SUP 10A Annex 1 Frequently asked questions

1Type of firm

1-1

Does this chapter apply to all types of firm? If not, where can I find the equivalent material?

No, SUP 10A does not apply to relevant authorised persons (broadly speaking, banks, credit unions, building societies and investment firms that are PRA-authorised persons). The requirements for these firms can be found in SUP 10C. However, this chapter does cover approved persons in appointed representatives of such firms.

Requirements of the regime

1

Does pre-approval apply to individuals taking up a new FCA controlled function within the same firm?

Yes. Pre-approval applies in all circumstances (see section 59 of the Act (Approval for particular arrangements)) except under the temporary (12 weeks) provision. See SUP 10A.5.6 R and question 2.

2

What are the procedures for ‘emergency situations’?

Individuals may perform an FCA significant-influence function for up to 12 weeks in any consecutive 12-month period without requiring approval. When it becomes clear that a person will be performing the function on a permanent basis, then an application for approval should be made. However, there is no provision for individuals to perform the customer function on a continuing basis without approval (SUP 10A.5.6 R).

3

Can a person be approved for more than one FCA controlled function?

Yes. A firm will need to seek approval in respect of each FCA controlled function a person is to perform.

4

Do the FCA controlled functions apply to an incoming EEA firm that is providing cross border services into the United Kingdom?

No. The FCA-approved persons regime does not apply to cross border services (SUP 10A.1.5 R).

5

May any activity be outsourced by a firm?

Yes. But if that activity constitutes a regulated activity, the person to whom it is outsourced will itself need permission.

6

Can an FCA significant-influence function be outsourced?

It is a question of fact in each case as to who is performing an FCA significant-influence function. These functions are mostly described at a high level of responsibility, for example, the director of a company or a partner in a partnership. The persons performing these functions cannot avoid their ultimate responsibility and, therefore, the need for approval. However, some of the FCA significant-influence functions may be performed by a person who is specifically brought in to do the job, for example the chief executive function (where it is to be performed by a body corporate).

7

Do Lloyd’s underwriting agents still require registration with Lloyd’s?

Yes. Approval for a controlled function is not sufficient.

8

What should a firm do if it is unsure whether an individual needs approval?

The firm should contact the FCA's Customer Contact Centre. See SUP 10A.12.6 G.

Submitting an application

9

Who applies for approval?

The firm. See section 60 of the Act (Applications for approval).

10

What is the role of the FCA candidate in the application process?

Before the firm submits the relevant Form A or Form E, it must verify the information contained in it. As part of this verification, the Form provides for the FCA candidate to confirm the accuracy of the information given by the firm so far as it relates to him.

11

What checks should a firm make on a FCA candidate before submitting an application for approval from the FCA?

The FCA expects firms to perform due and diligent enquiries into their FCA candidates before they submit an application to the FCA for approval. The FCA's approval process is not a substitute for the checks that a firm should be carrying out on its prospective recruits. It is for the firm to determine what checks are appropriate but, in making its decision, a firm should have regard to the FCA controlled function to which the application relates. Firms' enquiries should include checks to verify relevant qualifications and previous employment. Note also the provisions of EG 6.

12

Should these checks include a check of criminal records?

It is for senior management to decide what checks should be made. In deciding if it is necessary to carry out a check of criminal records, the firm should consider that the FCA does not routinely carry out these checks during the approval process. By virtue of the rehabilitation exceptions orders, the FCA and the industry also have a right to ask about the spent criminal convictions specified in those Orders, as well as any unspent criminal convictions, in order to assess the suitability of FCA candidates for approved person status (see section 5 of the relevant Form A (Application to perform controlled functions under the approved persons regime)). Note also the provisions of EG 6(Publicity).

13

What is the "fit and proper" test for approval?

Section 61(1) of the Act (Determination of applications) provides that the FCA may grant an application only if it is satisfied that the FCA candidate is a fit and proper person to perform the relevant function. In determining this question, the Act sets out the matters to which the FCA may have regard (section 61(2)) and the FCA has given guidance on this in FIT.

14

If a firm is unsure whether or not something may have an impact upon an individual’s fitness and propriety, should it be disclosed?

Yes, always. The deliberate non-disclosure of material facts is taken very seriously by the FCA as it is seen as possible evidence of current dishonesty. Therefore, if in doubt, disclose.

15

What happens if adverse information comes to light after the application form has been submitted or after the individual has been FCA-approved?

The firm must inform the FCA at the earliest opportunity. See SUP 10A.14.17 R.

16

Will the FCA consider an application in respect of a FCA candidate who has not yet signed a contract with the firm?

Yes, as the FCA will consider the arrangement under which the FCA candidate will perform the function. However, the FCA will not consider speculative or provisional applications - such as for the FCA candidates in an election to a mutual society Board. The FCA must be informed immediately of any material changes to the information provided on the application form which arises before the application has been determined. All changes must be communicated to the FCA by the firm making the application (see SUP 15.6.4 R). Failure to notify the FCA may result in a delay in processing or rejection or both.

17

How can credit unions get a supply of application forms (Forms A to F)?

These can be ordered from the FCA's Customer Contact Centre. There is no charge for an application form.

18

Is there a separate fee for making an application for FCA-approved person status?

No.

19

Must all gaps in previous employment be explained?

Yes.

FCA procedure

20

Does the FCA verify the information provided to it?

Yes, as far as possible, information is verified.

21

Will the FCA handle information confidentially?

Yes. The FCA is obliged to handle all information confidentially and is subject to the provisions of the Data Protection Act 1998.

22

How long will the FCA take to process an application for FCA-approved person status?

The length of time taken to process the application will vary as it is dependent upon the application under consideration. The FCA publishes standard response times on its website at www.fca.org.uk setting out how long the application process is expected to take in practice. From time to time, the FCA also publishes its performance against these times. However, if, for example, information is missing from the application, or the information provided gives the FCA cause for concern, or the FCA already has in its possession relevant information which gives rise to concerns, processing time will almost always be longer. In each case, the FCA will notify the firm of any extension to the processing times.

23

Will the firm and individual be notified if there is a delay in processing the application form?

Yes. The FCA will contact the firm explaining the position and, where appropriate, giving the reasons for delay. It will then be the responsibility of the firm to keep the FCA candidate and any other interested party informed.

24

How are non-routine cases handled?

Refer to DEPP 2.

25

Can the FCA apply conditions to an FCA-approved person?

No. The application can either be granted or refused. The Act provides no equivalent to the limitations or requirements which may be included in permissions. If the application is refused, the firm may re-apply in respect of the same individual but a different FCA controlled function. If it is considering doing this, the firm is encouraged to discuss the matter with the FCA. Where there are reasonable grounds for doing so, the FCA may require a firm to provide information about an FCA-approved person (see section 165 of the Act (Power to require information)).

26

Will the firm be issued with confirmation of approval?

Yes. The firm will be sent a letter setting out the effective date of approval together with the FCA controlled function for which the individual has been FCA-approved. It will then be the firm's responsibility to inform the individual and any other interested party, for example any appointed representative.

Withdrawing an application

27

Can a firm withdraw its application?

Yes, but only with the consent of the FCA candidate. See section 61(5) of the Act (Determination of applications).

28

What happens if the individual refuses to consent to the withdrawal of the application?

The FCA will consider with all interested parties what to do. If it proposes to refuse the application, it will give a warning notice to all interested parties. See section 62 of the Act (Applications for approval: procedure and right to refer to the Tribunal).

29

Can the firm withdraw only part of an application ? for instance, in relation to a specific FCA controlled function?

The FCA will allow the firm to amend its application at any time before determination with the consent of all other interested parties. Whether the amendment will have the effect of amounting to a fresh application will be considered on a case by case basis.

Conduct of FCA-approved persons

30

How and when must the firm report to the FCA potentially adverse information about an FCA-approved person's fitness and propriety?

Normally, the firm should report such matters to the FCA on Form D once it is reasonably satisfied as to the information’s validity (SUP 10A.14.17 R). (See also, Chapter 11 of the Principle for Businesses sourcebook (PRIN) and Statement of Principle 4 in Chapter 2 of the Statements of Principle and Code of Practice for Approved Persons (APER).) However, if an FCA-approved person is dismissed, is suspended, or resigns while under investigation by the firm, the FCA or another regulatory body, or there are any other matters that might affect the individual’s fitness and propriety to perform an FCA controlled function, the firm should inform the FCA (SUP 10A.14.10 R) that it will be submitting a Form C containing adverse information. Full details must then be provided within seven business days, on the Form C (SUP 10A.14.8 R).

31

For how long are individuals accountable to the FCA after ceasing to be an FCA-approved person?

A person is guilty of misconduct if, while an FCA-approved person, he fails to comply with a Statement of Principle or is knowingly concerned in the contravention by a firm of a requirement in the Act or the Handbook or certain other requirements. But the FCA may not bring proceedings after three years from when it first knew of the misconduct.

Advising only,

Undertaking an activity

Advising and dealing

Managing investments

2-9

10-11

12-13

14

customer function (CF 30)

10A.10.4 R