SYSC 26.4 Exclusions

1SYSC 26.3 (Main rules) does not require a PRA-authorised person2 to ensure that SMF managers have local or overall responsibility for any activity, business area or management function that is included in an FCA-prescribed senior management responsibility that applies to the firm.

1SYSC 26.3 (Main rules) does not require a firm to ensure that SMF managers have local or overall responsibility for any activity, business area or management function that is:

1. (1)

   included in a PRA-prescribed senior management responsibility that applies to the firm; or

2. (2)

   managed (as part of the PRA-designated senior management function concerned) by any of the firm’s SMF managers approved to perform any of the following PRA-designated senior management functions for the firm:

   1. (a)

      the Chief Finance function;

   2. (b)

      the Chief Risk function;

   3. (c)

      the Head of Internal Audit function;

   4. (d)

      the Head of Key Business Area function;

   5. (e)

      the Chief Operations function; or

   6. (f)

      the Group Entity Senior Manager function or the Group Entity Senior Insurance Manager function.

1SYSC 26.3 (Main rules) does not require a firm to allocate overall or local responsibility for the running of the firm’s governing body.

1. (1)

   1This rule applies where:

   1. (a)

      a firm appoints someone to perform a function in order to provide cover as described in SUP 10C.3.13R(1) (The 12-week rule) or (in the case of a PRA-authorised person)2 the PRA equivalent; and

   2. (b)

      the firm has allocated any responsibilities (the “Responsibilities”) under SYSC 26.3 (Main rules) to the SMF manager (the absent manager) who is absent as described in SUP 10C.3.13R(2) or (in the case of a PRA-authorised person)2 the PRA equivalent.

2. (2)

   While the disapplication of the designated senior management function provided for in SUP 10C.3.13R or (in the case of a PRA-authorised person)2 the PRA equivalent is still in force the firm may allocate the Responsibilities to an employee who is not an SMF manager.

3. (3)

   For the purposes of this rule, the PRA equivalent of:

   1. (a)

      SUP 10C.3.13R is the following parts of the PRA Rulebook:

      1. (i)

         rule 2.3 in “Senior Management Functions”;

      2. (ii)

         rule 2.4 in “Insurance - Senior Management Functions”; and

      3. (iii)

         rule 2.4 in “Large Non-Solvency II Firms – Senior Management Functions”.

   2. (b)

      SUP 10C.3.13R(1) and (2) is the following parts of the PRA Rulebook:

      1. (i)

         rules 2.3(1) and (2) in “Senior Management Functions”;

      2. (ii)

         rules 2.4(1) and (2) in “Insurance - Senior Management Functions”; and

      3. (iii)

         rules 2.4(1) and (2) in “Large Non-Solvency II Firms – Senior Management Functions”.

1. (1)

   2SYSC 26.3 (Main rules) applies to the SMCR legal function as modified by (2).

2. (2)

   A firm may allocate local or overall responsibility for the SMCR legal function to someone who is not an SMF manager.

1. (1)

   2The SMCR legal function of a firm means an activity of the firm that consists of one or more of the following:

   1. (a)

      the provision of legal advice or assistance to the firm or any member of its group in connection with the application of the law or with any form of resolution of legal disputes;

   2. (b)

      the provision of representation for the firm or any member of its group in connection with any matter concerning the application of the law or any form of resolution of legal disputes;

   3. (c)

      a reserved legal activity as defined in section 12 of the Legal Services Act 2007 (Meaning of “reserved legal activity” and “legal activity”) when carried out for the firm or any member of its group; or

   4. (d)

      any of the activities set out in section 32(1) of the Solicitors (Scotland) Act 1980 (Offence for unqualified persons to prepare certain documents) when carried out for the firm or any member of its group.

2. (2)

   For the purposes of the definition of the SMCR legal function, legal dispute includes a dispute as to any matter of fact the resolution of which is relevant to determining the nature of any person's legal rights or liabilities.

1. (1)

   2If a firm allocates the functions in (2) to the same person as the one to whom it allocates responsibility for activities in SYSC 26.4.10R, the functions in (2) also form part of the SMCR legal function. As a result the exclusion in SYSC 26.4.9R(2) also applies.

2. (2)

   A function is covered by this rule to the extent that it directly supports the activities in SYSC 26.4.10R.

2SYSC 26.3 (Main rules) only requires an enhanced scope SMCR firm to allocate responsibility for activities, business areas and management functions to the extent that they support, form part of or otherwise relate to its SMCR financial activities.

2A full-scope UK AIFM may treat managing an AIF as not being part of its SMCR financial activities for the purposes of this chapter.