Related provisions for MCOB 13.3.4C
Table: Examples of how the need for dual FCA and PRA approval in relation to PRA-authorised persons is reduced
1Example |
Whether FCA approval required |
Whether PRA approval required |
Comments |
(1) A is appointed as chief risk officer and an executive director. |
No. A4 is not treated as performing the executive director function.4 |
Yes |
Chief risk officer is a PRA-designated senior management function. A’s functions as a director will be included in the PRA-designated senior management function. To avoid the need for FCA approval, A’s appointment as director should not take effect before PRA approval for the chief risk officer role. |
(2) Same as example (1), except that A will take up the role as an executive director slightly later because 4approval is needed from the firm's shareholders or governing body. |
No |
Yes |
The answer for (1) applies. The arrangements in this section apply if the application to the PRA says that A will start to perform the potential FCA governing function around the time of the PRA approval as well as at that time. |
(3) Same as example (1) but the application to the PRA does not mention that it is also intended that A is to be an executive director. |
Yes, to perform the executive director function.4 |
Yes |
SUP 10C.9.8R does not apply if the application for PRA approval does not say that A will also be performing what would otherwise be an FCA governing function. |
(4) A is to be appointed as chief executive and an executive director. |
No. A is not treated as performing the executive director function.4 |
Yes |
Being a chief executive is a PRA-designated senior management function. A’s functions as a director will be included in the PRA controlled function. |
(5) A is appointed as chief risk officer. Later, A is appointed as an executive director while carrying on as chief risk officer. |
Yes, when A takes up the director role. The executive director function4 applies. |
Yes, when A takes up the chief risk officer role. |
SUP 10C.9.8R does not apply because, when the firm applied for approval for A to perform the PRA chief risk officer designated senior management function, there was no plan for A also to perform the executive director function4. |
(6) A is appointed as an executive director. Later, A takes on the chief risk officer function and remains as an executive director. |
Yes, when A is appointed as director. The executive director function4 applies. |
Yes, when A takes up the chief risk officer role. |
When A is appointed as chief risk officer, A is still treated as carrying on the executive director function4. A retains the status of an FCA-approved person. |
(7) A is appointed as chief risk officer. A then stops performing that role and for a while does not perform any controlled function for that firm. Later, A is appointed as an executive director with the same firm. |
Yes, when A is appointed as an executive director. The executive director function4 applies. |
Yes, when A takes up the chief risk officer role. |
SUP 10C.9.8R does not apply because there is no current PRA approval when A is being appointed as a director. |
(8) A is appointed as an executive director and chief risk officer at the same time. Later, A gives up the role as chief risk officer but remains as an executive director. |
No, on A’s first appointment (see example (1)). But when A gives up the role as chief risk officer, FCA approval is needed to perform the executive director function4. Form E should be used. The application should state that it is being made as a result of A ceasing to perform a PRA-designated senior management function. Form A should be used if there have been changes in A’s fitness (SUP 10C.10.9D(4)) |
Yes, on A’s first appointment. |
When A stops being a chief risk officer, A stops performing a PRA-designated senior management function. However, being an executive director requires FCA approval. A does not have that approval because A did not need it when A was first appointed. The combined effect of SUP 10C.9.8R and the relevant PRA rules is that the firm has three months to secure approval by the FCA. During that interim period, A keeps the status of a PRA approved person performing the director element of the PRA chief risk designated senior management function - which is included in that function under relevant PRA rules. The relevant PRA rules say that, during this transitional period, A is still treated as performing the PRA chief risk designated senior management function and SUP 10C.9.8R says that, for as long as A is performing a PRA-designated senior management function, A does not perform the executive director function4. |
(9) A is appointed as the chief finance officer and an executive director at the same time. Later, A switches to being chief risk officer while remaining as an executive director. |
No |
Yes |
The arrangements in SUP 10C.9.8R continue to apply, even though A switches between PRA-designated senior management functions4 after the PRA's first approval. |
(10) A is appointed chief risk officer and an executive director. A goes on temporary sick leave. A takes up their old job when A4 comes back. |
No, neither on A’s first appointment nor when A comes back from sick leave. |
Yes, on A’s first appointment.6 |
SUP 10C.9.8R still applies on A’s return because A does not cease to have approval for6 the PRA's chief risk function or permanently cease to perform6 what would otherwise have been the executive director function4 just because A goes on temporary sick leave. |
(11) A is appointed to be chair4 of the governing body and chair4 of the nomination committee at the same time. |
No. A does not need approval to perform the chair of the nomination committee function. |
Yes, on first appointment. |
Being chair4 of the governing body is a PRA-designated senior management function. Therefore, the answer for example (1) applies. |
2(12) ‘A’ is to be appointed to perform the Head of Overseas Branch PRA-designated senior management function (SMF19) for a an overseas SMCR firm that is not an EEA SMCR firm.4 A is also an executive director of that firm’sUKbranch. |
No. A is not treated as performing the executive director function4. 3 |
Yes |
A’s functions as a director will be included in the PRA controlled function. |
Note 1: The relevant PRA rules can be found in the parts of the PRA Rulebook listed in SUP 10C.9.6G.4 |
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Note 2: Where one of the examples in this table includes someone being chief risk or finance officer or chair of the governing body, the example assumes that the firm is of a type for which that function is a PRA-designated senior management function.4 |
Variation and cancellation of Part 4A permission and imposition, variation and cancellation of requirements. See SUP 6.2.3A G to SUP 6.2.3E G8
8Question |
Variation of Part 4A permission |
Cancellation of Part 4A permission |
Imposition, variation and cancellation of requirements |
What does the application apply to? |
Individual elements of a firm'sPart 4A permission. Variations may involve adding or removing categories of regulated activity or specified investments or varying or removing any limitations in the firm'sPart 4A permission. |
A firm's entire Part 4A permission and not individual elements within it. |
Any requirement imposed on a firm with a Part 4A permission. Requirements may involve requiring the firm concerned to take or refrain from taking a specified action. |
In what circumstances is it usually appropriate to make an application? |
If a firm: 1. wishes to change the regulated activities it carries on in the United Kingdom under a Part 4A permission (SUP 6.3); or 2. has the ultimate intention of ceasing carrying on regulated activities but due to the nature of those regulated activities (for example, accepting deposits, or insurance business) it will require a long term (normally over six months) to wind down (run off) its business (see SUP 6.2.8 G to SUP 6.2.11 G and SUP 6 Annex 4). |
If a firm: 1. has ceased to carry on all of the regulated activities for which it has Part 4A permission (SUP 6.4); or 2. wishes or expects to cease carrying on all of the regulated activities for which it has Part 4A permission in the short term (normally not more than six months). In this case, the firm may apply to cancel its Part 4A permission prior to ceasing the regulated activities (see SUP 6.4.3 G). |
If a firm: 1. wishes to have a new requirement imposed on it; or 2. wishes to vary or cancel an existing requirement imposed by the FCA or PRA (for example, if anything relating to the firm's individual circumstances change and any existing requirement should be varied or cancelled). |
The Companies Act 1989: section 166
The FCA1 may issue a "positive" direction (to take action) under section 166(2)(a) of the Companies Act 1989: 1 |
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Where in any case a [UK RIE] has not taken action under its default rules- if it appears to [the FCA] that it could take action, [the FCA may direct it to do so,1 1 |
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but under section 166(3)(a) of the Companies Act 1989: |
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Before giving such a direction the [FCA] shall consult the [UK RIE] in question; and [the FCA] shall not give a direction unless [the FCA] is satisfied, in the light of that consultation that failure to take action would involve undue risk to investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the United Kingdom, or that the direction is necessary to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 or in connection with a particular exercise of a power under that Part.1 1 |
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The FCA1 may issue a "negative" direction (not to take action) under section 166(2)(b) of the Companies Act 1989: 1 |
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Where in any case a [UK RIE] has not taken action under its default rules - if it appears to the [FCA] that it is proposing to take or may take action, [the FCA] may direct it not to do so.1 1 |
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but under section 166(3)(b) of the Companies Act 1989: |
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Before giving such a direction the [FCA] shall consult the [UK RIE] in question; and the [FCA] shall not give a direction unless [the FCA] is satisfied, in the light of that consultation that the taking of action would be premature or otherwise undesirable in the interests of investors or other participants in the market, or that the direction is necessary having regard to the public interest in the financial stability of the United Kingdom, or that the direction is necessary to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 or in connection with a particular exercise of a power under that Part.1 1 |