SUP TP 6 1 Financial Services (Banking Reform) Act 2013: Approved persons

1Purpose and application

6.1.1

G

SUP TP 6 has transitional and grandfathering provisions relating to the changes to the approved persons regime made by Part 4 of the Financial Services (Banking Reform) Act 2013.

6.1.2

R

SUP TP 6 applies to relevant authorised persons.

6.1.3

G

SUP TP 6.10 has a glossary of terms used in SUP TP 6 which are not defined in the Glossary.

Grandfathering of approved persons: mapping of old functions onto new

6.2.1

R

A firm must not include any of the following approved persons in a grandfathering notice:

(1)

an approved person whose approval is under SUP 10A.1.15R or SUP 10A.1.16R (appointed representatives) for that firm;

(2)

an approved person whose approval is to perform an FCA controlled function not listed in column one of the table in SUP TP 6.2.7R for that firm; or

(3)

an approved person if the firm has concluded that they will not be performing their potential new designated senior management function for the firm on the commencement date.

[Note: article 2(2) of the Transitionals and Grandfathering Order]

6.2.2

G

(1)

The approval of anyone approved under one of the rules in SUP TP 6.2.1R(1) is not affected by SUP TP 6 and continues in force as before.

(2)

A function in SUP TP 6.2.1R(2) ceases to be an FCA controlled function on the commencement date.

(3)

An example of SUP TP 6.2.1R(3) is an approved person who plans to resign before the commencement date.

(4)

If plans change, and the approved person in (3) plans to carry on performing the function, the firm should update the grandfathering notice.

(5)

The electronic version of the notification form will include approved persons in SUP TP 6.2.1R(3). However, that does not mean that the firm has included them in its notification. The names are supplied by the system to help the firm reconcile its records with the regulators’ records and to help the firm check whether it has missed out someone it wants to include.

(6)

If:

(a)

SUP TP 6.2.1R applies to some of an approved person's approvals or potential new designated senior management functions; but

(b)

it does not apply to others; and

(c)

as a result, some of the approved person's existing functions are potentially grandfathered and some are not;

then the notification should:

(d)

include the approved person; but

(e)

exclude the approvals and potential new designated senior management functions in SUP TP 6.2.1R.

6.2.3

R

(1)

Each FCA-designated senior management function listed in column three of the table in SUP TP 6.2.7R is specified as equivalent to the pre-commencement controlled function in the first column of the same row of that table.

(2)

Each PRA-designated senior management function listed in column two of the table in SUP TP 6.2.7R is specified as equivalent to any FCA pre-commencement controlled function in the first column of the same row of that table.

(3)

Paragraph (2) is subject to the PRA Transitional Rules.

[Note: article 17 of the Transitionals and Grandfathering Order]

6.2.4

R

If:

(1)

the result of SUP TP 6.2.3R (together with the PRA Transitionals Rules and the Transitionals and Grandfathering Order) would be that an approved person is deemed to be approved to perform:2

(a)

the other overall responsibility function (SMF18) for a UK relevant authorised person; or2

(b)

the other local responsibility function (SMF22) for a third-country relevant authorised person; and2

(2)

that approved person is deemed by the Transitionals and Grandfathering Order (together with SUP TP 6 and the PRA Transitionals Rules) to be approved to perform any other designated senior management function for the same firm;

then, for that approved person and that firm, the other overall responsibility function or the other local responsibility function (whichever is applicable)2 is not treated as equivalent to the pre-commencement controlled function to which it would otherwise have been equivalent under SUP TP 6.2.3R.

[Note: article 17 of the Transitionals and Grandfathering Order]

6.2.5

G

The effect of SUP TP 6.2.4R is that a person will not be grandfathered with the new FCA ‘other overall responsibility function’ (SMF18) or the new FCA ‘other local responsibility function’ (SMF22)2 if they have any other grandfathered approval for the same firm.

6.2.6

R

SUP TP 6.2.3R and SUP TP 6.2.4R also apply to applications for approval covered by Part 3 of the Transitionals and Grandfathering Order.

[Note: articles 11 and 17 of the Transitionals and Grandfathering Order]

6.2.7

R

Table of functions for grandfathering

All firms apart from credit unions and non-UK relevant authorised persons2

The following PRA controlled functions:

Director function (CF1)

Partner function (CF4)

Director of unincorporated association function (CF5)

The following PRA-designated senior management functions:

Chief Finance function (SMF2)

Chief Risk function (SMF4)

Head of Internal Audit (SMF5)

Head of Key Business Area (SMF6)

Group Entity Senior Manager (SMF7)

Executive director function (SMF3)

The PRA’s non-executive director controlled function (CF2)

Group Entity Senior Manager (SMF7)

Chairman (SMF9)

Chair of the Risk Committee (SMF10)

Chair of the Audit Committee (SMF11)

Chair of the Remuneration Committee (SMF12)

Senior independent director (SMF14)

Chair of the nominations committee function(SMF13)

The significant management function (CF29)

Head of Key Business Area (SMF6)

Group Entity Senior Manager (SMF7)

Other overall responsibility function (SMF18)

All firms to which the function in the first column applies

Compliance oversight function (CF10)

None

Compliance oversight function (SMF16)

CASS operational oversight function (CF 10A)

None

Other overall responsibility function (SMF18)

Other local responsibility function (SMF22)2

Money laundering reporting function (CF11)

None

Money laundering reporting function (SMF17)

Credit unions

The PRA's director controlled function (CF1)

Credit Union Senior Manager (SMF8)

Executive director function (SMF3)

The PRA's non-executive director controlled function (CF2)

Credit Union Senior Manager (SMF8)

Chair of the nominations committee function (SMF13)

2 EEA relevant authorised persons

2The significant management function (CF29)

None

EEA branch senior manager function (SMF21)

2 Third-country relevant authorised persons

2The PRA’s director function (CF1)

The following PRA-designated senior management functions:

Chief Finance function (SMF2)

Chief Risk function (SMF4)

Head of Internal Audit (SMF5)

Group Entity Senior Manager function (SMF7)

Head of Overseas Branch function (SMF19)

Executive director function (SMF3)

2The PRA’s systems and controls function (CF28)

The following PRA-designated senior management functions:

Chief Finance function (SMF2)

Chief Risk function (SMF4)

Head of Internal Audit (SMF5)

Group Entity Senior Manager (SMF7)

Other local responsibility function (SMF22)

2The significant management function (CF29)

The following PRA-designated senior management functions:

Group Entity Senior Manager function (SMF7)

Head of Overseas Branch function (SMF19)

Other local responsibility function (SMF22)

Note (1): All references to designated senior management functions in columns Two and Three are to FCA-designated senior management functions and PRA-designated senior management functions brought into force by the FCA’s Individual Accountability Instrument 2015 and the PRA Transitional Rules.

Note (2): This table does not apply to an approval under SUP 10A.1.15R or SUP 10A.1.16R (appointed representatives).

16.2.8

G

(1)

A firm should not make a grandfathering notification for an application for approval for a controlled function for which there is no potential new designated senior management function.

(2)

So for example a firm applying for approval for a controlled function under SUP 10A.1.15R or SUP 10A.1.16R (appointed representatives) should not include that application in a grandfathering notice. The FCA will consider that application outside the grandfathering arrangements in SUP TP 6.

Grandfathering of approved persons: forms

6.3.1

D

(1)

A firm, other than a credit union, must submit a document in column 1 of the table in SUP TP 6.3.3D in accordance with the corresponding requirement in column 3 of that table.

(2)

A credit union must submit a document in column 1 of the table in SUP TP 6.3.3D in accordance with the corresponding requirement in column 4 of that table.

6.3.2

G

If more than one method of submission is available to a credit union within the table in SUP TP 6.3.3D, the credit union can decide which one to use.

6.3.3

D

Table: Grandfathering notifications

(1) Notification of grandfathering

Article 2(1)

SUP 10C.15.11R

SUP 10C.15.11R or SUP TP 6.3.6D

(2) Amendment to grandfathering notification in (1) to add a new approved person

Article 6(1)

SUP 10C.15.11R

SUP 10C.15.11R or SUP TP 6.3.6D

(3) Any other amendment to grandfathering notification in (1)

Article 6(1)

SUP 10C.15.11R

SUP 10C.15.11R or SUP TP 6.3.6D

(4) Notification of applications for approval

Article 11

SUP 10C.15.11R

SUP 10C.15.11R or SUP TP 6.3.6D

(5) Amendment to grandfathering notification in (4) to add a new candidate

Article 14

SUP 10C.15.11R

SUP 10C.15.11R or SUP TP 6.3.6D

(6) Any other amendment to grandfathering notification in (4)

Article 14

SUP 10C.15.11R

SUP 10C.15.11R or SUP TP 6.3.6D

Notes:

(1) SUP 10C.15.11R does not apply if the electronic system referred to in that rule has not been made available yet by the FCA and the PRA – SUP TP 6.3.6D applies instead.

(2) A reference to SUP 10C is to the chapter of SUP as inserted by the FCA's Individual Accountability Instrument 2015.

16.3.4

D

(1)

A firm making a notification under SUP TP 6.3.1D in accordance with SUP 10C.15.11R must use the version of the notification form made available on the electronic system referred to in SUP 10C.15.11R, based on the version in SUP TP 6.11.1D.

(2)

A firm making a notification under SUP TP 6.3.1D in accordance with SUP TP 6.3.6D must use the notification form in SUP TP 6.11.1D.

6.3.5

D

A notification under row (1) (first grandfathering notification for approved persons) and row (4) (first grandfathering notification for candidates) of the table in SUP TP 6.3.3D should be made at the same time and on the same notification form.

6.3.6

D

(1)

A firm making a notification under this paragraph (SUP TP 6.3.6D) must:

(a)

send it to the PRA;

(b)

not use the electronic system referred to in SUP 10C.15.11R; and

(c)

subject to (b), submit it in the way required by chapter 7 of the part of the PRA's Rulebook called “Notifications”.

(2)

Paragraph (1) also applies when SUP 10C.15.11R(2) (unavailability of electronic submission) applies.

6.3.7

G

(1)

If a firm notifies an application for approval and that application is refused before the commencement date, the firm should update the notification under row (6) of the table in SUP TP 6.3.6D.

(2)

There is no need to update if the application is granted.

6.3.8

G

If a firm gives a grandfathering notification for an approved person and that approved person leaves the firm or gives up performing some of their controlled functions, the firm should notify the appropriate regulator using Form C as well as under SUP TP 6.

Grandfathering of approved persons: statements of responsibilities

6.4.1

D

A notification under the table in SUP TP 6.3.3D must be accompanied by a statement of responsibilities for each approved person or candidate covered by the notification.

Grandfathering of approved persons: management responsibilities maps

6.5.1

D

A notification under rows (1) and (4) of the table in SUP TP 6.3.3D (first grandfathering notification for approved persons and candidates) must be accompanied by a management responsibilities map.

6.5.2

G

(1)

If there has been a change relating to any information in a management responsibilities map, the firm should submit a revised version.

(2)

This is the effect of articles 6 and 14 of the Transitionals and Grandfathering Order.

Statements of responsibilities and responsibilities maps: general requirements

6.6.1

D

The statements of responsibilities and the management responsibilities map covered by SUP TP 6 must be prepared as of the commencement date.

6.6.2

D

(1)

A statement of responsibilities must comply with the requirements of SUP 10C.11 (Statements of responsibilities).

(2)

However the version in SUP TP 6.11.1D applies instead of the version in SUP 10C Annex 5D.

6.6.3

G

A firm should not assume that the FCA has reviewed statements of responsibilities and the management responsibilities map for completeness, quality or accuracy. It is the firm's responsibility to ensure that they have been prepared in accordance with the FCA's rules and the Act.

Criminal record checks for approved persons

6.7.1

R

SUP 10C.10.16R (Criminal record checks) applies to any application for approval continued in effect by the Transitionals and Grandfathering Order after the commencement date.

6.7.2

G

Except for SUP TP 6.7.1R, SUP 10C.10.16R (Criminal record checks) does not apply to any application for approval made before the commencement date.

6.7.3

G

SUP 10C.10.16R (Criminal record checks) will apply to any application for approval made under SUP TP 6.8.1D.

Applications of approved persons to take effect from the commencement date

6.8.1

D

(1)

A firm may apply 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 which comes into force on the commencement date.

(2)

Any application must be made between 1 January 2016 and the day before the commencement date.

(3)

Any such application is made on the basis that it is treated as being made on the commencement date.

(4)

The application must be made using the version of Form A or Form E applicable from the commencement date and (subject to (5)) in accordance with the other requirements to be in effect on that date.

(5)

The application must be made in the way set out in SUP 15.7.4R to SUP 15.7.9G (Form and method of notification).

6.8.2

G

The Transitionals and Grandfathering Order will not apply to an application under SUP TP 6.8.1D.

6.8.3

G

A firm does not have to make an application under SUP TP 6.8.1D. It can make an application before the commencement date under the rules and directions in force at the time of the application. The Transitionals and Grandfathering Order will apply to such applications.

Application of ongoing requirements to documents submitted as part of grandfathering

6.9.1

R

(1)

The requirements of the Handbook apply to approvals that are continued in force by the Transitionals and Grandfathering Order, as they do to approvals granted after the commencement date.

(2)

The requirements of the Handbook apply to an application for approval that is grandfathered under the Transitionals and Grandfathering Order and has not been finally determined before the commencement date, as they do to applications made after the commencement date.

(3)

This paragraph is subject to the other provisions of SUP TP 6.

6.9.2

D

SUP TP 6.9.1R applies to directions in SUP 10C in the same way as it does to the other requirements of that chapter.

6.9.3

G

The table in SUP TP 6.9.4G gives examples of how various provisions of SUP 10C and other parts of the Handbook apply in the light of:

(1)

the Transitionals and Grandfathering Order; and

(2)

SUP TP 6.9.1R and SUP TP 6.9.2D.

6.9.4

G

Table: Examples of how ongoing requirements apply to grandfathered approvals

Revised statements of responsibilities

SUP 10C.11.7D

Submission of revised statement of responsibilities

Article 8 of the Transitionals and Grandfathering Order says that the requirements in the Act about revised statements of responsibilities apply to approvals continued under the Order.

Article 15 of the Order says the same about statements of responsibilities submitted as part of a notice about applications for approvals that are to be grandfathered under the Order.

The SUP 10C requirements about revised statement of responsibilities apply.

Varying an approval

SUP 10C.11.10D

Statements of responsibilities

Article 7 of the Transitionals and Grandfathering Order says that the requirements in the Act about variation of approvals at the request of the firm apply to approvals continued under the Order.

The power of the FCA to vary an approval on its initiative applies to approvals continued under the Order.

The parts of SUP 10C that deal with variation of approvals apply, including the requirements for applications by the firm to vary approvals.

SUP 10C.13

Other material about variations

Single statement of responsibilities document

SUP 10C.11.13D

One statement of responsibilities document for each SMF manager for each firm

Applies to statements of responsibilities for approvals grandfathered under the Transitionals and Grandfathering Order

Applies to statements of responsibilities covering approvals continued in force by the Transitionals and Grandfathering Order

Complete set of statements of responsibilities

SUP 10C.11.20R

Complete set of current statements of responsibilities

Takes into account statements of responsibilities submitted under the Transitionals and Grandfathering Order

Ceasing to carry on functions

SUP 10C.11.12R

Statements of responsibilities to be included in notification

Applies to ceasing to carry on a function continued in force by the Transitionals and Grandfathering Order

SUP 10C.14.5R

Notification of ceasing to perform the function

SUP 10C.14.7R

Qualified Form C

Form D

SUP 10C.14.13R

Changes to details

Applies to notification relating to fitness of an FCA-approved SMF manager whose approval is continued in force by the Transitionals and Grandfathering Order.

The Form D requirements also apply to a candidate whose application is continued in force by the Order.

Before the commencement date, the existing requirements of SUP 10A apply to changes in a candidate's fitness.

SUP 10C.14.15R

Changes to arrangements

SUP 10C.14.18R

Fitness

Notifications under the Act

SUP 10C.14.22R

Notifications under the Act

Applies to notification about an FCA-approved SMF manager whose approval is continued in force by the Transitionals and Grandfathering Order

PRA

SUP 10C.14.28R

PRA-approved SMF manager

Applies to notification about an SMF manager whose approval is continued in force by the Transitionals and Grandfathering Order

General

Requirements referring to a current approved person approval (whether from the FCA or the PRA)

Includes an approval that is continued in force by the Transitionals and Grandfathering Order

Requirements referring to a current approved person approval held within the last six months

Applies to an approval that ceased to have effect under the Transitionals and Grandfathering Order within the last six months.

Applies to an approval given up within the last six months even though the controlled function ceases to exist after the commencement date

16.10.1

Terms used in SUP TP 6

6.10.1

R

The terms in the first column of the table in SUP TP 6.10.2R have the meaning in the corresponding row of column 2.

6.10.2

R

Table: glossary of bespoke terms used in SUP TP 6

1commencement date

(in accordance with the Financial Services (Banking Reform) Act 2013 (Commencement No. 9) Order 2015 (SI 2015/490)) 7 March 2016

designated senior management function

has the meaning in the new Glossary

FCA-approved SMF manager

has the meaning in the new Glossary

grandfathering notice

a notice described in the table in SUP TP 6.3.3D (including any revised notice)

management responsibilities map

has the meaning in the new Glossary

2other local responsibility function

has the meaning in the new Glossary

potential grandfathered function

(in relation to an approved person and firm at a particular date) a pre-commencement controlled function:

(1)

for which that person has approval for the firm;

(2)

for which there is an equivalent designated senior management function for the purposes of the Transitionals and Grandfathering Order; and

(3)

that therefore, potentially qualifies for grandfathering under the Transitionals and Grandfathering Order (together with SUP TP 6.2 and the PRA Transitional Rules) for that firm, as long as the other conditions in the Transitionals and Grandfathering Order are met

potential new designated senior management function

(in relation to an approved person and firm) the new designated senior management function that is deemed to apply after the commencement date under the Transitionals and Grandfathering Order and is referred to in paragraph (2) of the definition of potential grandfathered function

PRA-approved SMF manager

has the meaning in the new Glossary

PRA-designated senior management function

has the meaning in the new Glossary

PRA Transitional Rules

The part of the PRA Rulebook called Senior Managers Regime – Transitionals

pre-commencement controlled function

(as at any time before the commencement date) an FCA controlled function or a PRA controlled function in force at that time

SMF manager

has the meaning in the new Glossary

statement of responsibilities

has the meaning in the new Glossary

SUP 10C (and any reference to a particular provision of SUP 10C)

chapter 10C of SUP as inserted by the FCA's Individual Accountability Instrument 2015

Transitionals and Grandfathering Order

the Financial Services (Banking Reform) Act 2013 (Transitional and Savings Provisions) Order 2015 (SI 2015/492)

Note: A reference in column 2 to the meaning in the new Glossary is to the meaning in the Glossary as inserted by the FCA's Individual Accountability Instrument 2015.

6.11.1

Form K: Grandfathering notification

Statement of responsibilities to be included with Form K

Senior Management Regime: Statement of Responsibilities at grandfathering (EEA Relevant Authorised Persons only)

Senior Management Regime: Statement of Responsibilities at grandfathering (Third Country Relevant Authorised Persons only)