In accordance with section 63E of the Act (Certification of employees by authorised persons), a function is an FCA certification function only if, in relation to the carrying on of a regulated activity by a firm, that function:
is not a controlled function in relation to the carrying on of that regulated activity by that firm; and
will require the person performing it to be involved in one or more aspects of the firm’s affairs, so far as relating to that regulated activity.
In accordance with section 63E(3) of the Act, the functions in the table in SYSC 27.7.3R are FCA certification functions.
Table: FCA certification functions
Function | Where defined |
(1) CASS oversight | |
(2) Proprietary trader | |
(3) Significant management | |
(4) Functions requiring qualifications | |
(5) Managers of certification employees | |
(6) Material risk takers | |
(7) Client-dealing | |
(8) Algorithmic trading |
If a function falls into more than one of the FCA certification functions in the table in SYSC 27.7.3R, all of those FCA certification functions apply to it.
For example, if a person’s job involves both FCA certification function (4) (functions requiring qualifications) and (6) (material risk takers), the emergency appointments rule (SYSC 27.5.1R) does not apply to that job.
Another example is the rule about the territorial scope of this section (SYSC 27.3.1R)) for a UK SMCR firm. For example, if a person’s job involves both FCA certification function (4) (functions requiring qualifications) and (6) (material risk takers), the territorial restriction in that rule does not apply to that job. Instead, this chapter applies without any territorial limitation.
The reason for (3) is that SYSC 27.3.1R(3) says that there is no territorial limitation on FCA certification function (6) for a UK SMCR firm. As explained in (1), it does not matter that the job also involves FCA certification function (4), to which the territorial limitation does apply.
SYSC 27.7.1R(1) means that an FCA-designated senior management function cannot also be an FCA certification function at the same time.
So an SMF manager performing an activity that forms part of their FCA-designated senior management function is not, by performing that activity, also performing an FCA certification function.
But if an FCA-designated senior management function does not apply to a firm, performing the function described in the definition of that FCA-designated senior management function can be an FCA certification function.
See SYSC 27.8.7AG for an example of this.
SYSC 27.7.1R(1) also means that an SMF manager may need to be certified for a role that is distinct and separate from their designated senior management function.
This will sometimes mean that an SMF manager may need to be certified for the client-dealing FCA certification function if they meet clients.
However, it does not mean that, in all instances in which an SMF manager engages with clients, the SMF manager will automatically need to be certified as well. In many instances, client engagement would be a normal and expected part of an SMF manager’s role and would not require certification.
For example, a money laundering reporting officer who meets with clients in relation to their money laundering reporting officer responsibilities would likely to be doing so within the scope of the money laundering reporting function. In such cases, the money laundering reporting officer would not need to be certified.
This is equally true for other designated senior management function roles – for example, where an executive director engages with a client for relationship management reasons. This may also be the case if the director is accompanied by a qualified investment adviser who is a certification employee who can deal with detailed requests for investment advice from the client.
However, the demands of a customer-facing role can, in some cases, be quite different from those of a senior management role. For example, advising on investments is often technical and requires relevant qualifications (set out in the Training and Competence sourcebook (TC)). Such an activity is distinctly different from the role many SMF managers perform and will, therefore, in many cases, fall outside the scope of the SMF manager role. As such, it would require certification.
