems and controls (SYSC 2.1).