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  4. Point in time
    2019-12-20

SUP 10C.7 1Other overall responsibility function (SMF18)

Application

SUP 10C.7.1-2R

2This section applies to a firm:

  1. (1)

    to which SYSC 26 (Senior managers and certification regime: Overall and local responsibility) applies; and

  2. (2)

    that is a UK SMCR firm.

SUP 10C.7.1-1G

2The effect of SUP 10C.7.1-2R is that this section only applies to one of the following types of UK SMCR firm:

  1. (1)

    an SMCR banking firm; 3

  2. (2)

    a Solvency II firm (including a large non-directive insurer) but excluding an insurance special purpose vehicle and certain firms in run-off; and3

  3. (3)

    3an enhanced scope SMCR firm.

Definition

SUP 10C.7.1RRP

A person performs the other overall responsibility function in relation to a firm if that person:

  1. (1)

    is performing:

    1. (a)

      a function allocated to that person under SYSC 26.3.1R (Main rules)2 in relation to the firm; 3

    2. (b)

      FCA-prescribed senior management responsibility (z)2 in the table in SYSC 24.2.6R2 (functions in relation to CASS) allocated to that person under SYSC 24.2 (Allocation of FCA-prescribed senior management responsibilities: Main allocation rules)2; or3

      2
    3. (c)

      3(if the firm has allocated such a function to someone) the function of having overall responsibility for any of the activities, business areas and management functions of the firm excluded from SYSC 26.3 (Main rules) by SYSC 26.4.18R (Exclusion for AIFMD); and

  2. (2)

    does not have an approval to perform any other designated senior management function in relation to the firm.

The other2 overall responsibility function does not apply if approved for another function

SUP 10C.7.2G

The table in SUP 10C.7.3G gives examples of how SUP 10C.7.1R(2) works.

SUP 10C.7.3GRP

Table: Examples of how the other overall responsibility function applies

1Example

Comments

(1) ‘A’ is appointed to perform the executive director function2 and to perform a potential other overall responsibility function for the same firm.

A only needs approval to perform the executive director function2.

(2) ‘A’ is approved to perform the other overall responsibility function. Later, A is appointed to perform the executive director function2 for the same firm.

A requires approval for the other overall responsibility function when A is first appointed. When A is later approved to perform the executive director function2, A stops performing the other overall responsibility function. The firm should use Form E to apply for approval for A to perform the executive director function and to notify the FCA that A is no longer performing the other overall responsibility function2.

(3) ‘A’ is appointed to perform the PRA's Head of Key Business Area designated senior management function for Firm X2 and to perform a potential other overall responsibility function for the same firm. Firm X is an SMCR banking firm.2

A only needs approval to perform the PRA's Head of Key Business Area designated senior management function. It does not make any difference whether the potential other overall responsibility function that A performs is connected to the PRA's Head of Key Business Area designated senior management function.

(4) ‘A’ is approved to perform the other overall responsibility function for Firm X. Firm X is an SMCR banking firm.2 Later, A is appointed to perform the PRA's Head of Key Business Area designated senior management function for the same firm.

A requires approval for the other overall responsibility function when A is first appointed. When A is later approved to perform the PRA's Head of Key Business Area designated senior management function, A stops performing the other overall responsibility function.

(5) ‘A’ is appointed to perform:

(a) the compliance oversight function for one firm (Firm X) in a group (which may or may not be an SMCR firm to which the other overall responsibility function applies2); and

(b) a function coming within the scope of the other overall responsibility function for another firm (which is a an SMCR firm to which the other overall responsibility function applies2) in the same group (Firm Y).

A needs approval to perform the compliance oversight function for Firm X and the other overall responsibility function for Firm Y.

(6) ‘A’ is appointed to be head of sales for Firm X2 and to report directly to the firm's governing body about this. This function also comes within the PRA's Head of Key Business Area designated senior management function. Firm X is an SMCR banking firm.2

A only needs approval to perform the PRA's Head of Key Business Area designated senior management function.

(7) ‘A’ is appointed to take on some functions that come within the other overall responsibility function. Later, A is appointed as chief risk officer.

The firm is one of those for which being chief risk officer is a PRA-designated senior management function or an FCA-designated senior management function3.

2

On A’s first appointment, A will need to be approved to perform the other overall responsibility function.

On being appointed as chief risk officer, 2A will stop performing the other overall responsibility function.

(8) ‘A’ is appointed to a role for Firm X2 that comes within the other overall responsibility function. Firm X is an SMCR banking firm.2 Later, the firm reorganises and A’s role comes within the PRA's Head of Key Business Area designated senior management function. A’s role does not otherwise change.

On A’s first appointment, A will need to be approved to perform the other overall responsibility function.2

When A is later approved to perform the PRA’s Head of Key Business Area designated senior management function, A stops performing the other overall responsibility function.2

(9) ‘A’ is appointed to a role for Firm X2 that comes within the PRA's Head of Key Business Area designated senior management function. It is also a potential other overall responsibility function. Later, the firm reorganises—A’s role stays the same but now it falls outside the PRA's Head of Key Business Area designated senior management function.

On A’s first appointment, A only needs approval to perform the PRA's Head of Key Business Area designated senior management function. Following the reorganisation, the firm has three months to get approval for A to perform the other overall responsibility function. This three-month period applies because the relevant PRA rules keep the PRA's Head of Key Business Area designated senior management function in place, which means that the other overall responsibility function does not apply during that period.

The relevant PRA rules can be found in Chapter 2 of the part of the PRA Rulebook2 titled ‘Senior Management Functions’.

This example only applies if Firm X is an SMCR banking firm. If Firm X is an insurer it will need to obtain FCA approval before the reorganisation takes effect as the relevant PRA insurance rules are different from the ones for SMCR banking firms.2

(10) ‘A’ is appointed to a role for Firm X2 that comes within the PRA's Head of Key Business Area designated senior management function. A also performs a potential other overall responsibility function. Later,2 A gives up the PRA role but carries on with the potential other overall responsibility function.

The answer to example (9) applies.

(11) ‘A’ is appointed as an executive director. A then resigns and takes up a job with the same firm coming within the other overall responsibility function.

On A’s first appointment, A will need to be approved to perform the executive director function2. A will need to get approval to perform the other overall responsibility function before A takes up their new responsibilities.2

Note (1): A potential other overall responsibility function means a function that would have come within the other overall responsibility function but is excluded by SUP 10C.7.1R(2).

Note (2): A potential other overall responsibility function should be recorded in A’s statement of responsibilities and in the firm's management responsibilities map.

Non-executive directors

SUP 10C.7.4GRP

For the reasons described in SYSC 26.4.5G2, the FCA does not expect that a non-executive director will ever perform the other overall responsibility function.

2

Temporary absences

SUP 10C.7.5R

2A person does not perform the other overall responsibility function in relation to a firm by performing a function allocated to that person under SYSC 26.4.6R (Exclusion where the 12-week rule applies) in relation to the firm.

Head of the legal function

SUP 10C.7.6R

3A person does not perform the other overall responsibility function by having overall responsibility for the SMCR legal function under SYSC 26.3.

SUP 10C.7.7G
  1. (1)

    3The purpose of SUP 10C.7.6R (together with SYSC 26.4.9R(2)) is to ensure that a firm can allocate overall responsibility for its legal function to someone who is not an SMF manager. That means that the head of its legal function need not be an SMF manager.

  2. (2)

    However, that does not mean that the head of a firm’s legal function cannot be an SMF manager. For example, they could be an executive director performing the executive director function.