Related provisions for SYSC 5.2.34
1 - 8 of 8 items.
(1) This section is about the FCA's certification regime.(2) Under this regime, a firm should ensure that its employees only perform an FCA-specified significant-harm function if they have a certificate issued by that firm to perform that function.(3) The purpose of this section is to specify ‘FCA-specified significant-harm functions’ and to give guidance on the FCA's certification regime.
Under section 63E(1) of the Act, a firm must take reasonable care to ensure that no employee of the firm performs an FCA-specified significant-harm function under an arrangement entered into by the firm in relation to the carrying on by that firm of a regulated activity, unless the employee has a valid certificate issued by that firm to perform the function to which certificate relates.
Under section 63F of the Act, in assessing if a person is fit and proper to perform an FCA-specified significant-harm function, a firm must have regard, in particular, to whether that person:(1) has obtained a qualification;(2) has undergone, or is undergoing, training;(3) possesses a level of competence; or(4) has the personal characteristics,required by general rules made by the FCA.
Under section 63F of the Act, if, after having considered if a person is fit and proper to perform an FCA-specified significant-harm function, a firm decides not to issue a certificate to that person, the firm must give the person a notice in writing stating:(1) what steps (if any) the firm proposes to take in relation to the person as a result of the decision; and(2) the reasons for proposing to take those steps.
If, after having considered whether a person is fit and proper to perform an FCA-specified significant-harm function, a firm decides not to issue a certificate to that person, it should consider if the circumstances warrant making a notification to the FCA for a breach of the rules in COCON pursuant to SUP 15.3.11R (Breaches of rules and other requirements in or under the Act or the CCA)4.
(1) The FCA's approach to specifying FCA-specified significant-harm functions has the effect that several elements of a person's job may involve an FCA-specified significant-harm function or that a person may perform several FCA-specified significant-harm functions as part of the same job.(2) However, this does not mean that the FCA expects a firm to issue multiple certificates to each certification employee. Rather, in a certificate, a firm may describe the employee's functions
(1) In cases where a certification employee's role changes to involve a new function involving an FCA-specified significant-harm function part way through the twelve-month period for which their certificate is valid, and that new function may have different requirements relating to:(a) personal characteristics;(b) the level of competence, knowledge and experience;(c) qualifications; or(d) training;the FCA would expect the firm to assess whether the employee is fit and proper to
In accordance with section 63E of the Act (Certification of employees by relevant authorised persons), a function is an FCA-specified significant-harm function only if, in relation to the carrying on of a regulated activity by a firm, that function:(1) is not a controlled function in relation to the carrying on of that regulated activity by that firm; and(2) will require the person performing it to be involved in one or more aspects of the firm's affairs, so far as relating to
(1) A function is an FCA-specified significant-harm function for a UK relevant authorised person only to the extent:2(a) it is performed by a person from an establishment of the firm (or its appointed representative) in the United Kingdom; or2(b) the person performing that function is dealing with a client of the firm in the United Kingdom from an establishment of the firm (or its appointed representative) overseas.2(2) A function is an FCA-specified significant-harm function
(1) A person who works for an appointed representative of a firm may fall into the certification regime. In practice, however, they may not meet the conditions for the certification regime to apply.(2) One condition for the certification regime to apply to a person is that the person performs a specified significant-harm function under an arrangement entered into by the firm (see SYSC 5.2.4G). However, unlike the equivalent parts of the Act for the approved persons regime, the
(1) If:(a) a firm appoints an individual to perform a function which, but for this rule, would be an FCA-specified significant-harm function;(b) the appointment is to provide cover for a certification employee whose absence is reasonably unforeseen; and(c) the appointment is for less than four weeks;then the performance by that individual of such function does not constitute an FCA-specified significant-harm function.(2) This rule does not apply to FCA-specified significant-harm
SYSC 5.2.27R does not apply to FCA-specified significant-harm function (5) (functions requiring qualifications). Where there is an unforeseen absence of an employee performing a function for which there is a qualification requirement: (1) the firm should take reasonable care to ensure that no employee of that firm performs that function without a valid certificate; and (2) the certificate should be issued before the person starts to perform the function.
(1) 3None of the FCA-specified significant-harm functions extend to an individual (“P”) in relation to a firm if:(a) P is based outside the United Kingdom for the firm; and(b) in a 12-month period, P spends no more than 30 days performing what would otherwise be an FCA-specified significant-harm function for that firm within the territorial scope of this section as described in SYSC 5.2.19R.(2) Paragraph (1) only applies to the extent that P is appropriately supervised by: (a)
Table: FCA-specified significant-harm functions
Function |
Where defined |
(1) CASS oversight |
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(2) Benchmark submission and administration |
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(3) Proprietary trader |
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(4) Significant management |
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(5) Functions requiring qualifications |
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(6) Managers of certification employees |
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(7) Material risk takers |
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3(8) Client-dealing |
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3(9) Algorithmic trading |
(1) If a function falls into more than one of the FCA-specified significant-harm functions in the table in SYSC 5.2.30R, all of those FCA-specified significant-harm functions apply to it.(2) For example, if a person's job involves both FCA-specified significant-harm function (5) (functions requiring qualifications) and (7) (material risk takers), the emergency appointments rule (SYSC 5.2.27R) does not apply to that job.(3) Another example is the rule about the territorial scope
(1) Each of the following is an FCA-specified significant-harm function:(a) in relation to a CASS medium firm and a CASS large firm (other than a CASS large debt management firm), the function of acting in the capacity of a person who is allocated the function in CASS 1A.3.1AR (oversight of operational effectiveness);(b) in relation to a CASS large debt management firm, the function of acting in the capacity of a person who is allocated the function in CASS 11.3.4R (oversight
Each of the following is an FCA-specified significant-harm function:(1) acting in the capacity of a person who is allocated the function in MAR 8.2.3R(1) (benchmark manager); and (2) acting in the capacity of a person who is allocated the function in MAR 8.3.5R(1) (benchmark administration manager).
(1) The function of acting as a senior manager, with significant responsibility for a significant business unit, 2 is an FCA-specified significant-harm function.2(2) For a non-UK relevant authorised person’sbranch in the United Kingdom, the significant management function is limited to business units of the branch.2
A senior manager carrying on the significant management FCA-specified significant-harm function under SYSC 5.2.35R could, for example, be:(1) the head of a unit carrying on the activities of:(a) retail banking;(b) personal lending;(c) corporate lending;(d) salvage or loan recovery; or(e) proprietary trading; or(2) a member of a committee (that is, a person who, together with others, has authority to commit the firm) making decisions in these functions.
For the purposes of the definition of the significant management FCA-specified significant-harm function, the following additional factors about the firm should be considered:(1) the size and significance of the firm's business in the United Kingdom – for example, a firm carrying on designated investment business may have a large number of certification employees (for example, in excess of 100 individuals);(2) the number of regulated activities carried on, or proposed to be carried
(1) Each function involving an activity for which there is a qualification requirement as specified in TC App 1.1.1R (Activities and Products/Sectors to which TC applies) is an FCA-specified significant-harm function.2(2) For a non-UK relevant authorised person, each function involving an activity for which there would have been a qualification requirement, as specified in (1) if the firm had been a UK relevant authorised person, is an FCA-specified significant-harm function.
(1) Subject to (2), each function performed by a member of a firm'sdual-regulated firms Remuneration Code staff (including any person who meets any of the criteria set out in articles 3 to 5 of Commission delegated regulation (EU) No 604/2014 (criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile)) is an FCA-specified significant-harm function.2(2) For the purposes of this section: 2(a) the definition of
3A person (“P”) performs the client-dealing FCA-specified significant-harm function for a firm if:(1) P is carrying out any of the activities in the table in SYSC 5.2.45R; and(2) those activities will involve P dealing with:(a) a person with or for whom those activities are carried out; or(b) the property of any such person;in a manner substantially connected with the carrying on of regulated activities by the firm.
3Table: Activities covered by the client-dealing FCA-specified significant-harm function
Activity |
Comments |
(1) The following activities: (a) advising on investments other than a non-investment insurance contract; or (b) performing other functions related to this, such as dealing and arranging. |
(a) does not include advising on investments in the course of carrying on the activity of giving basic advice on a stakeholder product. |
(2) The following activities: (a) giving advice in connection with corporate finance business; or (b) performing other functions related to this. |
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(3) If the firm does any of the following activities: (a) dealing, as principal or as agent; or (b) arranging (bringing about) deals in investments; taking part in those activities is included. |
(a) and (b) do not include dealing or arranging (bringing about) deals in investments in a non-investment insurance contract. For the activity in this row (3), SYSC 5.2.44R(2)(a) and (b) are expanded to cover also: (a) a person in connection with whom the activities in the first column of this row are carried out; and (b) the property of any such person. |
(4) If the firm is acting in the capacity of an investment manager the following are included: (a) taking part in that activity; and (b) carrying on functions connected to this. |
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(5) Acting as a 'bidder's representative' in relation to bidding in emissions auctions. |
Acting as a 'bidder's representative' has the meaning in subparagraph 3 of article 6(3) of the auction regulation. |
(1) 3Each of the following is an FCA-specified significant-harm function:(a) approving the deployment of:(i) a trading algorithm or a part of one; or(ii) an amendment to a trading algorithm or a part of one; or(iii) a combination of trading algorithms; and(b) each of the following functions: (i) having significant responsibility for the management of monitoring whether or not a trading algorithm; and (ii) deciding whether or not a trading algorithm;is, or remains, compliant with
If a relevant authorised person (A):(1) appoints someone (P) to a specified significant-harm function position; (2) obtains a reference from an ex-employer; and(3) later wishes to renew P’s certificate under the certification regime; it is unlikely that A will need to ask for another reference from that ex-employer or ask for it to be reissued unless there is a change in P’s role of the type described in SYSC 5.2.17G (major changes in role).
(1) If a full scope regulatory reference firm (A):(a) appoints someone (P) to a specified significant-harm function or an approved person position;(b) obtains a reference from an ex-employer (B); and(c) later wishes to: (i) appoint P to another specified significant-harm function or approved person position; or(ii) keep P in the same specified significant-harm function but make a change in P’s role of the type described in SYSC 5.2.17G (major changes in role), whether that change
If:(1) a firm (A) appoints someone (P) to a specified significant-harm function or approved person position;(2) A obtains a reference from an ex-employer (B); (3) later P transfers to a specified significant-harm function or an approved person position with a full scope regulatory reference firm in A’s group (C); (4) B’s reference is:(a) addressed to all firms in A’s group; or(b) otherwise drafted so that it is clear that C may rely on it; and(5) C does not need to ask for the
(1) Where a relevant authorised person needs to fill a vacancy for a specified significant-harm function which could not have reasonably been foreseen, the FCA recognises that it may not be reasonable to expect the relevant authorised person to obtain references prior to issuing a certificate.(2) In such cases, the relevant authorised person should take up the reference as soon as reasonably possible.(3) If a reference obtained later raises concerns about the person’s fitness
3The material in CASS 1A.3.1BG about how CASS 1A.3 fits into the FCA approved persons regime for relevant authorised persons also applies to a CASS small firm and the function in CASS 1A.3.1R. However:(1) the function in CASS 1A.3.1R is not an FCA specified significant-harm function; and(2) the person performing that function will not necessarily be subject to the employee certification regime described in SYSC 5.2 (Certification Regime).
(1) (a) CASS 1A.3.1AR describes the FCA controlled function known as the CASS operational oversight function (CF10a). The table of FCA controlled functions3 in SUP 10A.4.4R3 together with SUP 10A.7.9R3 specify the CASS operational oversight function as an FCA required function4 for a firm to which CASS 1A.3.1AR applies.3(b) The CASS operational oversight function does not apply to a relevant authorised person.3(2) (a) For a firm that is a UK relevant authorised person5, the function
1CASS 11.3.3G(5) to (11)2 also apply to a CASS small debt management firm and the function in CASS 11.3.1R. However:(1) the function in CASS 11.3.1R is not an FCA specified significant-harm function; and(2) the person performing that function will not necessarily be subject to the employee certification regime described in SYSC 5.2 (Certification Regime).
(1) CASS 11.3.4R describes the FCA controlled function known as the CASS operational oversight function (CF10a) in relation to CASS large debt management firms, including not-for-profit debt advice bodies.1(2) As a consequence of CASS 11.3.4R (in conjunction with SUP 10A.4.1R and SUP 10A.7.10R), in a CASS large debt management firm (including a not-for-profit debt advice body fitting into that category) the function described in CASS 11.3.4R is required to be discharged by a director
(1) The guidance in COCON 2.3 applies to relevant authorised persons.(2) The persons in COCON 1.1.2R(1)(a) and (b) are referred to as senior conduct rules staff members. An approved person performing a significant influence function (including a PRA controlled function) in a Solvency II firm or in a small non-directive insurer4 is also a senior conduct rules staff member.2(3) SYSC 5.2.26R provides that a function performed by a non-executive director of a firm acting as such is
(1) COCON applies to the conduct of 6conduct rules staff set out in (2) 6wherever it is performed.(2) 6This rule applies to:(a) a senior conduct rules staff member; and(b) a certification employee performing FCA-specified significant-harm function (7) (material risk takers) in the table in SYSC 5.2.30R for a UK relevant authorised person.
5Under section 63E(1) of the Act, a relevant authorised person (including a credit union) should take reasonable care to ensure that no employee of the firm performs an FCA-specified significant-harm function under an arrangement entered into by the firm in relation to the carrying on by that firm of a regulated activity, unless the employee has a valid certificate issued by that firm to perform the function to which the certificate relates. The definition of employee for these
(1) SYSC 22.9.1R applies to keeping records created before the date this chapter came into force as well as ones created afterwards.(2) A full scope regulatory reference firm does not breach the requirements of this chapter by failing to include something in a reference because it destroyed the relevant records before the date this chapter came into force in accordance with the record keeping requirements applicable to it at the time of destruction.
(1) Twice a year a firm must provide the FCA with a complete report concerning complaints received from eligible complainants about matters relating to activities carried out by its employees when acting as retail investment advisers. The report must be set out in the format in DISP 1 Annex 1C R.104777(2) DISP 1 Annex 1C R requires (for the relevant reporting period) information about:10(a) the total number of complaints received by the firm about matters relating to activities