SUP 10.1 Application
General
This chapter applies to every firm.
This chapter is also relevant to every approved person.
The rules in this chapter specify descriptions of controlled functions9 under section 59 of the Act (Approval for particular arrangements).
994The directions in this chapter relate to the manner in which a firm must apply for the FSA's approval under section 59 of the Act and other procedures.
Overseas firms: UK services
This chapter does not apply to an overseas firm in relation to regulated activities which are carried on in the United Kingdom other than from an establishment maintained by it or its appointed representative in the United Kingdom.
Overseas firms: UK establishments
Only the following controlled functions apply to an overseas firm which maintains an establishment in the United Kingdom from which regulated activities are carried on:
- (1)
- (2)
the required functions;
- (3)
the significant management function in so far as the function relates to:9
9- (a)
designated investment business other than dealing in investments as principal, disregarding article 15 of the Regulated Activities Order; or9
- (b)
processing confirmations, payments, settlements, insurance claims, client money and similar matters in so far as this relates to designated investment business; and9
- (a)
- (4)
[deleted]9
9 - (5)
the customer function7.
7
Incoming EEA firms, incoming Treaty firms and UCITS qualifiers
This chapter does not apply to:
- (1)
an incoming EEA firm; or
- (2)
an incoming Treaty firm; or
- (3)
if and in so far as the question of whether a person is fit and proper to perform a particular function in relation to that firm is reserved, under any of the Single Market Directives, the Treaty or the UCITS Directive to an authority in a country or territory outside the United Kingdom.
SUP 10.1.9 R reflects the provisions of section 59(8) of the Act and, in relation to an incoming Treaty firm and a UCITS qualifier, the Treaty and the UCITS Directive. It preserves the principle of Home State prudential regulation. In relation to an incoming EEA firm exercising an EEA right, or an incoming Treaty firm exercising a Treaty right, the effect is to reserve to the Home State regulator the assessment of the fitness and propriety of a person performing a function in the exercise of that right. A member of the governing body, or the notified UKbranchmanager, of an incoming EEA firm, acting in that capacity, will not therefore have to be approved by the FSA under the Act.
But an incoming EEA firm, or incoming Treaty firm, will have had to consider the impact of the Host State rules with which it is required to comply when carrying on a passported activity or Treaty activity through a branch in the United Kingdom. An incoming EEA firm will have been notified of those provisions under Part II of Schedule 3 to the Act in the course of satisfying the conditions for authorisation in the United Kingdom.
An incoming EEA firm will have to consider, for example, the position of a branch manager based in the United Kingdom who may also be performing a function in relation to the carrying on of a regulated activity not covered by the EEA right of the firm. In so far as the function is within the description of a controlled function, the firm will need to seek approval for that person to perform that controlled function.
Incoming EEA firms: passported activities from a branch
Only the following controlled functions apply to an incoming EEA firm with respect to its passported activities carried on from a branch in the United Kingdom:
- (1)
- (2)
- (3)
- (4)
the significant management function in so far as the function relates to:9
9- (a)
designated investment business other than dealing in investments as principal, disregarding article 15 of the Regulated Activities Order; or9
- (b)
processing confirmations, payments, settlements, insurance claims, client money and similar matters in so far as this relates to designated investment business; and9
- (a)
- (5)
[deleted]9
9 - (6)
the customer function other than where this relates to the function in SUP 10.10.7A R (4).7
7
9If the only regulated activities carried on by an incoming EEA firm in the United Kingdom are MiFID business, only SUP 10.1.13 R (3), (4) and (6) apply to that firm.
9If an incoming EEA firm carries on designated investment business which consists of8 MiFID business 8only, the EEA investment business oversight function and the compliance oversight function will not apply to that firm.8
8If an incoming EEA firm carries on designated investment business which consists of both MiFID business and other regulated activities, the EEA investment business oversight function and the compliance oversight function (SUP 10.1.13 R (1) and SUP 10.1.13 R (2)) will apply to that firm, but only in relation to that part of the business which is not MiFID business.
Incoming EEA firms etc with top-up permission activities from a UK branch
In relation to the activities of a firm for which it has a top-up permission, only the following controlled functions apply:
- (1)
the required functions, other than the apportionment and oversight function;
- (2)
the significant management function in so far as it relates to:9
9- (a)
designated investment business other than dealing in investments as principal, disregarding article 15 of the Regulated Activities Order; or9
- (b)
processing confirmations, payments, settlements, insurance claims, client money and similar matters in so far as this relates to designated investment business; and9
- (a)
- (3)
[deleted]9
9 - (4)
the customer function.7
7
Appointed representatives
The descriptions of the following controlled functions9apply to an appointed representative of a firm, except an introducer appointed representative, as they apply to a firm:
9- (1)
the governing functions, subject to SUP 10.1.16A R and except for a tied agent of an EEA MiFID investment firm8; and
135 - (2)
the customer function7 other than in relation to acting in the capacity of an investment manager (see SUP 10.10.7A R (6)).7
77
- (1)
5SUP 10.1.16 R is modified in relation to an appointed representative meeting the conditions in (2) so that only one of the following governing functions:
- (a)
- (b)
- (c)
partner function; or
- (d)
applies, as appropriate, to an individual within that appointed representative who will be required to be an approved person.
- (2)
The conditions are that:
- (a)
the scope of appointment of the appointed representative includes insurance mediation activity in relation to non-investment insurance contracts but no other regulated activity, and
- (b)
the principal purpose of the appointed representative is to carry on activities other than regulated activities.
- (a)
[deleted]9
Members of a profession
This chapter, except in respect of the required functions, does not apply to an authorised professional firm in respect of its non-mainstream regulated activities.
Oil market participants, service companies, energy market participants, subsidiaries of local authorities or registered social landlords and insurance intermediaries.5
The descriptions of significant influence functions, other than the required functions, and if the firm is a MiFID investment firm, the governing functions, 9do not extend to activities carried on by a firm whose principal purpose is to carry on activities other than regulated activities and which is:
- (1)
an oil market participant; or
- (2)
a service company; or
- (3)
an energy market participant; or 5
- (4)
a wholly owned subsidiary of:5
- (5)
a firm with permission to carry on insurance mediation activity in relation to non-investment insurance contracts but no other regulated activity.52
It will be a matter of fact in each case whether, having regard to all the circumstances, including in particular where the balance of the business lies, a firm's principal purpose is to carry on activities other than regulated activities. If a firm wishes to rely on SUP 10.1.21 R, it should be in a position to demonstrate that its principal purpose is to carry on activities other than regulated activities.
2Committees of the Society of Lloyd's
- (1)
For the purpose of SUP 10.6.4 R (the director function), "director" includes an executive member of a committee to which the Council of the Society of Lloyd's directly delegates authority to carry out the Society's regulatory functions.
3 - (2)
For the purpose of SUP 10.6.8 R (the non-executive director function), "non-executive director" includes a non-executive member of a committee to which the Council of the Society of Lloyd's directly delegates authority to carry out the Society's regulatory functions.
Insolvency practitioners
This chapter does not apply to a function performed by:
- (1)
a person acting as an insolvency practitioner within the meaning of section 388 of the Insolvency Act 1986; or
- (2)
a person acting as a nominee in relation to a voluntary arrangement under Parts I (Company Voluntary Arrangements) and VIII (Individual Voluntary Arrangements) of the Insolvency Act 1986; or
- (3)
a person acting as an insolvency practitioner within the meaning of Article 3 of the Insolvency (Northern Ireland) Order 1989; or
- (4)
a person acting as a nominee in relation to a voluntary arrangement under Parts II (Company Voluntary Arrangements) and VIII (Individual Voluntary Arrangements) of the Insolvency (Northern Ireland) Order 1989.