This chapter is also relevant to FCA-approved SMF managers of a relevant authorised person.

1. (1)

   2SUP 10C.1.4R reflects the provisions of section 59(8) of the Act and, where relevant, the Treaty.

2. (2)

   It preserves the principle of Home State prudential regulation.

3. (3)

   For an EEA relevant authorised person, the effect is to reserve to the Home State regulator the assessment of fitness and propriety of a person performing a function in the exercise of an EEA right. A member of the governing body, or the notified3UKbranchmanager, of an EEA relevant authorised person, acting in that capacity, will not, therefore, have to be approved by the FCA under the Act.

4. (4)

   Aside from (1) to (3) an EEA relevant authorised person should have:

   1. (a)

      considered the impact of the Host State rules with which it is required to comply when carrying on a passported activity or a Treaty activity through a branch in the United Kingdom;

   2. (b)

      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; and

   3. (c)

      considered, for example, the position of a branchmanager 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 an FCA controlled function, the firm will need to seek approval for that person to perform that FCA controlled function.

1. (1)

   2Generally, where an overseas manager of a non-UK relevant authorised person has responsibilities in relation to its branch in the United Kingdom that are strategic only, they will not need to be an FCA-approved SMF manager.

2. (2)

   However, where an overseas manager is responsible for implementing that strategy for its branch in the United Kingdom, and has not delegated that responsibility to an SMF manager in the United Kingdom, they will potentially be performing an FCA controlled function if the detailed conditions in this chapter defining the relevant FCA controlled function are met.

There are no territorial limitations to SUP 10C for:

1. (1)

   overseas branches of UK firms; or

2. (2)

   UK firms providing services into or out of the United Kingdom on a cross-border basis.

1. (1)

   SUP 10A.1.15R to SUP 10A.1.16DG (Appointed representatives) deal with the approved persons regime for appointed representatives of relevant authorised persons.

2. (2)

   In general this chapter does not apply to appointed representatives of relevant authorised persons. SUP 10A applies instead.

3. (3)

   In theory, a person employed by an appointed representative of a relevant authorised person could come within one of the controlled functions in this chapter. If so, that person will be performing a senior management function and this chapter would apply. However, the FCA thinks that such a situation should rarely, if ever, arise.

4. (4)

   If a person is an approved person under this chapter and under SUP 10A for the same firm, this chapter applies to FCA-designated senior management functions under this chapter and SUP 10A applies to controlled functions under SUP 10A. It is unlikely that such a scenario would ever arise in practice.

The purpose of SUP 10C is:

1. (1)

   to specify, under section 59 of the Act, descriptions of the FCA-designated senior management functions for relevant authorised persons, which are listed in SUP 10C.4.3R;

2. (2)

   to specify the manner in which a firm must apply for the FCA's approval under section 59 of the Act and other procedures for FCA-approved SMF managers; and

3. (3)

   describe the FCA's senior management regime for SMF managers in relevant authorised persons.

SUP 10C does not deal with the PRA's senior management regime for relevant authorised persons. The key parts of its regime can be found in the parts of the PRA's rulebook called ‘Senior Management Functions’ and ‘Allocation of Responsibilities’.

1. (1)

   The FCA has certain powers in relation to PRA-approved persons, such as the requirement for FCA consent to the PRA granting approval for the performance of a PRA controlled function. SUP 10C does not deal with these.

2. (2)

   However, SUP 10C.12.1G has material about the FCA's policy on giving its consent to applications made to the PRA about conditional and time-limited approvals.

SUP 10C.14 (Changes to an approved person’s details) applies, in certain cases, to PRA-approved persons. Where this is the case, it says so.

This section has general provisions that apply to the definition of all controlled functions.

There are two types of FCA controlled function under the Act:

1. (1)

   an FCA-designated senior management function; and

2. (2)

   an FCA controlled function that is not a designated senior management function.

All the controlled functions that the FCA has specified in this chapter are designated senior management functions. The FCA has not, in this chapter, used its power to specify controlled functions that are not designated senior management functions.

The FCA has (in SUP 10A) specified controlled functions for relevant authorised persons that are not designated senior management functions. (See SUP 10C.1.7R to SUP 10C.1.8G (Appointed representatives)).

1. (1)

   Except as described in SUP 10C.3.4G, in this chapter, FCA controlled function and FCA-designated senior management function cover the same functions.

2. (2)

   Therefore, a function is only covered by SUP 10C.4.3R (Table of FCA-designated senior management 2functions for relevant authorised persons) if that function meets both the following sets of requirements:

   1. (a)

      the requirements of SUP 10C.3.6R (Definition of FCA controlled function: arrangements); and

   2. (b)

      the requirements of SUP 10C.3.10R (Definition of FCA-designated senior management function).

Section 59(1) and (2) of the Act provide that approval is necessary for an FCA controlled function which is performed under an arrangement entered into by a firm, or its contractor (typically an appointed representative), in relation to a regulated activity.

1. (1)

   Arrangement is defined in section 59(10) of the Act as any kind of arrangement for the performance of a function which is entered into by a firm or any of its contractors with another person.

2. (2)

   Arrangement includes the appointment of a person to an office, a person becoming a partner, or a person's employment (whether under a contract of service or otherwise).

3. (3)

   An arrangement need not be a written contract but could arise by conduct, custom and practice.

If a firm is a member of a group, a person employed elsewhere in the group (for example, by the holding company) who carries out a function in relation to the firm will only perform an FCA controlled function:

1. (1)

   if the function is performed under an arrangement entered into by the firm (under section 59(1)); or

2. (2)

   if:

   1. (a)

      there is a contract (under section 59(2)) between the firm and the relevant group member permitting this; and

   2. (b)

      the function is performed under an arrangement entered into by the contractor.

Section 59ZA(2) of the Act says that a function is a ‘senior management function’, in relation to the carrying on of a regulated activity by a firm, if:

1. (1)

   the function will require the person performing it to be responsible for managing one or more aspects of the firm's affairs, so far as relating to the activity; and

2. (2)

   those aspects involve, or might involve, a risk of serious consequences:

   1. (a)

      for the firm; or

   2. (b)

      for business or other interests in the United Kingdom.

Section 59ZA(3) of the Act says that ‘managing’ includes, for these purposes, taking decisions, or participating in the taking of decisions, about how one or more aspects of the firm's affairs should be carried on.

SUP 10C.3.13R enables cover to be given for (as an example) holidays and emergencies and avoids the need for the precautionary approval of, for example, a deputy. However, as soon as it becomes apparent that a person will be performing an FCA-designated senior management function for more than 12 weeks, the firm should apply for approval.

See SUP 10C.12.7G to SUP 10C.12.14G (time-limited approvals) for procedures for temporary appointments longer than 12 weeks.

As described in SUP 10C.1.7R to SUP 10C.1.8G (Appointed representatives), SUP 10A specifies certain other controlled functions for relevant authorised persons.

See SYSC 4.3A (Management body and nomination committee4) for material about nomination committees.

Please note that the chair of the nomination committee function still applies if the firm is not a CRR firm.

In some firms, the chairman of the nomination committee is also the chairman of the governing body. As being chairman of the governing body is a PRA controlled function, the chairman may not need approval to perform the chair of the nomination committee function but instead just need PRA approval for being chairman of the governing body.

(See SUP 10C.9 (Minimising overlap with the PRA approved persons regime) for an explanation of when PRA approval means that FCA approval is not needed.)

1. (1)

   As explained in SUP 10C.7.4G, the FCA does not expect a non-executive director ever to perform the other overall responsibility function.

2. (2)

   Therefore, a non-executive director will not need to be approved to perform any FCA-designated senior management function unless they perform the chair of the nomination committee function.

See MIPRU 2.2 for how the FCA's senior management regime for relevant authorised persons is adjusted for a firm carrying on insurance mediation activity.

A firm's obligations in respect of its money laundering reporting officer are set out elsewhere in the Handbook (see SYSC 6.3.9R and, for their scope, see the application provisions in SYSC 1 Annex 1).

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

For the reasons described in SYSC 4.7.18G, the FCA does not expect that a non-executive director will ever perform the other overall responsibility function.

The table in SUP 10C.8.3G gives:

1. (1)

   examples of how SUP 10C.8.1R(2) works; and

2. (2)

   other examples of how the other local responsibility function works.

1. (1)

   The definition of the EEA branch senior manager function (SMF21) is similar to that of the significant management FCA-specified significant-harm function under SYSC 5.2.35R. However, only the former is an FCA-designated senior management function.

2. (2)

   The main differences are:

   1. (a)

      SUP 10C.8.4R(2)(d) is not included in the significant management FCA-specified significant-harm function; and

   2. (b)

      the overriding requirements in SUP 10C.3 (General material about the definition of controlled functions) do not apply to the significant management FCA-specified significant-harm function.

A person performing the EEA branch senior manager function could, for example, be:

1. (1)

   the head of a significant business unit carrying on the activities in SUP 10C.8.4R(2); or

2. (2)

   a member of a committee (that is, a person who, together with others, has authority to commit the branch) making decisions about those activities.

When considering whether a business unit is significant for the purposes of SUP 10C.8.4R, the firm should take into account all relevant factors in the light of the firm's current circumstances and its plans for the future, including:

1. (1)

   the risk profile of that unit;

2. (2)

   its use or commitment of the firm’s capital;

3. (3)

   its contribution to the profit and loss account;

4. (4)

   the number of employees or approved persons working in the business unit;

5. (5)

   the number of customers; and

6. (6)

   any other factor which makes the unit significant to the conduct of the branch’s affairs.

SUP 10C.9 deals with how the FCA's senior management regime for relevant authorised persons interacts with the PRA's one.

Both the FCA and the PRA may specify a function as a designated senior management function in relation to a PRA-authorised person.

If a person's job for a firm involves performing:

1. (1)

   an FCA-designated senior management function, the firm should apply to the FCA for approval;

2. (2)

   a PRA-designated senior management function, the firm should apply to the PRA for approval;

3. (3)

   both an FCA-designated senior management function and a PRA-designated senior management function, the firm should apply to both the FCA and the PRA for approval (the purpose of SUP 10C.9 is to cut down the need for this sort of dual approval).

The FCA is under a duty, under section 59A of the Act (Specifying functions as controlled functions: supplementary), to exercise the power to specify any senior management function as an FCA controlled function in a way that it considers will minimise the likelihood that approvals need to be given by both the FCA and the PRA for the performance by a person of senior management functions in relation to the same PRA-authorised person.

The FCA and PRA have coordinated their approved person regimes to reduce the amount of overlap.

1. (1)

   SUP 10C.9.8R applies when a firm is seeking approval from the PRA for a candidate to perform a PRA controlled function and the intention is that the candidate will also perform what would otherwise be an FCA governing function once the PRA gives its approval. SUP 10C.9.8R works by disapplying that FCA governing function.

2. (2)

   Where (1) applies, the activities within that FCA governing function are included in the PRA controlled function for which the person has approval. Chapter Two of the part of the PRA's rulebook titled ‘Senior Management Functions’ deals with this.

1. (1)

   SUP 10C.9.9G gives some examples of how SUP 10C.9.8R works.

2. (2)

   The examples do not cover the other overall responsibility function because that function does not apply if the person holds any other designated senior management function for the same firm. See the table in SUP 10C.7.3G for examples of how this works.

1. (1)

   The potential FCA governing functions should be recorded in A’s statement of responsibilities and in the firm'smanagement responsibilities map.

2. (2)

   A potential FCA governing function means a function that would have been an FCA governing function but which is not an FCA governing function because of SUP 10C.9.8R.

The PRA cannot give its approval for the performance of a PRA-designated senior management function without the consent of the FCA. The firm does not need to apply to the FCA for that consent.

Under section 59B of the Act (Role of FCA in relation to PRA decisions), the FCA may arrange with the PRA that, in agreed cases, the PRA may give approval without obtaining the consent of the FCA. No such arrangements are currently in force.

This section explains how a firm should apply for approval for a person to perform an FCA-designated senior management function.

Unless the context otherwise requires, in SUP 10C.10 (Application for approval and withdrawing an application for approval) to SUP 10C.15 (Forms and other documents and how to submit them to the FCA), where reference is made to a firm, this includes an applicant for Part 4A permission and other persons seeking to carry on regulated activities as a relevant authorised person.

1. (1)

   Section 59 of the Act (Approval for particular arrangements) says that a firm must take reasonable care to ensure that no one performs an FCA controlled function (including an FCA-designated senior management function) unless that person is acting in accordance with an approval given by the FCA.

2. (2)

   That means that where a candidate will be performing one or more FCA-designated senior management functions, a firm must take reasonable care to ensure that the candidate does not perform these functions unless they have prior approval from the FCA.

1. (1)

   If a person performs an FCA controlled function (including an FCA-designated senior management function) without approval, it is not only the firm that is accountable. Under section 63A of the Act (Power to impose penalties), if the FCA is satisfied that:

   1. (a)

      a person (‘P’) has at any time performed an FCA controlled function without approval; and

   2. (b)

      at that time P knew, or could reasonably be expected to have known, that P was performing an FCA controlled function without approval;

   it may impose a penalty on P of such amount as it considers appropriate.

2. (2)

   A person performs a controlled function without approval for these purposes if that person is not acting in accordance with an approval given under section 59 (Approval for particular arrangements).

In accordance with section 60 of the Act (Applications for approval), applications must be submitted by, or on behalf of, the firm itself, not by:

1. (1)

   the FCA candidate; or

2. (2)

   (where the FCA candidate works for the firm'sparent undertaking or holding company) by the firm'sparent undertaking or holding company.

1. (1)

   The firm that is employing the FCA candidate to perform the FCA-designated senior management function will usually make the submission itself.

   (SUP 10C.10.7G describes some common situations.)

2. (2)

   Where a firm has outsourced the performance of an FCA-designated senior management function, the details of the outsourcing determines whom the FCA anticipates will submit the FCA-approved persons application forms.

3. (3)

   The firm which is outsourcing is referred to as ‘A’ and the person to whom the performance of the FCA-designated senior management function has been outsourced, or which makes the arrangement for the FCA-designated senior management function to be performed, is referred to as ‘B’. In each situation, A must take reasonable care to ensure that, in accordance with section 59(2) of the Act, no person performs an FCA-designated senior management function under an arrangement entered into by its contractor in relation to the carrying on by A of a regulated activity, without approval from the FCA.

1. (1)

   5The MiFID II ITS requires that MiFID investment firms (except credit institutions) submit the Annex III information on the ESMA template available at https://www.fca.org.uk/publication/forms/mifid-changes-management-body-form.docx (‘Annex III template’)) where there is a change to a member of the management body or a person who effectively directs the business.

2. (2)

   MiFID investment firms (except credit institutions) need to submit this Annex III template within ten business days of the change in the online notification and application system (also known as Connect).

3. (3)

   In summary, where there is a change to a member of the management body or a person who effectively directs the business of a MiFID investment firm (except a credit institution) then the firm is required to submit the following forms (in addition to the relevant Form A, C, or E about a candidate):

   1. (a)

      Where a new member of the management body or a person who effectively directs the business is appointed :

      1. (i)

         the Annex III template; and

      2. (ii)

         MiFID Article 4 SMR Information Form.

   2. (b)

      Where a person ceases being a member of the management body or a person who effectively directs the business, then the firm must submit the Annex III template (in addition to the relevant Form E).

4. (4)

   Where the Annex III template requires the firm to provide information which is also contained in Form A and/or E, the firm may, instead of duplicating the information, cross-refer to the information in the relevant Form A or E and annex those forms to the Annex III template (see SUP 10C.10.9C).

5Where there is a change to a member of the management body or person who directs the business, MiFID investment firms (except credit institutions) must submit to the FCA the completed form found in SUP 10C Annex 7D (MiFID Article 4 SMR Information Form) at the same time as submitting Form A and/or E about a candidate.

[Editor’s note: This is in accordance with the information required in article 4 of the Commission Delegated Regulation of 14 July 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on information and requirements for the authorisation of investment firms.]

5 MiFID investment firms (except credit institutions) who submit:

1. (a)

   Form A and/or E; and

2. (b)

   the MiFID Article 4 SMR Information Form

about a candidate can complete the Annex III template outlined in SUP 10C.10.9A by cross-referring to the information in the relevant Form A and/or E where it has already been provided by the firm, and this would then be annexed to the relevant Form A and/or Form E.

SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications should be submitted.

An application by a firm for the FCA's approval under section 59 of the Act (Approval for particular arrangements) for the performance of an FCA-designated senior management function should be accompanied by a statement of responsibilities.

SUP 10C.11 (Statements of responsibilities) contains more material about statements of responsibilities, including (in particular) about a statement of responsibilities submitted under an application under SUP 10C.10.

A firm should include in an application a reasonable summary of:

1. (1)

   any handover certificate; and

2. (2)

   any other handover material;

referred to in SYSC 4.9 (Handover procedures and material) that relates to the responsibilities that the candidate is to perform.

Under section 60A of the Act, before a firm makes an application for approval, it should be satisfied that the candidate is a fit and proper person to perform the function to which the application relates. In deciding that question, the firm should have particular regard to whether the candidate, or any person who may perform a function on the candidate's behalf:

1. (1)

   has obtained a qualification;

2. (2)

   has undergone, or is undergoing, training;

3. (3)

   possesses a level of competence; or

4. (4)

   has the personal characteristics;

required by FCArules in relation to persons performing functions of the kind to which the application relates.

For guidance on criteria that a firm should use for assessing whether an FCA candidate is fit and proper (including the FCArules referred to in SUP 10C.10.14G), see FIT.

1. (1)

   In England and Wales a firm should get an application form from the Disclosure and Barring Service (DBS) or an umbrella body (a registered body that gives access to DBS checks).

2. (2)

   The firm should ask the candidate to fill in and return the form to the firm. The firm should then send the completed application form to DBS or the firm's umbrella body.

3. (3)

   The firm should then ask the candidate to show the firm the certificate when the candidate receives it from the DBS.

4. (4)

   There is an equivalent procedure in Scotland (involving Disclosure Scotland) and Northern Ireland (involving AccessNI).

Subject to SUP 10C.10.18A, the5firm should not send a copy of the certificate to the FCA.

5 MiFID investment firms (except credit institutions) should provide a copy of the certificate in cases where they disclose the existence of a criminal conviction in response to the questions in:

1. (a)

   Long Form A; and

2. (b)

   The MiFID Article 4 SMR Information Form accompanied by Form E.

If the candidate is employed by a contractor, the firm may ask the contractor to obtain the certificate.

A firm should also check the Financial Services Register as part of its assessment of whether a candidate is fit and proper and to verify the information contained in the application for approval.

If appropriate, a firm should:

1. (1)

   carry out a criminal record check; and

2. (2)

   check any equivalent of the Financial Services Register;

in a jurisdiction outside the UK. This may be appropriate if the candidate has spent time working or living in that jurisdiction.

A firm should consider whether it should take additional steps to verify any information contained in an application to carry out an FCA-designated senior management function or that it takes into account in its assessment of whether a candidate is a fit and proper person.

Please see SYSC 22 (Regulatory references) about the requirement for a firm to ask for references from previous employers.3

The Act sets out the time that the FCA has to consider an application and come to a decision.

In any case, where the application for approval is made by a person applying for a Part 4A permission, the FCA has until the end of whichever of the following periods ends last:

1. (1)

   the period within which an application for that permission must be determined; and

2. (2)

   the period of three months from the time it receives a properly completed application.

In any other case, it is the period of three months from the time it receives a properly completed application.

The FCA will deal with cases more quickly than this whenever circumstances allow and will try to meet the standard response times published on the website and in its Annual Report. However, the processing time will be longer than the published standard response times if:

1. (1)

   an application is incomplete when received; or

2. (2)

   the FCA has knowledge that, or reason to believe that, the information is incomplete.

Before making a decision to grant the application or give a warning notice, the FCA may ask the firm for more information about the FCAcandidate. If it does this, the three-month period in which the FCA must determine a completed application:

1. (1)

   will stop on the day the FCA requests the information; and

2. (2)

   will start running again on the day on which the FCA finally receives all the requested information.

If there is a delay in processing the application within the standard response time, the FCA will tell the firm making the application as soon as this becomes apparent.

1. (1)

   Application forms must always be completed fully and honestly. Further notes on how to complete the form are contained in each form.

2. (2)

   If forms are not completed fully and honestly, applications will be subject to investigation and the FCA candidate's suitability to be approved to undertake an FCA controlled function will be called into question.

3. (3)

   A person who provides information to the FCA that is false or misleading may commit a criminal offence and could face prosecution under section 398 of the Act, regardless of the status of their application.

The FCA may grant an application only if it is satisfied that the FCA candidate is a fit and proper person to perform the FCA-designated senior management function stated in the application form. Responsibility lies with the firm making the application to satisfy the FCA that the FCA candidate is fit and proper to perform the FCA-designated senior management function applied for.

For further guidance on criteria for assessing whether an FCA candidate is fit and proper for the purposes of SUP 10C.10.31G, see FIT.

The FCA must:

1. (1)

   grant the application;

2. (2)

   grant the application subject to conditions or limitations (see SUP 10C.12 for more information); or

3. (3)

   refuse the application.

Whenever it grants an application, the FCA will confirm this in writing to all interested parties.

If the FCA proposes to take the steps in SUP 10C.10.33G(2) or(3) in relation to one or more FCA-designated senior management functions, it must follow the procedures for issuing warning and decision notices to all interested parties. The requirements relating to warning and decision notices are in DEPP 2.

Under section 61(5) of the Act (Determination of applications), the firm may withdraw an application only if it also has the consent of:

1. (1)

   the candidate; and

2. (2)

   the person by whom the candidate is or would have been employed, if this is not the firm making the application.

SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how a notice of withdrawal should be submitted.

1. (1)

   Section 60(2A) of the Act (Applications for approval) says that, if a firm is applying for approval from the FCA or the PRA for a person to perform a designated senior management function, the regulator to which the application is being made must require the application to contain, or be accompanied by, a statement setting out the aspects of the affairs of the firm which it is intended that the person will be responsible for managing in performing the function.

2. (2)

   That statement is a statement of responsibilities.

3. (3)

   A statement of responsibilities includes a statement amended under 62A of the Act (see SUP 10C.11.5G).

1. (1)

   This section is about the FCA's requirements for statements of responsibilities.

2. (2)

   However, where applications and notifications relate both to FCA-designated senior management functions and to PRA ones, the regulators’ requirements are consistent with each other.

3. (3)

   The general material in this section (SUP 10C.11.13G to SUP 10C.11.35G) applies to statements of responsibilities submitted in all the cases covered by this section. It covers statements of responsibilities submitted as part of an application for approval or variation and revised statements of responsibilities.

1. (1)

   SUP 10C.10 (Application for approval and withdrawing an application for approval) explains the procedures for applying for approval.

2. (2)

   SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications for approval should be submitted.

3. (3)

   See the table in SUP 10C.11.19G for examples of how the requirements of this section about including statements of responsibilities in applications for approval apply in different situations.

Under section 62A of the Act, a firm must provide the FCA with a revised statement of responsibilities if there has been any significant change in the responsibilities of an FCA-approved SMF manager. More precisely:

1. (1)

   if a firm has made an application (which was granted) to the FCA for approval for a person to perform an FCA-designated senior management function;

2. (2)

   the application contained, or was accompanied by, a statement of responsibilities; and

3. (3)

   since the granting of the application, there has been any significant change in the aspects of the firm's affairs which the FCA-approved SMF manager is responsible for managing in performing the function;

the firm should provide the FCA with a revised statement of responsibilities.

1. (1)

   This paragraph sets out non-exhaustive examples of potential changes which, in the FCA's view, may be significant and thus require the submission of a revised statement of responsibilities.

2. (2)

   A variation of the FCA-approved SMF manager's approval, either at the firm's request or at the FCA's or PRA's initiative, resulting in the imposition, variation or removal of a condition or time limit, may involve a significant change.

3. (3)

   Fulfilling or failing to fulfil a condition on approval may involve a significant change.

4. (4)

   The addition, re-allocation or removal of any of the following (or part of one):

   1. (a)

      an FCA-prescribed senior management responsibility;

   2. (b)

      a PRA-prescribed senior management responsibility or a PRA-prescribed UK branch senior management responsibility; or2

   3. (c)

      responsibility for a function under SYSC 4.7.8R (Allocation of overall responsibility for a firm’s activities, business areas and management functions);

   may involve a significant change.

5. (5)

   The sharing or dividing of a function in (4) that was originally performed by one person between two or more persons may involve a significant change.

6. (6)

   Ceasing to share a function in (4) that was originally shared with another, or others, may involve a significant change.

7. (7)

   A change is likely to be significant if it reflects a significant change to the job that the person is doing for the firm. Some factors relevant here include:

   1. (a)

      the importance to the firm of the functions being given up or taken on;

   2. (b)

      whether the FCA-approved SMF manager's seniority in the firm's management changes;

   3. (c)

      whether there are changes to the identity, number or seniority of those whom the FCA-approved SMF manager manages; and

   4. (d)

      whether there are changes to the skills, experience or knowledge needed by the FCA-approved SMF manager for the job.

Broadly, the intention of SUP 10C.11.7D(2) is that there is no need for Form J if the revised statement of responsibilities is being submitted together with Form A, Form E, the MiFID Article 4 SMR Information Form4 or Form I for the same firm.

1. (1)

   SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how revised statements of responsibilities should be submitted.

2. (2)

   See the table in SUP 10C.11.19G for examples of how the requirements of this section about submitting revised statements of responsibilities apply in different situations.

3. (3)

   In particular, the table in SUP 10C.11.19G gives examples of how SUP 10C.11.7D(2) works.

1. (1)

   See SUP 10C.13 (Variation of conditional and time-limited approvals) for more details about applications to vary an approval.

2. (2)

   SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications to vary an approval should be submitted.

3. (3)

   See the table in SUP 10C.11.19G for examples of how the requirements of this section about submitting statements of responsibilities with applications to vary an approval apply in different situations.

1. (1)

   SUP 10C.11.13D means that, at any time, a firm should have a single document for an SMF manager that:

   1. (a)

      contains statements of responsibilities for all designated senior management functions for which that SMF manager has approval; and

   2. (b)

      where relevant, contains statements of responsibilities for all designated senior management functions for which the firm is applying for approval.

2. (2)

   The document in (1) should cover PRA-designated senior management functions as well as FCA-designated senior management functions.

3. (3)

   The document should be updated:

   1. (a)

      under section 62A of the Act (see SUP 10C.11.5G); and

   2. (b)

      whenever the firm has to submit statements of responsibilities under this section.

4. (4)

   The FCA and the PRA have coordinated their arrangements so that a firm can prepare a single document that will meet the requirements of both regulators about statements of responsibilities.

5. (5)

   The table in SUP 10C.11.19G gives examples of how these requirements work.

If a person is an SMF manager for several firms in a group that are relevant authorised persons, there should be a separate document for each firm.

There should be a separate document for each SMF manager in a firm. A firm should not combine statements of responsibilities for several SMF managers.

The requirement for a single document does not prevent the document having an attachment sheet for additional information where SUP 10C Annex 5D (the FCA's template for statements of responsibilities) allows this.

The table in SUP 10C.11.19G gives examples of how the requirements in this section for submitting statements of responsibilities work in different cases.

1. (1)

   A complete set of current statement of responsibilities means all statements of responsibilities that the firm has provided to the FCA or PRA as revised under section 62A of the Act.

2. (2)

   A statement of responsibilities is not current if the person in question no longer performs any of the controlled function to which it relates.

1. (1)

   A firm should consider past versions of its statements of responsibilities as an important part of its records and as an important resource for the FCA in supervising the firm.

2. (2)

   Past versions of a firm'sstatements of responsibilities form part of its records under SYSC 9.1 (General rules on record-keeping).

A statement of responsibilities should:

1. (1)

   show clearly how the responsibilities that the SMF manager performs as part of their FCA-designated senior management function fit in with the firm's overall governance and management arrangements; and

2. (2)

   be consistent with the firm'smanagement responsibilities map.

(See SYSC 4.5.9G, SYSC 4.6.12G and SYSC 4.6.27G2 for more about this.)

1. (1)

   A statement of responsibilities (including its attachment sheet for additional information) should:

   1. (a)

      be complete by itself;

   2. (b)

      not refer to documents not forming part of it; and

   3. (c)

      only contain material about the matters that this chapter, the corresponding PRA requirements and the Act say should be included in it.

2. (2)

   For example, if it is necessary to include relevant material from the firm's report and accounts, the statement of responsibilities should not attach the whole of the report and accounts or cross refer to them. Instead it should include a summary of the relevant part only.

A statement of responsibilities should be:

1. (1)

   practical and useable by the FCA;

2. (2)

   without unnecessary detail; and

3. (3)

   succinct and clear.

1. (1)

   SYSC or another part of the regulatory system will generally impose requirements (referred to as ‘prescribed requirements’ in this paragraph) that relate to a particular post or set of responsibilities.

2. (2)

   For instance, these include:

   1. (a)

      the responsibilities that go with the FCA required functions; and

   2. (b)

      the FCA-prescribed senior management responsibilities, the PRA-prescribed senior management responsibilities and the PRA-prescribed UK branch senior management responsibilities2.

3. (3)

   The allocation of responsibilities under a statement of responsibilities should not reduce or alter the scope of any applicable prescribed requirements.

4. (4)

   If:

   1. (a)

      the responsibilities that the SMF manager carries out as described in the statement of responsibilities go beyond the prescribed requirements; or

   2. (b)

      the firm includes additional information about any prescribed requirements;

   the additional responsibilities or additional information should not:

   1. (c)

      reduce or alter the scope of the prescribed requirements; or

   2. (d)

      dilute or undermine the prescribed requirements.

1. (1)

   A firm'sstatements of responsibilities for its SMF managers should together demonstrate that there are no gaps in the allocation of responsibilities among its SMF managers.

2. (2)

   A firm'sstatements of responsibilities should be interpreted, where possible, so as to avoid any gaps in the allocation of responsibility for its activities among its SMF managers.

3. (3)

   Paragraphs (1) and (2) are not relevant to EEA relevant authorised persons.2

1. (1)

   A statement of responsibilities of an SMF manager should include details about any:

   1. (a)

      FCA-prescribed senior management responsibilities, PRA-prescribed senior management responsibilities and PRA-prescribed UK branch senior management responsibilities2 allocated to the SMF manager;

   2. (b)

      functions that are included in a PRA controlled function under SUP 10C.9 (Minimising overlap with the PRA approved persons regime); and

   3. (c)

      responsibility for a function allocated to the SMF manager under SYSC 4.7.8R (Allocation of overall responsibility for a firm’s activities, business areas and management functions) or SYSC 4.8.10R (Local responsibility for a branch’s activities, business areas and management functions)2.

2. (2)

   Paragraph (1)(c) applies even if the responsibility is excluded from the other overall responsibility function under SUP 10C.7.1R(2) (Exclusion for approved person with approval to perform other controlled functions) or from the other local responsibility function under SUP 10C.8.1R(2) (Exclusion for approved person with approval to perform other controlled functions2).

1. (1)

   The definition of every FCA-designated senior management function contains a responsibility which is inherent, inseparable from and intrinsically built into the specific role.

2. (2)

   In many ways, this inherent responsibility is the most important responsibility of any given SMF manager, as it provides a rationale as to why that specific function is subject to pre-approval by the FCA in the first place.

3. (3)

   Even where an SMF manager has not been allocated any other responsibilities by the firm, the responsibility inherent in the definition of their FCA-designated senior management function means that they will be accountable for that aspect of the firm's activities.

4. (4)

   For instance, even if a person approved to perform the compliance oversight function has no other responsibilities allocated to them, they will be accountable for the Handbook requirements for the compliance oversight function.

1. (1)

   The FCA may request a firm to include specific responsibility for a regulatory outcome in the statement of responsibilities of the relevant SMF managers.

2. (2)

   For example, where the FCA asks a firm to take remediation action following an internal or supervisory review or a report under section 166 of the Act (Reports by skilled persons) and considers it appropriate for an SMF manager to take responsibility for that action, it may ask the firm to add an additional, customised, explicit responsibility to the relevant SMF manager'sstatement of responsibilities.

1. (1)

   Where a responsibility or function is shared or divided between an SMF manager and others, the statements of responsibilities for each SMF manager concerned should make this clear.

2. (2)

   Where a responsibility or function is divided between an SMF manager and others, the statements of responsibilities for each SMF manager concerned should make it clear for what part of which responsibility or function that SMF manager has responsibility.

3. (3)

   Together, the statements of responsibilities should show which responsibility or function is shared or divided between which SMF managers or other persons. It should be clear which responsibility or function and which SMF managers or other persons are involved.

1. (1)

   Where:

   1. (a)

      an FCA-prescribed senior management responsibility; or

   2. (b)

      any function allocated under SYSC 4.7.8R (Allocation of overall responsibility for a firm’s activities, business areas and management functions) or SYSC 4.8.10R (Local responsibility for a branch’s activities, business areas and management functions)2;

   is divided or shared between several SMF managers, the statement of responsibilities for each SMF manager should:

   1. (c)

      explain why this has been done; and

   2. (d)

      give full details of the arrangements, including the names of the other persons and their FCA/PRA Individual Reference Numbers (IRN) (if known).

2. (2)

   Where a responsibility or function is shared between several SMF managers, this should be recorded in the same way in the statements of responsibilities of each of them. This should also be consistent with the firm'smanagement responsibilities map.

1. (1)

   Where two or more SMF managers share a responsibility, each will be individually responsible for everything included in that responsibility, including anything inherent in that responsibility (see SUP 10C.11.29G for inherent responsibilities).

2. (2)

   Where:

   1. (a)

      a responsibility is divided between several SMF managers; but

   2. (b)

      some part of the responsibility has not clearly been allocated to any of them;

   it should be assumed that that part is the joint responsibility of all of them.

In general, the FCA expects the statement of responsibilities of a non-executive director who is an SMF manager to be less extensive than those of an executive SMF manager.

The FCA does not require any of the general duties of a non-executive director described in section 2 of COCON 1 Annex 1 (The general role of a NED) to be included in the non-executive director'sstatement of responsibilities.

1. (1)

   SUP 10C.12 describes the regime for conditional and time-limited approvals.

2. (2)

   In particular, SUP 10C.12 sets out the FCA's policies on giving approval under section 59 subject to conditions or for a limited period only, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation).

3. (3)

   The policies described in SUP 10C.12 also apply when the FCA is considering whether to give its consent to an application made to the PRA for approval.

4. (4)

   Material on variations of conditional and time-limited approvals can be found in SUP 10C.13 (Variation of conditional and time-limited approvals).

1. (1)

   The power to grant an approval subject to conditions or for a limited period only applies to senior management functions.

2. (2)

   As all FCA controlled functions specified in this chapter are senior management functions, this means that this power applies to all FCA controlled functions specified in this chapter.

3. (3)

   The FCA has (in SUP 10A) specified controlled functions for relevant authorised persons that are not designated senior management functions. See SUP 10C.1.7R to SUP 10C.1.8G (Appointed representatives) for more about this.

4. (4)

   The power to grant an approval subject to conditions or for a limited period does not apply to the controlled functions in (3).

The FCA may:

1. (1)

   grant an application for approval subject to any conditions that the FCA considers appropriate; and

2. (2)

   grant the application to give approval only for a limited period.

The FCA may use this power only if it appears to the FCA that it is desirable to do so to advance one or more of its operational objectives.

Factors that the FCA will take into account include:

1. (1)

   those relating to the firm at the time of the application, such as:

   1. (a)

      its size, scale and complexity; and

   2. (b)

      its plans and prospects; and

2. (2)

   those relating to the candidate and, in particular, the candidate’s fitness and properness.

The FCA expects that the most common use of the power to give qualified approvals would be:

1. (1)

   time-limited approvals;

2. (2)

   a time limitation in relation to an ongoing or prospective enforcement investigation;

3. (3)

   a competency-related condition; and

4. (4)

   a role-limited condition.

An example of a time-limited approval is where a firm needs to appoint the candidate on an interim basis while the firm seeks to appoint a permanent candidate. The FCA may approve the interim appointee on a time-limited basis.

The FCA would not generally impose a time limitation in these circumstances for a period of less than 12 weeks. The FCA would expect the firm to use the 12-week rule in SUP 10C.3.13R.

An example of when the FCA may approve an individual on a time-limited basis is where, following a sudden or unexpected departure:

1. (1)

   a firm needs to fill an FCA-designated senior management function vacancy immediately; but

2. (2)

   it is likely to take longer than 12 weeks to recruit a permanent replacement; and

3. (3)

   there is an individual at the firm not currently approved to perform the relevant FCA-designated senior management function whom the firm and the FCA think capable of fulfilling the role on an interim, provisional basis but not necessarily on a permanent basis.

Generally, the FCA would not impose a time limitation of this type for longer than 12 to 18 months.

The FCA would consider using this power for a person who is in the running for the long-term appointment.

1. (1)

   An example of how the FCA could deal with a person who is in the running for the long-term appointment is outlined below.

2. (2)

   The head of compliance resigns unexpectedly from a firm. The firm wishes to appoint one of the deputies. The FCA and the firm believe the deputy to be capable of running the firm's compliance function on a day-to-day ‘business as usual basis’ but the deputy has no experience developing a long-term, firm-wide strategy. The firm estimates that it could take up to a year to recruit a permanent head of compliance. It also believes that the deputy could be the ideal candidate if the deputy could outline a viable compliance strategy for the firm.

3. (3)

   In this situation, it may be appropriate to approve the deputy as head of compliance subject to a 12-month time limit.

4. (4)

   Before the end of that period, the deputy would have to prepare a new compliance strategy and the deputy’s ability to do so would be taken into account when deciding whether to approve the deputy on a permanent basis.

In deciding whether a candidate is fit and proper, the FCA will take into account the role that the candidate is going to perform. The standard for a person who is appointed on a temporary basis may be different from a person appointed on a permanent basis when the person with a temporary appointment has a more limited role.

The FCA may impose a condition on the approval, as well as time limitation. For example, in the example in SUP 10C.12.12G, the FCA may impose a condition prohibiting the candidate from significantly amending the management structure of the department.

The other main examples of a time-limited approval are:

1. (1)

   an enforcement action time-limited approval (see SUP 10C.12.16G);

2. (2)

   a time limitation used in conjunction with a competence condition (see SUP 10C.12.26G); and

3. (3)

   a time limitation in relation to the scale of a role (see SUP 10C.12.35G).

An enforcement action time-limited approval relates to a case in which there is an enforcement investigation ongoing, or in prospect, the results of which may call into question the candidate's fitness and properness, but at the time of application there are no or insufficient grounds to refuse approval. The candidate may or may not be a subject of that investigation.

The FCA will generally limit an enforcement action time-limited approval for a period long enough to allow the investigation to be completed so far as relevant to the candidate. Imposing a time limitation on approval would allow the FCA to look at the situation in more detail after approval, with the benefit of all the facts arising from the investigation.

The policy on the length of time-limited approvals in SUP 10C.12.8G does not apply to time limitations of this type.

The FCA may take the view that a candidate would meet the fit and proper requirement with an approval subject to either, or both, of the following:

1. (1)

   one or more conditions; and/or

2. (2)

   a time limitation;

who would not have met that requirement without the qualification.

Firms should not see the power to give approval on this basis as an opportunity to put forward sub-standard candidates in the knowledge that they are unlikely to gain unconditional approval but may scrape through by way of a qualified approval.

1. (1)

   The FCA is likely only to give a qualified approval on the basis described in SUP 10C.12.19G in limited circumstances.

2. (2)

   Generally, the FCA would only use this power in place of rejection where the deficiency is in only a relatively small proportion of the required job competencies.

3. (3)

   Lack of technical knowledge is more likely to be easier to remedy than a problem with personal characteristics.

4. (4)

   The FCA is only likely to give its approval on this basis when the candidate has fallen short of the required standard by a reasonably small margin (a ‘near miss’).

One example of a conditional approval based on the competence of the candidate would be where the candidate would have met the fitness and properness standard but for a shortfall in the candidate's technical knowledge and the shortfall is in a relatively narrow and specific area.

The FCA does not see this as being a probationary or standalone measure. The competency-related limitation would be time specific and linked to something that the FCA would wish to re-examine after the period has expired.

1. (1)

   When the FCA is imposing a competence-related condition where there is a shortfall, approval will only be granted on the condition that the candidate is required to undertake training or receive mentoring to eliminate the shortfall.

2. (2)

   See SUP 10C.12.39G (role-limited approval) for an example of a shortfall in competence that is not dealt with by trying to remove it.

1. (1)

   An example of where a qualified approval based on competence may be used is for a candidate with proven management skills who is new to the role or the industry and requires some new technical knowledge for the new role.

2. (2)

   For instance, a candidate for the role of a senior manager may have a proven track record as a senior manager but may lack detailed knowledge of a specific area, such as money laundering or of the technical details of prudential capital requirements.

3. (3)

   A competence condition would require the candidate to undertake training in the area of shortfall after appointment.

1. (1)

   A competency-related approval is likely to be linked with a time-limited approval.

2. (2)

   Under an approval of this kind, the candidate will be required to undertake the necessary training or other remedial measures.

3. (3)

   The time for which the approval will last would be set to give the firm and the candidate a reasonable time to complete the measures.

4. (4)

   At the end of the period, the firm would need to apply to the FCA to appoint the candidate on a permanent basis.

The FCA would only be likely to consider a qualified approval based on competence if it was sure that the candidate could achieve the required level of competence within a specified period, which is unlikely to be more than 12 to 18 months.

1. (1)

   The FCA may give a conditional approval instead of rejection in cases where the condition does not relate to the candidate’s abilities.

2. (2)

   For example, the FCA may consider that the candidate is suitable only if the candidate refrains from, or ceases undertaking, certain actions and makes the approval conditional on that basis.

3. (3)

   The FCA may require the candidate to go beyond the regulatory requirements in a given area.

1. (1)

   An example of SUP 10C.12.28G is where a firm wishes to appoint someone as an executive director who has a number of non-executive directorships.

2. (2)

   The FCA may be concerned about the potential impact of these other commitments on that individual’s ability to devote sufficient time to the proposed role with the firm.

3. (3)

   In this situation, it might be appropriate to attach a condition to the individual’s approval requiring that person to resign from some of their non-executive directorships.

A role-limited approval means:

1. (1)

   a time-limited approval; or

2. (2)

   a condition;

relating to the nature or scope of the candidate's role.

One example of a role-limited approval relates to the fact that the size, nature, scope and complexity of a firm's activities can change over time. An individual may be fit and proper to perform a senior management function at a certain firm at a point in time but the FCA may wish to re-assess that individual if the firm's situation changes.

It is not FCA policy to impose role-limited approvals routinely for all firms or for a certain category of firm. For example, there is no blanket policy that approval of a candidate for a post in a small firm would be subject to a qualification based on the firm remaining small.

Where a firm is expanding or transforming its business model or its risk profile and there are identifiable upcoming milestones, the FCA may wish to link the duration of a candidate's approval to these milestones.

If the change is likely to occur in the near future and the details are clear, the FCA may consider its approval of the application in the light of this proposed change.

1. (1)

   Very often it will be uncertain whether a change in circumstances will happen at all, the details may not yet be known or the timing may be uncertain.

2. (2)

   In that case, the FCA may, subject to (3), make its judgement based on the candidate's proposed role, without taking into account the possible change. This reflects the fact that the judgement of whether a candidate is fit and proper takes into account the role that they are actually going to play.

3. (3)

   However, to reflect the possible change, the FCA would give a time-limited approval that would come to an end on the occurrence of the milestone.

4. (4)

   The firm could then apply for a new and possibly unqualified approval.

An example under SUP 10C.12.35G is as follows.

1. (1)

   In this example:

   1. (a)

      an individual is to perform an FCA-designated senior management function in an unlisted firm which currently operates only in the UK; and

   2. (b)

      the firm is planning a listing and a string of acquisitions which are projected to treble the size of its balance sheet and give it a global footprint over the next three years, but the candidate has never worked for an institution as large or as complex.

2. (2)

   In this situation:

   1. (a)

      it may be appropriate to limit the candidate's approval to a specified period. If the projected time for completing the transactions is three years, the approval would be for three years; or

   2. (b)

      it may be appropriate to draft the time limitation by reference to the milestone. For example, the approval might be expressed to come to an end at the point at which the firm's balance sheet exceeds a certain size.

The policy on the length of time-limited approvals in SUP 10C.12.8G does not apply to time limitations of this type.

Another way of dealing with a firm that plans to reorganise itself but has not made a firm decision to do so or worked out the details, is to make the approval subject to the condition that the nature or scope of the candidate's role should not change. The firm could apply for the condition to be removed once the plans are ready to be carried out.

1. (1)

   Another example of a limited-role approval is where:

   1. (a)

      a candidate is not competent to carry out all the functions that are capable of falling within the FCA-designated senior management function for which approval is sought; but

   2. (b)

      the candidate will be fit to carry out most of them; and

   3. (c)

      the firm has adequate arrangements to deal with the other aspects.

2. (2)

   In such circumstances, the condition would be that the candidate does not get involved in the aspects of the role for which that candidate is not competent, as specified in the condition.

The power to impose a conditional or time-limited approval:

1. (1)

   does not depend on the candidate being unfit without that condition or limit; and

2. (2)

   need not be related to the candidate's ability to do the job properly (see SUP 10C.12.28G).

One example of a conditional approval when the candidate is fit and proper and able to do the job is to support supervisory action in relation to the firm. So, if a firm is running a remedial programme, it may be a condition of the candidate's approval that the candidate takes responsibility for aspects of that programme.

Although it is not general FCA policy to use the power to give qualified approval as a probationary measure, there may be circumstances where a firm wants to appoint a candidate to perform an FCA-designated senior management function who, although fit and proper, may, in the role, be responsible for the firm's approach to dealing with particularly unusual or severe challenges in the near future. In this situation, it might be appropriate to approve the candidate subject to a time limit with a view to reassessing that candidate for a permanent position in due course.

In this scenario, the time-limited approval may be accompanied by a condition requiring the candidate to:

1. (1)

   complete an action or deliverable on or before the end of the time limit, eg a requirement on the acting Head of Sales to produce a revised strategy for treating customers fairly within the next six months; and

2. (2)

   refrain from taking specific actions or decisions associated with the role until that person receives permanent approval, eg, a requirement not to introduce a new sales channel until they receive permanent approval.

The provisions in:

1. (1)

   section 59 of the Act that say a firm should take reasonable care to ensure that no person performs a controlled function without approval (see SUP 10C.10.3G); and

2. (2)

   section 63A of the Act, under which a person performing a controlled function without approval may be subject to a penalty (see SUP 10C.10.4G);

apply not only to the performance of an FCA-designated senior management function by someone who has not been approved to perform that function but also to the performance of an FCA-designated senior management function for which the person has been approved in breach of a condition or time limitation.

Sections 59 and 63A of the Act show that failure to observe a condition does not in itself invalidate an approval. Instead, both the firm and the SMF manager may be subject to a penalty for breach of the Act. Such a failure may also:

1. (1)

   involve a breach of FCArules by the firm and a breach by the SMF manager of COCON; and

2. (2)

   call into question the fitness of the SMF manager.

For example, if an SMF manager is subject to a role-limited condition under which the SMF manager is not allowed to carry out certain specified aspects of the FCA-designated senior management function but the SMF manager goes ahead and carries out those aspects, the SMF manager's approval does not automatically come to an end. Instead, both the firm and the SMF manager may be subject to a financial penalty.

This section deals with variation of a conditional approval at the:

1. (1)

   request of the firm; and

2. (2)

   initiative of the FCA.

1. (1)

   In particular, this section sets out the FCA’s policies about varying conditional approvals at the request of a firm, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation).

2. (2)

   This section does not deal with the FCA’s policies on varying a condition on its own initiative. DEPP 8 deals with that.

A firm may apply to the FCA to change a conditional approval. The changes for which a firm may apply are:

1. (1)

   a variation of the condition;

2. (2)

   removal of the condition; and

3. (3)

   the imposition of a new condition.

1. (1)

   If a firm is applying for a change of the type described in SUP 10C.13.3G(1) or SUP 10C.13.3G(2), the firm should apply to the FCA if the FCA imposed that condition, even if the approval was given by the PRA.

2. (2)

   If the firm is applying for the imposition of a new condition, the firm should apply to the FCA if the approval to which the application relates was given by the FCA.

3. (3)

   In other cases, the application should be to the PRA.

The power to apply for a variation does not apply to a time limitation.

1. (1)

   An application under SUP 10C.13.6D should be accompanied by a statement of responsibilities for the approved person concerned.

2. (2)

   See SUP 10C.11 (Statements of responsibilities) for more details.

SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications to vary a conditional approval should be submitted.

The FCA has until the end of the period of three months from the time it receives a properly completed application to consider the application and come to a decision.

The FCA must either grant the application or, if it proposes not to grant an application, issue a warning notice (see DEPP 2).

The FCA may refuse an application if it appears to the FCA that it is desirable to do so to advance one or more of its operational objectives.

Before making a decision to grant the application or give a warning notice, the FCA may ask the firm for more information. If it does this, the three-month period in which the FCA must determine a completed application:

1. (1)

   will stop on the day the FCA requests the information; and

2. (2)

   will start running again on the day on which the FCA finally receives all the requested information.

Whenever it grants an application, the FCA will confirm this in writing to all interested parties.

If the FCA proposes to refuse an application, it must follow the procedures for issuing warning notices and decision notices to all interested parties. The requirements relating to warning and decision notices are in DEPP 2.

SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how notifications of withdrawal of an application should be submitted.

Under section 61(5) of the Act (Determination of applications), as applied by section 63ZA(8) of the Act (Variation of senior manager’s approval at request of relevant authorised person), the firm may withdraw an application only if it also has the consent of:

1. (1)

   the approved person; and

2. (2)

   the person by whom the approved person is employed if this is not the firm making the application.

The FCA’s policy on approving or refusing a request for a variation is the same as it is for imposing conditions on approval (see SUP 10C.12 (Conditional and time-limited approvals)).

1. (1)

   An example of a situation in which the FCA would consider varying a condition would be a competency-related condition which required a training course to be completed (see, in particular, SUP 10C.12.24G for this type of condition).

2. (2)

   If the firm later concludes that a different course would be better, the firm may apply for a variation of the condition.

Another example of a situation in which the FCA would consider varying a condition would be a condition relating to a remedial programme (see SUP 10C.12.41G). If the remedial programme is changed, it may be appropriate to change the condition.

1. (1)

   Other examples of where the FCA may agree to removing a condition are where:

   1. (a)

      the approved person's role has changed so that the reason for the condition originally being imposed no longer applies; or

   2. (b)

      new information has come to light that removes any doubt about the approved person's competence so a condition is no longer necessary.

2. (2)

   For example, the FCA may agree to removing a condition about the scope of the approved person's role of the type described in SUP 10C.12.39G.

See SUP 10C.12.38G for another example of a case where the FCA may agree to removing a condition (condition imposed pending reorganisation).

Under section 63ZB of the Act (Variation of senior manager's approval on initiative of regulator), the FCA may vary an approval given by the FCA or the PRA for the performance of a designated senior management function if the FCA considers that it is desirable to do so to advance one or more of its operational objectives.

The FCA may vary an approval by:

1. (1)

   imposing a condition;

2. (2)

   varying a condition;

3. (3)

   removing a condition; or

4. (4)

   limiting the period for which the approval is to have effect.

More information about the FCA's powers to vary a condition on its own initiative, including its policy on using these powers, can be found in DEPP 8.

1. (1)

   An FCA-approved SMF manager's job may change from time to time as a result, for instance, of a change in personal job responsibilities or a firm'sregulated activities.

2. (2)

   Where the changes will involve the SMF manager performing one or more FCA-designated senior management functions different from those for which approval has already been granted, an application must be made to the FCA for approval for the SMF manager to perform those FCA-designated senior management functions.

3. (3)

   The firm must take reasonable care to ensure that an individual does not begin performing an FCA-designated senior management function until the FCA has granted FCA-approved SMF manager status to that individual for that FCA-designated senior management function.

4. (4)

   Similarly, a firm must get the FCA's approval if an individual is to start performing an FCA-designated senior management function in relation to that firm when they already have the PRA's approval to perform a PRA-designated senior management function in relation to that firm.

1. (1)

   A firm should generally use Form E where an approved person is both ceasing to perform one or more controlled functions and needs to be approved in relation to one or more FCA-designated senior management functions within the same firm or group.

2. (2)

   In certain cases, a firm should use Form A.

3. (2A)

   3When a MiFID investment firm (except a credit institution) notifies the FCA of a change using Form A or Form E, they must also submit the MiFID Article 4 SMR Information Form (see SUP 10C.10.9BD).

4. (3)

   The details can be found in SUP 10C.10.8D to SUP 10C.10.9CG.

If it is proposed that an FCA-approved SMF manager:

1. (1)

   will no longer be performing an FCA-designated senior management function under an arrangement entered into by one firm or one of its contractors; but

2. (2)

   will be performing the same or a different FCA-designated senior management function under an arrangement entered into by a new firm or one of its contractors (whether or not the new firm is in the same group as the old firm);

the new firm will be required to make a fresh application for the performance of the FCA-designated senior management function by that person.

In certain circumstances, when the FCA already has the information it would usually require, a shortened version of the relevant Form A may be completed. See the notes relevant to each form for full details.

SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how notifications should be submitted.

1. (1)

   Notification under SUP 10C.14.7R may be made by telephone, email or fax and should be made, where possible, within one business day of the firm becoming aware of the information.

2. (2)

   Oral notifications should be given directly to the firm's usual supervisory contact at the FCA. An oral notification left with another person or left on a voicemail, or other automatic messaging service, is unlikely to have been given appropriately.

A firm is responsible for notifying the FCA if any FCA-approved SMF manager has ceased to perform an FCA-designated senior management function under an arrangement entered into by its contractor.

1. (1)

   A firm can submit Form C or Form E and the MiFID Article 4 SMR Information Form3 to the FCA in advance of the cessation date.

2. (2)

   If the actual cessation date turns out to be different from the one notified in advance, the firm should notify the FCA.

3. (3)

   If the

   firm does not submit Form C (including a qualified one), the MiFID Article 4 SMR Information Form,3 or Form E, it should inform the FCA in due course of the reason. This could be done using Form D, if appropriate.

1. (1)

   When a person ceases the arrangement under which they perform an FCA-designated senior management function, they will automatically cease to be an FCA-approved SMF manager in relation to that FCA-designated senior management function.

2. (2)

   A person can only be an FCA-approved SMF manager in relation to a specific FCA-designated senior management function. Therefore, a person is not an FCA-approved SMF manager during any period between ceasing to perform one FCA-designated senior management function (when they are performing no other FCA-designated senior management function) and being approved for another FCA-designated senior management function.

Sending forms promptly will help to ensure that any fresh application can be processed within the standard response times.

The duty to notify in SUP 10C.14.13R does not apply to changes to an FCA-approved SMF manager's private address.

SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how notifications should be submitted.

1. (1)

   Under section 62A of the Act, a firm should provide the FCA with a revised statement of responsibilities if there has been any significant change in the responsibilities of an FCA-approved SMF manager.

2. (2)

   Details can be found in SUP 10C.11 (Statements of responsibilities).

SUP 10C.15 (Forms and other documents and how to submit them to the FCA) applies to the submission of Form D.

Failing to disclose relevant information to the FCA may be a criminal offence under section 398 of the Act.

The duty to notify in SUP 10C.14.18R extends to any circumstances that would normally be declared when giving the information required for section 5 of Form A or matters considered in FIT 2.

The table in SUP 10C.12.24G summarises what the relevant parts of the sections of the Act listed in SUP 10C.12.22G say.

1. (1)

   When considering how to notify the FCA under SUP 10C.14.18R or SUP 10C.14.22R, a firm should have regard to the urgency and significance of a matter. If appropriate, the firm should also notify its usual supervisory contact at the FCA by telephone or by other prompt means of communication, before submitting a written notification.

2. (2)

   Oral notifications should be given directly to the firm's usual supervisory contact at the FCA. An oral notification left with another person or left on a voicemail, or other automatic messaging service, is unlikely to have been given appropriately.

1. (1)

   The obligations to supply information to the FCA under:

   1. (a)

      SUP 10C; or

   2. (b)

      the sections of the Act listed in SUP 10C.14.22R;

   apply notwithstanding any agreement (for example, a 'COT 3' Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS)) or any other arrangements entered into by a firm and an employee upon termination of the employee's employment.

2. (2)

   A firm should not enter into any such arrangements or agreements that could conflict with its obligations under this section or the Act.

Failing to disclose relevant information to the FCA may be a criminal offence under section 398 of the Act.

If a firm is required to notify the FCA about a PRA-approved SMF manager who is not an FCA-approved SMF manager under one of the sections of the Act referred to in SUP 10C.14.28R, it should make a single notification under the PRA's requirements. There is no need for a separate notification to the FCA.

The purpose of this section is to:

1. (1)

   summarise the main forms and other documents used in this chapter; and

2. (2)

   explain how they should be submitted to the FCA.

The main forms and other documents used in this chapter are listed in SUP 10C.15.3G.

SUP 10C Annex 1G gives examples of the circumstances in which the documents in SUP 10C.15.3G should be used.