Extending the Senior Managers & Certification

Regime to FCA firms – Feedback to CP17/25

and CP17/40, and near-final rules

Policy Statement
PS18/14***

July 2018
PS18/14 Financial Conduct Authority
Extending the Senior Managers & Certification Regime to FCA firms


How to respond Contents

In this Policy Statement we report on the 1 Overview    3

main issues arising from Consultation
Papers 17/25 Individual Accountability: Part 1: Feedback to CP17/25:
Extending the Senior Managers & Certification
Regime to all FCA firms and 17/40 Individual
Extending the Senior Managers & Certification Regime
Accountability: Transitioning FCA firms to all FCA firms 8
and individuals to the Senior Managers
& Certification Regime. We also publish the 2 Senior Management Functions &
near-final rules. Prescribed Responsibilities    9
We have developed the policy in the 3 Certification Regime    26
underlying rules in the context of the
existing UK and EU regulatory framework. 4 Fit and Proper Requirements  34
We will keep the policy under review to
assess whether any amendments will be 5 Conduct Rules    43
required due to changes in the UK regulatory
framework. This includes changes that result 6 Enhanced Tier – Criteria and Extra Requirements   51
from the UK’s vote to leave the EU.
7 Applying the new regime to incoming UK branches   61
Please send any comments or queries to:
Jon Blankfield / Sophie Stern 8 Changes that affect banking firms and
Governance & Professionalism Policy solo‑regulated firms    65
Financial Conduct Authority
12 Endeavour Square 9 Feedback to our Cost‑Benefit Analysis  68
London E20 1JN
Email:
Part 2: Feedback to CP17/40:
[email protected] Transitioning FCA firms and individuals to the Senior
You can download this Policy Statement
Managers & Certification Regime  72
and all FCA publications from our 10 Transitional Arrangements  73
website: www.fca.org.uk. If you would
like to receive this paper in an alternative 11 Conversion – Core and Limited Scope Firms
format, please call 020 706 0790 or email:
[email protected] or write
(including branches)  76
to: Editorial and Digital team, Financial 12 Conversion – Enhanced Firms  83
Conduct Authority, 12 Endeavour Square,
London E20 1JN. 13 Forms  89
14 Consequentials  98
How to navigate this
15 Changes affecting banking firms  101
document onscreen
Annex 1   
returns you to List of non‑confidential respondents 103
the contents list
Annex 2   
takes you to helpful Abbreviations in this document 108
abbreviations Appendix 1   
Near-Final Rules 110

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1 Overview   

Introduction

1.1 The Senior Managers & Certification Regime (SM&CR) aims to strengthen individual
accountability in financial services.

1.2 In July 2017, we consulted on extending the SM&CR to almost all firms regulated only
by the FCA and not the PRA (‘solo‑regulated’ firms) in Consultation Paper (CP) 17/25
– ‘Individual Accountability: Extending the Senior Managers & Certification Regime to all
FCA firms’. A second CP, CP17/40 – ‘Individual Accountability: Transitioning FCA firms
and individuals to the Senior Managers & Certification Regime’, set out how we proposed
to move FCA firms and individuals from the Approved Persons Regime (APR) to
the SM&CR.

1.3 This Policy Statement (PS) summarises the feedback we got to CP17/25 (Part 1) and
CP17/40 (Part 2), and our response to the feedback received.

1.4 We have provided a separate guide to the SM&CR. This sets out the main features of
the regime and gives the details of how the move to the SM&CR will happen. If your
firm is preparing for the SM&CR, we recommend that you read the guide.

Who does this affect?

1.5 All firms authorised under the Financial Services and Markets Act (FSMA) and regulated
by the FCA will be affected by these changes, as well as European Economic Area
(EEA) and third‑country branches. Insurers are also affected but these firms should
read PS18/15.

1.6 The requirements depend on whether firms are classified as Limited Scope, Core or
Enhanced. Use Figure 1 and Table 1 to identify your firm’s classification.

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Figure 1: Firm Checker Tool

Are you a firm that is currently You are not an
exempt from the Approved Yes
SM&CR firm
Persons Regime?

No

Are you a firm that is

currently subject to a limited You are a Limited
application of the Approved Yes Scope SM&CR firm
Persons Regime?

No

You are a Core SM&CR firm unless one of the following applies:

You are a firm with You are a firm with You are a
You have Assets total intermediary annual revenue mortgage lender
Under Management regulated business generated by or administrator
You are a regulated consumer (that is not a bank)
You are a CASS of £50 billion revenue of
Significant IFPRU credit lending of with 10,000 or
Large firm or more calculated £35 million or
firm £100 m or more more regulated
as a three year more per annum,
rolling average calculated as a three calculated as a three mortgages
year rolling average year rolling average outstanding

You are an Enhanced SM&CR firm

Table 1: Table of Firm Types

Firm type Description
Limited Scope Firm Firms that have fewer requirements than Core firms. This covers all
firms that currently have a limited application of the Approved Persons
Regime, including:
• limited permission consumer credit firms
• all sole traders
• authorised professional firms whose only regulated activities are
non‑mainstream regulated activities
• oil market participants
• service companies
• energy market participants
• subsidiaries of local authorities or registered social landlords
• insurance intermediaries whose principal business is not insurance
intermediation and who only have permission to carry on insurance
mediation activity in relation to non‑investment insurance contracts
• authorised internally managed Alternative Investment Funds (AIFs)
Core Firm Firms that will have a baseline of SM&CR requirements applied.
Enhanced Firm A small proportion of solo‑regulated firms that will have to apply extra rules.

Who this applies to

1.7 People who should read this whole document:

• all solo‑regulated UK firms authorised under FSMA

• EEA and third‑country branches

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1.8 People who only need to read sections of this document:

• firms subject to the Banking SM&CR (Chapters 8 and 15)

• Appointed Representatives1 (Chapters 2, 3, 10 and 13)

1.9 People who don’t need to read this document:

• incoming EEA firms providing cross‑border services only – these firms are out of
scope of the SM&CR

• Payment Services firms that aren’t authorised under FSMA– these firms are out of
scope of the SM&CR

• Insurers and insurance branches (please read PS18/15 for the relevant near-final
rules for these firms)

Context

1.10 This Policy Statement sets out changes to how we will regulate people working in
financial services. The SM&CR replaces the APR for nearly all the firms we regulate.

1.11 The aim of the SM&CR is to reduce harm to consumers and strengthen market
integrity by creating a system that enables firms and regulators to hold people to
account. As part of this, the SM&CR aims to:

• encourage staff to take personal responsibility for their actions

• improve conduct at all levels

• make sure firms and staff clearly understand and can demonstrate who does what

1.12 In March 2016 we applied the SM&CR to banks, building societies, credit unions and
PRA‑designated investment firms ('banking firms'). Subsequent changes to FSMA now
require us to extend the SM&CR to all firms authorised to provide financial services
under FSMA.

1.13 In this PS we summarise changes to our rules to extend the SM&CR to cover all
authorised firms. These rules will apply:

• the Senior Managers Regime (SMR) to FCA solo‑regulated firms. This will focus
regulatory approval on fewer senior individuals in a firm than under the current APR

• the Certification Regime to FCA solo‑regulated firms. This requires firms to

assess the fitness and propriety of specific individuals who could harm the firm, its
customers or the market

1 Limited Permission Consumer Credit firms that also act as Appointed Representatives for other business (eg a limited
permission credit broker that is also an AR for insurance business) are, however, within scope of the extended SM&CR as they are
authorised firms.

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• the Conduct Rules to most staff working in financial services in FCA

solo‑regulated firms

Summary of feedback and our response

1.14 We received 225 responses to CP17/25 and 47 to CP17/40. We have also considered
relevant responses to CP17/26 and CP17/41, which set out proposals for applying the
SM&CR to insurers.

1.15 The vast majority of these responses supported our proposals. Many respondents
also asked for further clarification on how the rules apply. We also received some
suggestions for changes to the proposed rules. In general, we intend to implement the
consultation proposals, but will make some changes in response to this feedback.

1.16 As a result of the responses received, we have made the following changes to our
CP17/25 proposals:

• removed the Prescribed Responsibility (that only applied to Core firms) to inform the
governing body of their legal and regulatory obligations

• provided an easy process for firms to tell us they wish to voluntarily apply a higher
regime tier

• amended three of the Enhanced criteria to smooth single‑year anomalies

• lengthened the time period from 6 to 12 months for a firm to implement the
Enhanced tier, once they have met relevant criteria

1.17 We intend to implement the proposals set out in CP17/40 largely as proposed, but have
made two changes:

• aligned the REP008 reporting period for Limited Permission Consumer Credit firms
with their annual return

• adjusted a number of regulatory forms following specific feedback

1.18 We have concluded that these amendments do not lead to significant changes to the
costs and benefits and hence do not require an additional cost‑benefit analysis (CBA)
under section 138I(5) of FSMA.

1.19 We have updated our CBA and published it alongside this PS. This is because of the
importance of the SM&CR for the financial services sector, changes in the number of
firms in the different tiers, and the complexity of the CBA. The updated document sets
out the CBA in relation to the near-final rules.2

2 LINK

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Equality and diversity considerations

1.20 We have considered the equality and diversity issues that may arise from the new rules
in this PS.

1.21 Overall, we don’t consider our rules adversely impact any of the groups with protected
characteristics, ie age, disability, sex, marriage or civil partnership, pregnancy and
maternity, race, religion and belief, sexual orientation and gender reassignment.

1.22 A consumer body suggested that we review whether the fit and proper requirements
support the recruitment of diverse candidates into leadership positions in firms. We
have responded to this feedback in Chapter 4.

1.23 The same respondent considered that the SM&CR should be used to address diversity
on boards across the industry. While we agree that diversity is an important issue for
firms and industry to address, we don’t think SM&CR is the best mechanism to deal
with this. There are a number of other initiatives at the UK and EU level, including
diversity obligations on firms under MiFID and CRD, that we believe are better
placed to improve diversity. Our supervision teams will continue to impress on senior
management the importance of diversity in their teams, and we may ask firms directly
about gender diversity policies.3

Next steps and implementation dates

1.24 The legal instrument accompanying this PS contains near‑final rules. Although they are
near‑final in most respects, they:

• may be amended by subsequent Handbook changes, for example those relating to

the UK’s exit from the European Union, or SM&CR optimisations

• are not near‑final in respect of benchmark activities, our approach to which we will
consult on separately

• are subject to commencement regulations to be made by HM Treasury

1.25 Firms affected by these changes will move to the new regime on 9 December 2019.
Note that Handbook references in this PS refer to the rules set out in the
accompanying Instrument.

1.26 Firms should check they have the appropriate people in the correct approved functions
before approved individuals are converted from the APR to the SM&CR. This will help to
make the move to the new regime as effective as possible.

3 www.fca.org.uk/news/speeches/women‑finance‑keeping‑pressure‑progress

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Part 1:
Feedback to CP17/25:
Extending the Senior Managers &
Certification Regime to all FCA firms
 Financial Conduct Authority PS18/14
Extending the Senior Managers & Certification Regime to FCA firms Chapter 2


2 Senior Management Functions &

Prescribed Responsibilities   

All UK Limited Scope, Core and Enhanced firms should read this chapter. The feedback for branches is
dealt with in Chapter 7.

2.1 In this chapter, we summarise the feedback we received on our proposed rules and
guidance for applying Senior Management Functions (SMFs) and our response.

Our proposals

2.2 In CP17/25, we proposed applying the following SMFs to Core and Enhanced firms
where they have individuals performing the relevant roles:

• SMF1 – Chief Executive

• SMF3 – Executive Director

• SMF27 – Partner

• SMF9 – Chair

• SMF16 – Compliance Oversight

• SMF17 – Money Laundering Reporting Officer (MLRO)

2.3 We proposed applying a streamlined set of Senior Management Functions to Limited

Scope firms, and additional Senior Management Functions for Enhanced firms.

2.4 We also proposed applying the following Prescribed Responsibilities (PRs) that must be
allocated to Senior Managers in Core and Enhanced firms:
Table 2: Prescribed Responsibilities
Handbook PR Ref. Description
All Core and Enhanced Firms
(a) Performance by the firm of its obligations under the SMR, including
implementation and oversight
(b) Performance by the firm of its obligations under the Certification Regime
(b-1) Performance by the firm of its obligations in respect of notifications and training
of the Conduct Rules
(d) Responsibility for the firm’s policies and procedures for countering the risk that
the firm might be used to further financial crime

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Handbook PR Ref. Description

(z) Responsibility for the firm’s compliance with CASS (if applicable)
Authorised Fund Managers
(za) Responsibility for an AFM’s value for money assessments, independent director
representation and acting in investors’ best interests. This PR only applies to
AFMs. For more details, see CP17/18, MS15/2.3 – Asset Management Market
Study: Final Report and PS18/8.
Enhanced Firms
(c) Compliance with the rules relating to the firm’s Responsibilities Map
(j) Safeguarding and overseeing the independence and performance of the internal
audit function (in accordance with SYSC 6.2)
(k) Safeguarding and overseeing the independence and performance of the
compliance function (in accordance with SYSC 6.1)
(l) Safeguarding and overseeing the independence and performance of the risk
function (in accordance with SYSC 7.1.21R and SYSC 7.1.22R)
(j-3) If the firm outsources its internal audit function, taking reasonable steps to make
sure that every person involved in the performance of the service is independent
from the persons who perform external audit, including:
• supervision and management of the work of outsourced internal auditors
• management of potential conflicts of interest between the provision of
external audit and internal audit services
(t) Developing and maintaining the firm’s business model
(s) Managing the firm’s internal stress‑tests and ensuring the accuracy and
timeliness of information provided to the FCA for stress‑testing

2.5 In CP17/25, we also proposed a PR for ensuring that the governing body is informed
of its legal and regulatory obligations. We have not included this in Table 2 because
we are removing this PR following consultation. Read our response on p. 20 for
more information.

2.6 We proposed that PRs would not apply to Limited Scope firms, and that additional PRs
would apply to Enhanced firms.

Senior Management Functions in the Core tier

Feedback received
Q1: Does the proposed list of Senior Managers in the Core
regime cover the appropriate roles, ie the most senior
decision makers within a firm?

Q2: Are there any other roles that the FCA should consider
specifying as SMFs?

Q3: Are there any proposed Senior Managers that the FCA
should consider excluding from the Core regime?

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2.7 Most respondents supported the list of SMFs proposed for the Core tier and agreed
we had taken a proportionate approach to Core firms.

Scope of Senior Management Functions

2.8 Most respondents agreed that the proposed Senior Manager roles covered the most
senior decision‑makers. They felt that adding too many SMF roles would increase
complexity and firms’ costs. Some respondents asked us to create sector‑specific
SMFs. We were also asked to consider providing the option for firms to choose to have
extra SMFs.

2.9 Some respondents thought that larger or more complex Core firms may have people
doing jobs more suited to the functions defined in the Enhanced tier. They felt that the
proposals concentrate responsibility on a narrow group of executives. They argued
that additional SMFs would help reflect the scale and complexity of these businesses.
Suggestions for additional SMFs in the Core tier included:

• the Enhanced SMF functions equivalent to the CF28 – Systems & Controls function
under APR, ie Chief Finance (SMF2), Chief Risk (SMF4) and Head of Internal
Audit (SMF5)

• the SMF24 – Chief Operations Function

• the SMF18 – Overall Responsibility Function

• the SMF7 – Group Entity Senior Manager Function

2.10 One respondent thought the proposals created too much bias towards second line
functions by excluding managers of major business units but including roles such as
the Money Laundering Reporting Officer (MLRO).

Requests for clarification

2.11 Respondents asked us to clarify if:

• we required an SMF9 – Chair to be a Non‑Executive Director

• the term ‘required functions’ meant that firms needed to appoint people to fill these
roles where they don’t currently have them, and how two of these roles (SMF16 –
Compliance Oversight and SMF17 – MLRO) apply to specific firm types

• all types of partners fall within the definition of the SMF27 – Partner function

• membership of the management body or holding a title matching that of an SMF

would automatically make an individual a Senior Manager

• they could apply the regime at a group level

• individuals performing two or more SMFs would require multiple approvals.

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Our response

Additional Senior Management Functions

Most respondents agreed with our proposals to apply a streamlined set
of SMFs to Core firms. As such, we are confirming the list of functions we
consulted on and are not applying any additional functions to these firms.

We think this is proportionate and focuses accountability on the most

senior people in firms. It isn’t intended to change how firms organise
themselves. For example, even though the Systems & Controls Function
will no longer be approved by us in Core firms, firms can still have
someone performing this role. In addition, the Certification Regime
may, and the Conduct Rules will, apply to these individuals – for example,
as a Material Risk Taker or the Significant Management Function. We
think this is sufficient to improve conduct and enhance accountability in
these roles.

Respondents asked whether they could apply the Enhanced Senior

Management Functions, even if they were in the Core tier. We have
designed the requirements in the Enhanced tier to work as a package.
We have, for example, combined a requirement for Overall Responsibility
with a requirement for Responsibilities Maps and the ability to use SMF18
as an additional ‘catch all’ function. We don’t propose to allow firms
to only adopt parts of the Enhanced tier. We think this could obscure
accountability if there is only an ad hoc application of the Enhanced rules
and make it more complicated for us to supervise firms. We will, however,
make it easier for firms to opt into the Enhanced tier as a whole. See
page 55 for more detail on this.

Definitions of Senior Management Functions

Each Senior Management Function has a specific definition that is set
out in SUP 10C of our Handbook. Firms should consider the definitions
of each SMF when thinking about if and how they apply. For example, the
fact that someone has the title of director doesn’t mean that they will
necessarily hold the Executive Director SMF – they need to meet the
definition of an Executive Director in our rules. Similarly, members of an
Executive Committee are not automatically Senior Managers. The SMR
will only apply if the individuals on the committee meet one of the SMF
definitions – for example, an Executive Director.

We confirm that the SM&CR rules allow a firm’s Chair to be either

Executive or Non‑Executive.

Required functions
The term ‘required function’ is an existing definition under APR that
we proposed carrying over to the SM&CR. It’s intended to categorise
those functions that we require some types of firms to have under
other sections of our Handbook. For example, under the Markets in
Financial Instruments Directive (MiFID) II, some firms need to have a
Compliance Oversight Function. Some firms don’t currently need to
comply with these requirements and the SMR doesn’t change this.
For example, if a firm doesn’t need to have someone in the Compliance
Oversight or MLRO functions under the APR, they won’t need to under

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the SM&CR. Firms should already know whether these functions apply
to them or not.

Holding more than one Senior Management Function

As set out in CP17/25, if a person performs more than one SMF, they
will need to apply for approval for each function. This can be done at the
same time and using the same Form A for all functions.

Group application
The SM&CR applies to legal entities, rather than to groups. This is set
out in FSMA. As such, we don’t have discretion to take a group‑wide
approach to applying the SM&CR.

Instead, we will allow firms to opt into the Enhanced tier if they wish.
We have set out more detail on this in our answer to Q21, in Chapter 6.
This should allow groups to take a consistent approach across different
legal entities if they wish to. The SM&CR is designed to be proportionate,
so firms should only opt up if they are prepared to apply and comply with
the extra requirements of the Enhanced tier. There is no expectation on
firms to opt into the Enhanced tier for the sake of having more SMFs.

Partners
Only partners that meet the definition of the SMF fall under the Senior
Managers Regime. As we set out in CP17/25, we think most partners
will have some involvement in managing a firm, although we recognise
that this won’t be the case in every partnership. It is for firms to decide
whether a Partner performs an SMF, based on our rules and guidance
in SUP 10C.5. The guidance in the Handbook allows firms to consider
other circumstances which may mean a partner does not meet the
SMF definition.

If a firm’s principal purpose isn’t to carry on regulated activities (eg

a professional services firm), then the partner function only applies
to the extent that a partner has responsibility for a regulated activity.
For example, the partner function won’t apply if a partner’s regulated
activities are only incidental to their professional services. Our rules and
guidance in SUP 10C.5.19 and 10C.5.20 contain more detail on this.

Before they move from the APR to the SM&CR, we encourage firms
to consider whether partners currently approved under CF4 – Partner
Function meet the SMF definition. If they don’t, then Core firms will
need to submit a Form C to cancel that Partner’s approval. Enhanced
firms can simply leave this individual out of their submitted Form K and
the individual’s function will not be converted.

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Senior Management Functions in the Limited Scope tier

Feedback received
Q4: Do you agree with our approach to Senior Management
Functions for Limited Scope Firms? If not, please
explain why.

2.12 Most respondents supported the list of SMFs proposed for the Limited Scope tier.

2.13 However, some considered the criteria for identifying Limited Scope Firms were
unsuitable. They suggested that only using regulatory permissions could create an
uneven playing field for similar firms who would fall in the Core tier. For example, two
firms offering consumer credit could have different permissions, but only one would be
Limited Scope. They felt that the conduct risk posed by consumer credit and insurance
intermediary firms meant the Core tier should apply to them in all cases.

2.14 Other suggestions included expanding the firms under the Limited Scope tier to
include all authorised professional firms (APFs), sole traders with up to 4 employees,
or owner managed businesses.

2.15 Respondents also asked us to clarify how the regime applies to

Appointed Representatives.

Our response

We are implementing the SMFs for Limited Scope firms as consulted on.

Criteria for Limited Scope firms

The criteria for Limited Scope firms mirrors how the APR applies at the
moment. Under the APR, firms with certain permissions don’t need to
apply some of the controlled functions.

We think this is proportionate and reflects the different risks and

business models of firms with these types of permissions. As these
are permissions‑based, we don’t think this will create an uneven playing
field. This is because firms with the same permissions will have the same
elements of the SM&CR apply to them.

The fundamental requirements of the SM&CR apply in the same way

to almost all firms. Senior Managers are approved by the FCA and are
subject to the Duty of Responsibility and the Certification Regime and
the Conduct Rules apply to almost all firms. All these elements combined
will increase individual accountability and improve standards of conduct,
whether a firm falls in the Limited Scope, Core or Enhanced tier.

We considered whether it was appropriate to amend the rules to make all

APFs Limited Scope but have decided to maintain the existing criteria for
limited application of the APR in the move to the SM&CR. This is because
we think only those APFs that do non‑mainstream regulated activities
should fall in the Limited Scope tier. It is highly unlikely that these firms
will need to apply the Certification Regime or Conduct Rules to staff
whose roles that have nothing to do with financial services or regulated

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activities. However, it is for APFs to make their own assessment of

whether or not individuals conduct activities that bring them into the
scope of the Certification Regime or Conduct Rules.

All sole traders are already in the Limited Scope tier, even if they
have employees.

Appointed Representatives
There are some changes that will interest Appointed Representatives
(ARs) of firms. However, the extension of the SM&CR proposed in
CP17/25 doesn’t affect individuals and Approved Persons working at
ARs. This is because the relevant legislation doesn’t give us the power to
extend the SM&CR to ARs.

As a result, the provisions of the APR and the relevant APR controlled
functions still apply to ARs. Principal firms remain fully responsible for
their ARs and networks meeting our rules. Senior Managers at these
firms must make sure that this happens.

One exception is for Limited Permission Consumer Credit firms that also
act as ARs for other business (eg a limited permission credit broker that
is also an AR for insurance business). These firms fall within scope of the
extended SM&CR as they are authorised firms.

Required functions
Limited Scope Firms may need to have a Compliance Oversight
Function or MLRO under another section of our Handbook. If they
don’t, then firms don’t have to appoint people to these roles for
the SM&CR.

Senior Management Functions in the Enhanced tier

Feedback received
Q22: Do you agree with our proposed Senior Management
Functions for Enhanced firms?

Q23: Do you agree that this will ensure the most senior people
in firms are covered by the Senior Managers Regime,
regardless of organisational structure? If not, please
explain why.

2.16 The majority of respondents supported the list of SMFs proposed for the
Enhanced tier.

2.17 Some respondents suggested that we include extra functions within the Enhanced
tier. These included:

• Chief Credit Risk Officer

• Chief Information and/or Technology Officer

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• Chief Investment Officer

• Head of Human Resources

• all Non‑Executive Directors

• a number of sector‑specific SMFs

• the Chair of the Conduct Committee

2.18 There was a concern that the proposals won’t work at group level if the subsidiaries of
regulated firms don’t have independent Board and Committee frameworks. Another
respondent suggested that the Enhanced tier does not reflect how the investment
management industry operates because these firms will typically be structured by
‘function’ or ‘centre for excellence’ on a group rather than entity basis.

2.19 Some respondents asked us to clarify the difference between functions. For example,
differences between the Head of Internal Audit and the Chair of the Audit Committee,
and the Senior Independent Director and the Chair.

2.20 One respondent suggested that we shouldn’t make chairs of committees SMFs,
as these individuals may already be covered under other SMF roles. We were also
asked how the SM&CR applies to Company Secretaries and whether the SMF7 –
Group Entity Senior Manager Function can act as Chair of the subsidiaries without
separate approval.

2.21 There was a call for greater alignment between the PRA and FCA definitions of the
Chief Operations Function (SMF24). One respondent noted that the PRA currently
allow the SMF24 function to be split across a maximum of 3 people. Another
respondent suggested that the FCA introduce a PR for operational continuity instead
of SMF24 for both FCA and the PRA regimes.

2.22 We were asked to consider applying the PRA Head of Key Business Area Function
(SMF6) to Enhanced Firms as it was suggested this could be more appropriate than
SMF18 – Other Overall Responsibility Function. One respondent suggested that
we should review the potential overlap between the definition of SMF18 and the
Significant Management Function under the Certification Regime. Many respondents
requested clarity on the status of the Head of the Legal Function.

2.23 We were asked whether the SM&CR would force firms to have committees they
haven’t needed to in the past, as a result of making some Chairs of Committees SMFs.

2.24 Respondents asked us:

• how the functions of the Chair of the Risk and Audit Committees apply to firms if
they don’t have Non‑Executive Directors

• for more guidance on identifying SMFs where there is a parent/subsidiary

relationship between different entities that will come under the SM&CR

2.25 We received some feedback that updating the Statements of Responsibilities following
significant changes was too burdensome.

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Our response

Additional Senior Management Functions

We have considered the feedback and decided to implement the SMFs
for the Enhanced tier as proposed in CP17/25.

We believe using SMF18 for Enhanced firms is the best way to capture
individuals with Overall Responsibility for a firm’s business area or activity
of the firm if they aren’t performing another SMF. Many different types
of firms come in scope of the FCA’s regime, so we think this function
gives Enhanced firms the flexibility to apply the SMR without having to
specify a series of detailed roles. This allows firms to allocate Overall
Responsibility in way that reflects their business models and governance
structures in the way they consider is most appropriate.

We believe that the Enhanced tier reflects how investment management

firms operate. The regime has been designed so that the functions
apply where the firm has someone performing these roles, allowing it
to accommodate different business models. SMF18 lets firms apply
the SMR to someone with Overall Responsibility for an area if they
have not already been captured as a Senior Manager under another
specified function.

We would only expect the Company Secretary to be approved as a

Senior Manager if they either:

• carry out another SMF

• hold Overall Responsibility for an activity, business area or

management function

SMF18 and Significant Management Function

The Other Overall Responsibility Function (SMF18) will apply if someone
has Overall Responsibility for any of the activities, business areas or
management functions of an Enhanced firm, and are not already
performing another SMF. Firms won’t need to apply the Significant
Management Function to this individual under the Certification Regime
if the management of their business unit comes within their SMF.
The Significant Management Function will apply to senior staff that have
significant responsibility for a significant business unit, but who don’t
have Overall Responsibility for that area in the firm. This may include, for
example, an individual managing a significant part of the firm’s business,
reporting to a Senior Manager.

Senior Management Function definitions

Our Handbook sets out the definitions of each SMF. We have considered
respondents’ feedback and believe the definitions clearly distinguish
between the different types of functions. For example, the Head of
Internal Audit is an executive management role, whereas the Chair of the
Audit Committee is an oversight and review role, often performed by a
Non‑Executive (but not always).

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Director functions
Our Handbook definitions of the Chairs of Committees under SUP
10C.5A don’t mandate whether these must be held by Executive or
Non‑Executive Directors. There may be other requirements or good
governance practices that dictate whether these Chair roles are held
by a Non‑Executive or Executive Director. The SMR is designed to
accommodate both.

We recognise that if a Chair role is currently held by an Executive Director,

this person will already have been approved under the APR Director
Function (CF1). This function will be converted to the Executive Director
Function (SMF3) and the individual will need to apply separately for the
SMF9 – Chair function. They will need to hold both functions to act as
Executive Chair. We still require approval for each of the functions an
individual holds as this will make the roles they perform clearer. Firms
should include all of an individual’s responsibilities in the one Statement
of Responsibilities (SoR).

Groups
Under FSMA we need to apply the SM&CR on a legal entity basis. We
recognise that many Enhanced firms will be part of a wider group, so we
have designed the regime to accommodate complex groups and matrix
structures as much as possible, using, for example, the SMF7 – Group
Entity Senior Manager Function.

If a firm’s structure prevents it from clearly allocating responsibilities, this

suggests there is risk that the firm should address. Because Enhanced
firms will need to allocate ‘Overall Responsibility’, this may mean that
some firms will need to formalise existing arrangements between the
Board and individuals so that the individual becomes a Senior Manager
of the legal entity. For example, if the Board has delegated Overall
Responsibility for a function to someone outside the legal entity. We
don’t want to prescribe what sort of arrangement would be needed
to formalise an individual’s responsibilities, but this might be through a
contract of employment or through formal board delegation.

Committee Chairs
Firms don’t have to set up committees as a result of the SM&CR. It is
only where firms have these committees – whether because they are
required to under other rules or because they choose to – that the Chair
will be a Senior Manager. We have made this clearer in our guidance
in SUP10C.

Chief Operations Function

In CP17/40 we proposed extra guidance in SUP 10C about the areas of
responsibility we would expect to be relevant to the Chief Operations
Function. This guidance more closely aligns the role with the current
SMF24 – Chief Operations Function for banks and insurers.

We have not proposed a PR for operations because this would require all
firms to allocate this responsibility in a specific way. The Chief Operations
Function gives firms more flexibility to meet our requirements in a way

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that reflects their business model and governance structure. It does not
require firms to hire someone to fill the Chief Operations role.

In SUP 10C.6B we have set out a number of examples of how the SMF24
– Chief Operations Function could apply. We don’t expect or require firms
to change how they currently allocate responsibility for managing their
internal operations or technology. Instead, the function will clarify how
this responsibility is allocated within the firm. We don’t insist that all these
responsibilities are held by one person and the examples in the guidance
recognise this.

Head of Legal
CP17/25 highlights that the Overall Responsibility requirement currently
includes the legal function (ie there is no specific exemption for this
function). This policy is under review following industry feedback and the
position will be clarified by a further consultation before the rules in this
PS come into force. We will make final rules on this issue before the start
of the SM&CR for solo‑regulated firms.

Significant changes and Statements of Responsibilities

Every Senior Manager must have a SoR, and update it whenever there is
a significant change to their responsibilities. This is a requirement that
comes from legislation. To help firms, we have provided some examples
in SUP 10C.11.6 of potential changes which could trigger the need to
resubmit a Statement of Responsibilities using Form J.

A Senior Manager will need to have one SoR for every firm where
they perform an SMF. If a Senior Manager performs multiple SMFs in
a single firm, this should all be included in the one SoR. If someone
performs SMFs in different firms across a group, they will need one
SoR for every firm (legal entity) within it.

Prescribed Responsibilities in the Core tier

Feedback received
Q5: Do you agree with our proposed list of Prescribed
Responsibilities? If not, please explain why.

2.26 In CP17/25, we proposed 6 responsibilities (‘Prescribed Responsibilities’) that

must be given to Senior Managers. We also outlined an additional responsibility for
Authorised Fund Managers (AFMs) in CP17/18. These responsibilities are intended
to ensure a Senior Manager is accountable for the SM&CR and for key conduct and
prudential risks.

2.27 The majority of respondents agreed with our proposed list of Prescribed
Responsibilities (PRs). Some suggested that we use the same PRs for both Core and
Enhanced firms.

2.28 There were some concerns with our proposals for the PR for informing the
governing body of legal and regulatory obligations. Respondents thought that it was

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inappropriate to assign this responsibility to one individual. In many firms, this is divided
across different individuals such as the Company Secretary, the General Counsel and
the Compliance Officer.

2.29 Several respondents felt that in small firms the CEO and Compliance Oversight
Function will be given most of the responsibilities. We were asked to clarify whether
PRs should be allocated to the most appropriate Senior Manager that sits on the
Board. Similarly, some respondents asked us to expand on our expectations of
sharing PRs.

2.30 Some respondents suggested that we widen the list of PRs to cover areas such as
culture, complaints handling and risk management.

2.31 There were requests for clarity about whether firms need to assign the PR for the
Certification Regime if firms have no Certified Staff. One respondent asked if the PR
for Conduct Rules extended to Appointed Representatives, or whether it is limited to
‘own staff’ of a firm.

Our response

Legal and Regulatory obligations PR

We have considered the feedback we received on the PR for legal
and regulatory obligations. We agree with respondents’ concerns
that this may not be appropriate to allocate to one Senior Manager
in solo‑regulated firms. We have therefore removed this PR from our
near‑final rules. Under the Conduct Rules, Senior Managers must already
ensure that the business area for which they are accountable complies
with the relevant requirements and is controlled effectively. We consider
this is adequate to balance out any risks from removing this PR.

Who to allocate PRs to

It is for firms to consider which Senior Manager is the best person to hold
each PR. PRs should not be shared across different lines of defence.

For example, one of the PRs that must be allocated by Core firms is
responsibility for the firm’s policies and procedures for countering the
risk that the firm might be used to further financial crime. If an SMF3
– Executive Director of a firm is accountable for the firm’s policies and
procedures on financial crime, we would expect the PR to be allocated
to that individual, even if the firm’s compliance function also supports by
providing oversight of these policies and procedures.

In this scenario, we would not expect the PR to be split or shared

between the SMF3 – Executive Director and the SMF16 – Compliance
Oversight. If the SMF16 – Compliance Oversight wishes to specify
that their areas of responsibility include oversight of the firm’s policies
and procedures on financial crime, this could be included in the
“Supplementary Information” section of their SoR.

When allocating PRs firms will need to think about which Senior Manager
is the most senior person accountable for an issue. For example, if the
person performing the SMF17 – MLRO is not responsible for all aspects

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of financial crime, then the PR for financial crime should not be allocated
to this person. It must instead be allocated to the Senior Manager
accountable for all financial crime matters.

We confirm that Core firms are not required to allocate PRs to only those
Senior Managers who sit on the Board.

Does the Certification PR apply if there are no Certification

Functions?
We recognise that there will be firms without any Certified Staff.
However, the PR for the firm’s performance of its obligations under the
Certification Regime still needs to be allocated. This is because the
firm still needs to identify whether there are employees carrying out
Certification Functions. There should be a Senior Manager accountable
for this.

Dividing and Sharing Prescribed Responsibilities

We don’t consider that dividing and sharing PRs should be a common
practice across firms. But we do recognise that there might be limited
circumstances where this can happen. Firms must be able to show that
this is appropriate and justifiable and that it doesn’t leave a gap or create
an overlap in responsibilities.

Additional Prescribed Responsibilities and ‘Culture’ PR

Most responses to the consultation agreed with our proposed list of
PRs. As such, we don’t propose applying any additional PRs to Core firms.
We think this is proportionate and focuses accountability on key conduct
and prudential risks.

We haven’t introduced a PR for culture as we consider every individual in

a firm to be accountable for the firm’s culture, from the governing body
down. This reinforces our own focus on culture and governance, and is
one of our top priorities for firms.4

In addition, all Senior Managers have a particular role to play in driving

an appropriate culture and should take accountability for their actions,
shaping the firm’s culture by taking accountability for their own behaviour
and taking reasonable steps to manage the behaviour of those in their
area of responsibility.

Culture will also be reinforced by applying the Conduct Rules throughout

every level of a firm. The Conduct Rules aim to drive up standards of
individual behaviour in financial services and shape a firm’s culture,
standards and policies as a whole.

We view this responsibility holistically. So we also think that Boards should

be collectively responsible for setting and monitoring firms’ cultures.
Boards need to ensure culture remains high on their agenda and be able
to demonstrate how they satisfy themselves that the firm’s culture does
not cause harm.

4 In March 2018 we published a Discussion Paper on transforming culture in financial services. This is part of our drive to promote a
discussion and consensus on the essential features of a healthy culture within financial services. For more information, read DP18/2
– ‘Transforming Culture in Financial Services’.

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Scope of the Conduct Rule Prescribed Responsibility

The scope of individuals covered by the PR for the Conduct Rules
is the same as how the Conduct Rules apply to the firm. We have
addressed the scope of staff under the Conduct Rules in Chapter 5.

Prescribed Responsibility for Authorised Fund Managers

Feedback received
Q6: Do you agree with our proposed Prescribed Responsibility
for AFMs as set out in CP17/18? If not, please explain why.

2.32 In CP17/25, we proposed a PR for Authorised Fund Managers (AFMs). CP17/18

described the responsibility for an AFM’s value for money assessments, independent
director representation and acting in investors’ best interests.

2.33 Respondents agreed with our proposed PR. Some requested clarity on the allocation
of this PR. They asked if it should be allocated to an Executive or a Non–Executive
Director. They also requested clarity on whether this PR should be allocated to the
SMF9 – Chairman.

2.34 Some respondents felt that introducing the PR would result in Compliance Officers
challenging less in owner‑managed firms, because this PR can only be exercised by
senior executives.

2.35 A small number of respondents suggested an additional PR for managing conflicts of

interest where investment management companies manage investments for retail
clients, institutions or other entities within their group.

2.36 One suggestion was that we split this PR into two separate PRs to cover the following
two responsibilities:

• AFMs’ value for money assessment and acting in the investors best interest

• appointing an independent director

Requests for clarification

2.37 One respondent asked whether the PR for value for money, independent director
representation and acting in investors’ best interests would only apply to AFMs.

2.38 Several others queried how much the value for money process is a collective Board
responsibility, or an individual one.

2.39 One respondent asked if the individual holding the SMF14 – Senior Independent
Director Function can hold the PR for an AFM’s value for money assessments,
independent director representation and acting in investors’ best interests.

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Our response

We set out our intention to implement the AFM PR in PS18/8.5 This PR

will take effect from the start of the extended SM&CR.

The AFM PR forms part of remedies coming out of the Asset

Management Market Study. It only applies to Authorised Fund Managers
and, where the firm has an individual approved in the SMF9 – Chair
function, the PR should be allocated to this individual. Where an AFM
doesn’t have an SMF9 – Chair, they must assign the PR to another
appropriate Senior Manager. The Asset Management Market Study
remedies assign all three elements of this PR to the Chair. We don’t
consider it appropriate to sub‑divide them.

In CP17/18, we noted that there are benefits to appointing either an

executive or independent member of the board as Chair. We consulted
on rules that would allow an AFM Board to make this decision itself.
The SMF9 – Chair role can be either executive or non‑executive.

In PS18/8 we explained that value for money assessments should not

focus purely on costs. Fund charges should take into account the context
around the whole service provided.

Managing conflicts of interest is important and should be included in

a Senior Manager’s SoR if it forms a significant part of their role.

Prescribed Responsibilities in the Enhanced tier

Feedback received
Q24: Do you agree with our proposals for Prescribed
Responsibilities in Enhanced firms? If not, please
explain why.

2.40 CP17/25 proposed applying an additional seven PRs for Senior Managers in Enhanced
firms, on top of the Core PRs.

2.41 The majority of respondents supported the list of PRs proposed for Enhanced firms.

2.42 Some respondents suggested that we allow individuals holding the SMF18 – Other
Overall Responsibility to be allocated PRs other than CASS compliance.

2.43 Several respondents didn’t think that firms should allocate the PR for developing and
maintaining the firm’s business model to a single individual. They argued that this
should be a collective responsibility allocated to the Board. They asked us to explain
how we will measure reasonable steps for this PR.

2.44 One suggestion was to create a single set of PRs for both Core and Enhanced Firms.
The same respondent recommended aligning PRs for solo‑regulated firms, insurers

5 PS 18/8 – Asset Management Market Study remedies and changes to the handbook

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and the PRA list. This would create a common set of PRs across both solo and
dual‑regulated firms.

2.45 There were some questions over the oversight PRs and the PR for managing the firm’s
internal stress‑tests. Respondents asked if they would apply to Enhanced firms that
are exempt from the relevant requirements in the SYSC section of our Handbook.

Our response

We are implementing the PRs for Enhanced firms as consulted on.

Overall Responsibility and PRs

In CP17/25, we proposed applying an ‘Overall Responsibility’ requirement
to all Enhanced firms. This means that an Enhanced firm will need to
ensure that every activity, business area and management function
has a Senior Manager with Overall Responsibility for it. This is to prevent
unclear allocation of responsibilities that could result in issues falling
between the cracks.

The most senior person with Overall Responsibility might already be

an existing Senior Manager. Our proposals noted that we expected this
to be the case most of the time. As we didn’t receive feedback that
disagreed with this, we are maintaining the position as consulted on
and consider it appropriate to restrict the allocation of other Prescribed
Responsibilities (other than the CASS compliance) to the SMF18. This
will reinforce a culture of accountability and encourage firms to identify
who actually has Overall Responsibility at the most senior level, for each
of its activities, business areas and management functions.

Prescribed Responsibility for developing and maintaining the firm’s

business model
The specific accountabilities of individual Senior Managers add to
and complement the collective responsibility shared by directors as
members of the Board. Ultimately, the Board remains collectively
accountable for developing and maintaining the firm’s business model.
The PR for the business model provides further focus on this and
ensures that this does not ‘fall between the cracks’. We expect the Senior
Manager with the PR for developing and maintaining the firm’s business
model to give directors the time and opportunity to contribute to
develop the firm’s business model, and to provide appropriate challenge,
before final sign‑off by the Board.

Prescribed Responsibilities for both Core and Enhanced firms

We have deliberately taken a different approach to the requirements
that apply to Core firms and Enhanced firms. This is because of the
breadth of the population that will now come under the extended
SM&CR. Additional PRs apply to Enhanced firms to reflect the specific
risks in relation to governance in larger firms. For example, a number are
designed to be held by Senior Managers that chair key committees. We
don’t believe it would be proportionate or practical to apply the Enhanced
PRs to all Core firms.

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Prescribed Responsibilities connected to underlying requirements

There are some PRs that only apply if the firm is subject to the
underlying requirement in SYSC. This is set out in the description of
the PRs in SYSC 24.2.6. For example, the PR for managing the firm’s
internal stress tests only applies to a firm to which SYSC 20 applies.
In addition, the CASS PR only applies to a firm to which CASS applies.

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3 Certification Regime   

Who should read this chapter?

All firms should read this chapter.

Our proposals

3.1 In CP17/25 we proposed 8 Certification Functions, building on existing functions in

the Approved Persons Regime. These functions apply to all firms where they have
individuals performing the roles.

3.2 The Certification Regime covers people who aren’t Senior Managers, but whose jobs
mean they can have a significant impact on customers, the firm or market integrity.
We won’t approve these individuals, but firms will need to check and confirm (‘certify’)
at least once a year that these people are suitable to do their job. This is a requirement
under FSMA.
Table 3: Certification Functions
Certification Function Overview
Significant Management These individuals perform functions that would have been Significant
Function (current CF29) Influence Functions under the APR.
Proprietary traders These important roles can seriously affect how the firm conducts
(also covered by its business.
current CF29)
CASS Oversight
Function (current CF10a)
Functions subject to This includes, for example, mortgage advisers, retail investment advisers
qualification and pension transfer specialists. The full list is set out in our Training and
requirements Competence Sourcebook.
The client This function has been expanded from the CF30 function under APR to
dealing function apply to any person dealing with clients, including retail and professional
clients and eligible counterparties.
This will cover people who:
• advise on investments (other than a non‑investment insurance contract)
and perform other related functions, such as dealing and arranging
• deal, as principal or agent, and arrange (bring about) deals in investments
• act in the capacity of an investment manager and all functions connected
with this
• act as a bidder’s representative

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Certification Function Overview

Anyone who supervises This will ensure that people who supervise certified employees are held
or manages a Certified to the same standard of accountability. It also ensures a clear chain of
Function (directly or accountability between junior certified employees and the Senior Manager
indirectly), but isn’t a ultimately responsible for that area. For example, if a firm employs a
Senior Manager customer‑facing financial adviser, every manager above them in the same
chain of responsibility will have to be certified (until the Senior Manager
approved under the SMR is reached).
Material Risk Takers The concept of Material Risk Takers (also known as Remuneration Code
staff) already exists for firms under our remuneration rules (SYSC 19).
They are a category of staff that all firms under AIFMD, UCITS, IFPRU and
BIPRU are already required to identify under our remuneration regime.
These firms need to consider all types of risk when identifying their
Material Risk Takers. This includes prudential, operational, conduct and
reputational risks. All of these Material Risk Takers will be covered by this
certification function.
Algorithmic trading This function includes people with responsibility for:
• approving the deployment of a trading algorithm or a material part of one
• approving the deployment of a material amendment to a trading
algorithm or a material part of one, or the combination of
trading algorithms
• monitoring or deciding whether or not the use or deployment of a trading
algorithm is or remains compliant with the firm’s obligations

3.3 We also asked for feedback on whether individuals performing these functions should
appear on a public register.

3.4 This chapter sets out the feedback received to our proposed:

• Certification Functions

• territorial application of the Certification Regime

3.5 We included feedback on whether details of Certified Staff should be included on

a public register in the proposals made in CP18/19 - 'Introducing the Directory'. We
don’t address it here.

Certification Functions

Feedback received
Q7: Do you agree with the functions we have proposed
making Certification Functions? If not, please explain why.

Q8: Are there any other functions that we should make a

Certification Function?

3.6 The majority of respondents supported our proposed Certification Functions.

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3.7 A number of respondents felt that the breadth of individuals in scope of the
Certification Regime was not proportionate. One respondent suggested that the term
‘significant harm function’ should be replaced with ‘significant responsibility function’.

3.8 Others noted that the new definition of the Client Dealing Function could extend the
Certified population to include relevant junior and call centre staff. Some suggested
that the Certified population should only capture current CF30s or other roles such
as mortgage advisers, staff involved in designing products sold to retail investors, and
anyone approving financial promotions.

3.9 There was a concern that certain roles were excluded from the Certification Regime.
Respondents suggested including people handling complaints and corporate finance
activity. They proposed a number of additional Certification Functions. We were asked
to clarify whether a range of roles, including those at Appointed Representatives, were
in scope of the Certification Regime. Commonly suggested functions included:

• Head of HR

• Complaints Handling

• Head of Product Design

• Non‑SMF Partners

3.10 Several respondents commented that the definition of the term ‘Material Risk Taker’
(MRT) differs under UCITS, AIFMD and CRD, and suggested aligning these. Another
said that the MRT definition can cause the MRT populations to vary each year.

3.11 Some respondents wanted us to provide guidance on how firms should decide if
someone is performing the Significant Management Function.

3.12 Concerns were raised about the practical implementation of Certification in

firms where regulated activities form a small part of the overall business. Another
respondent asked whether individuals undertaking unregulated activities should
be certified.

3.13 More information was requested on how a firm should decide whether someone
should be a Senior Manager or certified. Some respondents felt that this is particularly
difficult where they have flat organisational structures. We were also asked whether
contractors and secondees should be certified.

3.14 Another respondent asked that the 4 week period for emergency appointments to
certification functions be extended to 12 weeks. This would then align with Senior
Managers. Another suggested a transitional period for firms to certify staff, noting that
some firms would have a large number of individuals to certify.

Requests for clarification

3.15 Respondents asked us for more information on a number of points:

• how Certification would apply to smaller firms

• how to apply the Algorithmic Trading Function to firms that use a trading algorithm
provided by another firm

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• if ongoing Certification requires the same depth or detail as initial Certification

• whether firms are required to certify individuals who perform multiple functions
across a group multiple times

• how Training and Competence rules, which allow trainees to undertake a role under
supervision should be reconciled with the certification requirements

Our response

We are implementing the Certification Regime as consulted on.

The Certification Regime

The term ‘Significant Harm Function’ comes from FSMA. It describes
a person performing these functions as someone ‘involved in one
or more aspects of the firm's affairs, so far as relating to a regulated
activity, and those aspects involve, or might involve, a risk of significant
harm to the firm or any of its customers’. A ‘specified Significant Harm
Function’ is a Significant Harm Function that has been specified by the
FCA in rules. The Certification Regime applies to specified Significant
Harm Functions. In our Handbook, we have changed the term to ‘FCA
Certification Function’ instead.

The regime only applies if the firm has individuals performing a

Certification Function, where it relates to a regulated activity. It applies to
individuals within a regulated firm who meet the definition of one or more
Certification Functions. If a Senior Manager performs one of these roles
and it isn’t related to their SMF, then they will also need to be certified.

For example, if someone is approved as an SMF and also meets the

definition of the Client Dealing Function under the Certification Regime,
they must be certified for the latter function. In practice, once we
have approved someone as an SMF, firms may decide to assess the
individual’s fitness and propriety for both roles in one assessment on an
ongoing basis or at least once a year.

Certification is intended to ensure that firms assess their staff as fit and
proper on a regular basis. It is for firms to decide the best way of meeting
the requirements. Firms don’t need to adopt the same criteria for fitness
and propriety regardless of a person’s seniority or role. We expect firms
to act in a proportionate manner. This means that, for example, where a
trainee retail investment adviser practises under supervision, they can be
certified as fit and proper for the Client Dealing Function on the condition
that they still meet basic standards and are supervised.

We considered extending the 4 week emergency period to 12 weeks

but have decided not to amend this rule. The 12 week period for
Senior Managers reflects that processing a new approval takes time.
Certification Functions don’t have to be approved by us, so firms should
be able to complete the relevant certification processes in 4 weeks.

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Scope of the Client Dealing and Algorithmic Trading Functions

The scope of the new Client Dealing function is broader than the
CF30 – Customer Function under the APR. It covers anyone advising
or dealing for clients, including retail and professional clients and
eligible counterparties. This means that there will be staff who were
not previously CF30s, but who will be performing the Client Dealing
Function. It does not cover advising or arranging non‑investment
insurance products.

The Algorithmic Trading Function covers individuals with

responsibility for:

• approving the deployment of a trading algorithm or a material part

of one

• approving the deployment of a material amendment to a trading

algorithm or a material part of one, or the combination of
trading algorithms

• monitoring or deciding whether or not the use or deployment of a

trading algorithm is or remains compliant with the firm’s obligations

If firms use a third party algorithm, there must be someone in the firm
accountable for the decision to use the algorithm, and for how the
algorithm behaves on an ongoing basis. This may be the same person.
Firms must be clear on this and who these people are, whether they
develop their own algorithms or rely on third parties.

Additional Certification Functions

We have considered whether it would be appropriate to add extra
Certification Functions. We have decided not to change the scope of
this part of the regime. Many of the functions suggested by respondents
are already included in the regime. For example, our guidance on the
Significant Management Function specifically considers that this could
include a senior person in human resources or complaints handling.

We were also asked to consider applying the Certification Regime to

non‑SMF Partners. Under FSMA the Certification Regime can only apply
to employees and we are therefore unable to do this because partners
are unlikely to meet the definition of ‘employee’ in FSMA 63E(9). The
definition can, however, cover secondees and contractors. If they are
performing Certification roles they must be certified.

Clarifications
The definition of ‘Material Risk Taker’ (MRT) is taken from European
legislation on remuneration. Firms subject to these rules are already
required to identify their Material Risk Takers. This is in line with these
existing requirements and European legislation, and as such we don’t
intend to change this.

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Firms and the appropriate Senior Manager are responsible for

ensuring that there are effective certification processes. They must
be satisfied that they have taken reasonable steps to comply with our
requirements for fitness and propriety. This will include determining
whether, in order to meet our requirements, ongoing certification
needs to be as thorough as the assessment done at appointment.
Individuals who perform Certification Functions across multiple
group entities can be certified in a single process, but the assessment
must take into account the performance of all the roles in the
different entities.

Certification – Territorial Application

Feedback received
Q10: Do you agree with our proposed territorial limitation for
the Certification Regime? If not, please explain why.

3.16 Respondents broadly agreed with the proposal but highlighted the differences in
territorial scope between Senior Managers and Certification Functions. Others were
concerned about the difficulties of applying and monitoring the ’30 day’ rule (where
individuals should be certified if they work more than 30 days a year in the UK).

3.17 Some respondents were concerned that employees of a non‑UK firm to which
a UK firm has delegated a service would be captured. They felt this would be
disproportionate. Others suggested extending the territorial scope of the
Certification Regime.

3.18 Firms asked us to clarify if the Certification Regime applies to staff based abroad,
including individuals involved in client dealing.

Our response

We intend to apply the territorial scope of the regime as proposed. Firms

must ensure that employees are certified if they perform a certification
role and are either based in the UK (or spend more than 30 days a year in
the UK) or deal with UK customers. There is no territorial limitation if the
person is performing the MRT Certification Function for a UK firm. This
is because, by their nature, Certification Functions are important roles
that can cause harm. If staff are moving in and out of the UK performing
these roles, it is important that they meet the necessary standards,
and the 30-day window applies this principle proportionately to reflect
short‑term moves within firms and groups in and out of the UK. These
standards help protect UK consumers, the firm and the market.

In CP17/25, we provided a flow chart summarising the application of the

Certification Regime to overseas staff. Firms should refer to SYSC 27.3
for more information on territoriality.

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If a firm outsources a service to an overseas entity, the application of

the Certification Regime will depend on the nature of the outsourcing
agreement. Generally, such individuals would not be in scope of the
Certification Regime unless they meet the FSMA definition of an
‘employee’ of the firm outsourcing the service. This would include any
individuals seconded to the firm from the outsourcing provider.

CASS Responsibilities

Feedback received
Q11: Do you agree with the approach we have proposed
to allocating CASS responsibilities? If not, please
explain why.

3.19 Most respondents agreed with our approach of allocating the CASS PR.
Some disagreed with our proposal to include the CASS Operational Oversight
Function (current CF10a) under the Certification Regime. In their view, the CASS
Operational Oversight Function should be kept as an approved function. They felt
that to do otherwise could reduce firms’ Boards attention on the importance of
CASS compliance.

3.20 A few respondents disagreed with our example that the CASS PR will often be
allocated to the Senior Manager undertaking the Compliance Oversight role. They feel
this contradicts previous FCA advice that the CASS and Compliance Oversight should
be performed separately.

3.21 One respondent asked us to clarify whether firms can allocate the CASS oversight
function to multiple employees to allow for segregation of duties.

3.22 Some respondents asked how the CASS requirements under the SM&CR worked
with MiFID.

Our response

In CP17/25, we didn’t propose making the current CF10a or CASS

Operational Oversight Function an SMF. This is because firms currently
assign responsibility for client assets oversight in different ways. In some
cases, the person performing this role may not meet the definition
of a Senior Manager. For example, in larger firms the person familiar
with the day‑to‑day operation of client money calculations may not
be senior enough to influence strategic decisions around the budget
and resources dedicated to CASS. In smaller firms they may be the
same person.

We have made Overall Responsibility for compliance with CASS a PR.

This is because we want to ensure that there is always a Senior Manager
with ultimate responsibility for overseeing a firm’s CASS obligations. This
PR applies to all firms subject to CASS. As the person with day‑to‑day
responsibility is not always a Senior Manager, the CASS Operational

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Oversight Function forms part of the Certification Regime. This means

that the person performing the CASS Operational Oversight Function
will always be either certified or a Senior Manager.

Firms are not allowed to allocate the CASS Operational Oversight

Function to more than one person, unless it is done as part of a job‑share
arrangement. This is governed by our rules in the CASS module of the
Handbook. We expect firms to maintain a permanent and effective
compliance function that operates independently from the firm’s
business areas. The aim of the SM&CR is not to change how firms are
organised or structured. Firms must decide who, in the context of the
firm’s business model, is the most appropriate Senior Manager to be
allocated the CASS PR.

The SM&CR allows a firm to allocate both the CASS Prescribed

Responsibility (in SYSC 24) and the CASS Operational Oversight Function
(in CASS 1A) to a single Senior Manager. Where this is the case, a firm
can allocate additional responsibilities to this person only if:

• it can satisfy itself on reasonable grounds that this person is still able
to discharge his/her CASS oversight responsibilities effectively, and

• the firm’s full compliance with CASS won’t be compromised

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4 Fit and Proper Requirements 

Who should read this chapter?

All firms should read this chapter.

Our proposals

4.1 In CP17/25 we proposed new rules for how firms should assess whether people are fit
and proper to do their job. This includes Senior Managers, Non‑Executive Directors
and individuals under the Certification Regime. The new rules include:

• a requirement on firms to assess, at least annually, whether individuals in certain

roles are fit and proper for their role (except non-approved Non‑Executive Directors)

• the evidence we expect firms to gather when making their assessment, including
requirements to:

–– carry out criminal records checks as part of an application for approval of a

Senior Manager

–– obtain regulatory references for Senior Managers, Certification Staff and

non‑approved Non‑Executive Directors before appointing them

4.2 This chapter sets out the feedback we received on these topics and our response.

The Fit and Proper Test

Feedback received
Q12: Do you agree with our proposed approach to rules
and guidance on the fit and proper test? If not, please
explain why.

4.3 Most respondents agreed with our proposals on the fit and proper test. A few asked
us to clarify how firms should conduct the annual assessment. We were also asked for
additional guidance to ensure consistency across the industry.

4.4 Some respondents were concerned about the administrative burden on small HR
functions. A few suggested that the FCA should conduct the annual fitness and
propriety assessments, rather than firms. Some commented that it would be difficult
to conduct fit and proper assessments on Non‑Executive Directors as they only
attend a few Board meetings each year. There were also questions about how fit and
proper assessments apply to sole traders, and whether our rules mean they would
need to self‑certify.

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4.5 One respondent suggested that smaller firms should only be required to conduct the
assessment every 3 years, rather than every year.

4.6 Some respondents thought that we should use this opportunity to link and consolidate
various regulatory competence requirements. These could include MIFID II, IDD, Board
competence and guidelines issued by European Supervisory Authorities. Some felt
that we should change the existing rules and guidance on fit and proper assessments
and training and competence to improve standards of individual behaviour. They also
suggested making it compulsory to undertake continuous professional development
of skills and knowledge.

4.7 One respondent was concerned that our fit and proper requirements may not support
the recruitment of diverse candidates in leadership positions. There was also a concern
this could discriminate against those with criminal convictions or older staff members
with experience rather than formal training.

Our response

We are implementing the fit and proper requirements as consulted on.

A key feature of the SM&CR is to reinforce that firms need to take more
responsibility for their staff being fit and proper to do their jobs. This
requirement stems from legislation and followed recommendations
from the Parliamentary Commission on Banking Standards (PCBS).

Similarly, FSMA, rather than FCA rules, requires firms to assess fitness
and propriety of their Senior Managers and Certification Staff at least
annually. So we don’t have discretion to change this. It is for firms to
decide how best to carry out their fit and proper assessments, based
on the rules, guidance and evidence requirements set by the FCA. We
haven’t provided prescriptive guidance on how firms should carry out
these assessments as we consider firms best placed to decide how their
internal employee assessments should be carried out.

Firms should already have processes in place to assess the fitness and
propriety of their employees and to monitor and record information
about employees’ performance and suitability. They must also ensure
that employees have the skills, knowledge and expertise necessary for
their responsibilities, as required by the Competent Employees Rule and
corresponding EU rules.

We appreciate that firms must meet different regulations and

requirements when considering the competence and behaviour of their
staff. These can come from different regulatory bodies and may focus on
the same objective, such as ensuring employees’ fitness and propriety.
However, as these requirements are often specific to a firm’s activities
or business and are drawn from EU legislation, we have not consolidated
them into the SM&CR framework, which applies to all firms.

We don’t consider that our expectation for people to be fit and proper
will discriminate against the recruitment of diverse candidates. In our

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view, the most important considerations that are relevant to fitness and
propriety include:

• honesty, integrity and reputation

• competence and capability, and

• financial soundness.

We don’t think that recruiting with these considerations in mind should

affect staff diversity and they provide important protections.

In addition, conviction for a criminal offence won’t automatically mean

that someone isn’t fit and proper. We have guidance in FIT that makes it
clear that this should be a case‑by‑case assessment.

We haven’t introduced any new qualification requirements in the SM&CR

or amended existing ones; these are all existing requirements. For those
roles that do have specific qualification requirements, we think this is
necessary and appropriate to ensure consumer protection.

In practice, there will be few cases where sole traders will need to
conduct a fit and proper assessment on themselves. This is because
neither the governing SMFs nor the Certification Regime apply to a
sole trader themselves, as opposed to their employees. If a sole trader
does need to conduct a fit and proper assessment, the guidance in FIT
will still be relevant. They won’t need the assessment to be verified by
someone else. This is identical to the way the current APR operates for
sole traders.

Overall, we consider that applying the SM&CR as a package will drive

up standards of individual behaviour and accountability and the
assessments of whether people working in financial services are fit
and proper are important parts of making this happen.

Criminal Records Checks

Feedback received
Q13: Do you agree with our proposed requirements on criminal
records checks? If not, please explain why.

4.8 The majority of respondents agreed with our proposals. However, several questioned
whether the proposals were consistent with privacy and data protection laws. Some
said that Limited Scope Firms should not be required to conduct criminal records
checks. On the other hand, several respondents thought that we should extend the
criminal records checks to all Certification Functions. They argued this was appropriate
as these are customer‑facing functions, and firms are limited in the information they
can receive on individuals who are not Senior Managers.

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4.9 Several respondents suggested that we shouldn’t ask for criminal records checks
if someone is moving roles within a firm. Some asked for clarity about how often
a criminal records check should be conducted. One respondent asked if a criminal
records check needed to be completed before an employee started with a firm.

4.10 We were also asked to explain when firms should make checks on individuals who have
worked overseas for any length of time, as this this can be a burdensome process.

4.11 Some respondents asked what types of convictions and offences would bar someone
from working in financial services. One suggested that there should also be checks
on whether a director has ever been disqualified or has an undischarged bankruptcy.
Respondents also asked if they need to notify us if an employee provides false
information on a form.

4.12 Some respondents asked whether the Disclosure & Barring Service (DBS) had the
capacity to undertake these criminal records checks.

4.13 One respondent asked how these rules apply to not‑for‑profit firms.

Our response

General Data Protection Regulation (GDPR)

We don’t think it’s appropriate for us to give detailed guidance on
complying with the GDPR and the UK’s Data Protection Act 2018.
However, we do want firms to be confident that they can comply
with both the SM&CR and data protection laws. We don’t think these
obligations conflict, as they acknowledge that employers have legal
obligations to process sensitive personal data, such as criminal records.
Firms may find it helpful to read Article 6 of the GDPR and Schedule
One of the UK’s Data Protection Act to understand more.

Criminal Records Checks

Carrying out criminal records checks is an important tool for firms
when assessing the fitness and propriety of Senior Managers, including
as part of preparing the application to us for their approval. Almost
all respondents agreed with this. We will, therefore, require a criminal
records check for every application for a Senior Management Function,
even if that person already performs a role in the firm or the group.

We only require a criminal records check when a candidate is applying

for an SMF. There is no requirement for annual criminal records checks,
although firms can choose to do this as part of their ongoing fit and
proper assessments. We have made this clearer in our Handbook in SUP
10C.10.23A. Given the number of staff who may fall in the Certification
Regime, we don’t think it is proportionate to require criminal records
checks for these roles.

If a candidate for an SMF has spent considerable time overseas in the last
six years, firms should consider carrying out a criminal records check in
those particular jurisdictions. We provide guidance in the Handbook, but
it is up to the firm to decide if this is appropriate. Candidates themselves

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are asked to disclose all related matters, whether in the United Kingdom
or overseas, in our forms.

Guidance in FIT makes it clear that conviction for a criminal offence won’t
automatically mean someone can’t be considered fit and proper – this
is a case‑by‑case assessment. If a candidate provides false information
on a form, a firm should consider this when deciding on the individual’s
honesty, integrity and reputation. If someone who is currently employed
by the firm provides false information, this could also be a breach of
the Conduct Rules. Firms need to report breaches of Conduct Rules
resulting in disciplinary action to us annually, using REP008 on GABRIEL.

We confirm that FIT already contains guidance that firms should

consider whether a person has ever been disqualified from acting as a
director or has an undischarged bankruptcy.

While we appreciate that a firm's hiring needs can be urgent, we think

that the criminal records check is one of the key checks that a firm needs
to make in order to assess a Senior Manager as Fit & Proper. In order for
a firm to submit an application for a Senior Manager to be approved, the
criminal records check must be complete.

We have discussed our requirements in this area with the Disclosure and
Barring Service (DBS), as well as the likely increase in requests for criminal
records checks it will receive.

Not‑For‑Profit firms
If a not‑for‑profit firm is in scope of the SM&CR and has someone
performing an SMF, then criminal records checks apply, whether or not
that person is remunerated for their role.

However, SMFs don’t apply to not‑for profit debt advice firms under
our rules.

Regulatory References

Feedback received
Q14: Do you agree with our proposed requirement of
regulatory references? If not, please explain why.

4.14 Most respondents agreed with our proposals for regulatory references, but asked for
clarification on some practical issues. These included:

• how firms should approach reportable matters where the relevant individual has left
the firm

• how firms should approach circumstances where an individual’s current or previous

employer won’t provide a regulatory reference

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• whether regulatory references would need to be requested before an individual has

handed in their notice

4.15 There were also several requests for guidance on what should be included in regulatory
references. Some firms suggested that additional specific information should be
included in the regulatory reference template.

4.16 Respondents pointed out that employment legislation can make some firms reluctant
to disclose relevant information on candidates. A few firms asked us to explain how
regulatory references interact with legal requirements. These include employment law,
GDPR, laws such as the Rehabilitation of Offenders Act, managing conflicts of interest
and any pre‑existing contracts, such as confidentiality requirements.

4.17 A few respondents noted that providing and getting regulatory references would lead
to increased costs and workloads for firms.

4.18 Some wanted us to create a portal or public register of references, through which
firms lodge confidential references and update them as necessary. One respondent
recommended that we set up a tribunal process to address cases of unfairness around
regulatory references. This could correct simple cases of unfairness or refer more
complex disputes to the courts.

4.19 Many firms expressed concern that Certified Staff may omit previous employers from
their records, rather than receive a poor regulatory reference.

4.20 We were asked for guidance on how the regulatory reference requirements apply to
sole traders.

4.21 One person asked if firms are required to respond to references from third parties,
or respond to speculative regulatory references (such as from recruitment agencies)
before an individual had been put forward for a role.

Our response

We are implementing our rules on regulatory references as consulted on.

Feedback has shown that there were some misunderstandings about

the changes we have proposed to our regulatory reference rules. Firms
are already required to provide all information relevant to the fit and
proper assessment when they get a request for a regulatory reference.
The main changes proposed by CP17/25 were that firms must:

• request a reference from all previous employers in the past six years
for Senior Managers, Certification Functions and non‑approved
Non‑Executive Directors (except in Limited Scope firms)

• provide references using a standard template

• update references if new information comes to light

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In addition, firms are already required not to enter into non‑disclosure

agreements that could affect their ability to disclose the information
required by regulatory references.

New information after an employee has left the firm

If new information about someone’s conduct comes to light after they
have left a firm, the rules require the firm to update their new employer.
However, to ensure fairness, these rules are limited. The standards that
apply to an updated reference are the same as apply to the original
reference based on what firms reasonably consider to be relevant. The
test is whether the new information arising would have caused the
providing firm to have written the original reference differently had the
information been known at the time, and the new information would
change an assessment of the fitness and propriety of the individual.

Secondly, firms only need to update their new employer if that firm is
regulated under FSMA, and the individual still works there. In practice this
will need to be checked with the firms that were last sent references.

The updating requirement applies:

• to any notice period served between providing a reference and the

individual leaving a firm

• for ex‑employers, six years from the date the individual left the firm

Also, misconduct that occurred more than six years ago, but which came
to light within six years from the date the individual left the firm, may
require disclosure if that misconduct is serious.

This avoids data protection concerns about sharing personal information

with firms that may not have a legitimate reason for receiving such
information. We think this requirement is a valuable tool to encourage
good conduct. In practice, such updated disclosures are likely to be
infrequent. Nonetheless, on the occasions that they are necessary, they
are likely to provide important information to the current employer.

Timing of references
We recognise that there may be situations where a candidate has not
told their current employer that they are leaving. However, a fit and
proper assessment can’t be made until the new firm can confirm that
its due diligence is complete. This includes getting a reference from the
candidate's previous employer. For Senior Managers, firms should ideally
get references before they submit an application for approval. However,
we know that there will be circumstances where this may not be possible.
In these cases, firms can get references no later than one month before
the end of the application process. For Certified Staff, the firm must
receive the references before they issue the certificate.

Cooperation between firms

Any FCA‑authorised firm is already required to respond appropriately
to reference requests. Our Handbook guidance states that we
expect regulated firms to do so within 6 weeks. While references

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from non‑financial services firms are likely to be general employment

references, they can still provide important information to the hiring
firm. In cases where it is difficult to get references, such as when the
firm providing the reference is overseas, firms requesting the references
should take all reasonable steps to obtain it.

Role changes
There may be cases where someone changes roles within a group, for
example if they are initially hired into a Certification Function and then
move into an SMF in another entity. In these cases, a firm doesn’t need
to request a regulatory reference from the original entity if the group
maintains centralised records or alternative means of sharing existing
relevant information on the fit and proper assessment of candidates.

SYSC 22.7.8G contains guidance on whether firms need to ask

third‑party (non‑group) employers to reissue a reference where a
relevant individual moves between group entities.

Interaction with employment and data protection law

Our regulatory reference rules only require firms to disclose information
that has been properly verified. The template for regulatory references
sets out the minimum criteria that a firm must disclose. A firm can still
provide additional information. If a firm chooses to disclose more than
we require, it should still meet its duties under general law to its former
employee and to the firm requesting the reference.

We believe that the requirement to provide a regulatory reference does

not contravene any aspect of the GDPR, as:

• the information employers are required to give is proportionate

• storage of the information is for an appropriate amount of time

• it is appropriate to store it and provide to a new employer to comply

with regulation

Contractual terms
Firms should already be collecting most of the information they have to
include in regulatory references, as part of their statutory obligations to
keep records for regulatory reporting. So we think that updating these
existing processes should involve only minimal costs.

One of the main aims of the SM&CR is for firms and Senior Managers
to take greater responsibility for ensuring their employees are
suitable. Regulatory references are designed to make it easier to share
information between firms. The Fair and Effective Markets Review
(FEMR) found that there was little benefit in creating an FCA portal of
references. So we don’t believe it’s appropriate for us to create a central
portal of references or to manage disputes about their content.

Clarifications
We believe that using a mandatory standard template will increase the
consistency of references across different firms. Our Handbook contains

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guidance on how firms should complete references. It includes examples

of factors to take into account when deciding whether old misconduct is
sufficiently serious to be disclosed.

When and how a firm decides to undertake disciplinary action is a

matter for individual firms. We have not imposed a wider duty on firms to
investigate all potential breaches or disclose information that they have
not been able to verify.

Under SYSC 22, firms must disclose, in the reference, all information
that could be relevant to the hiring firm's assessment of the candidate’s
fitness and propriety. If a firm fails to disclose all information that could
be relevant, then this is likely to be a breach of our rules. In such cases
we will consider what regulatory action should be taken. In certain
circumstances, this may include possible enforcement action.

If the former employer is not willing to provide a regulatory reference and

is an authorised firm, you should:

• explain you are requesting the reference under Chapter 22 of the

FCA Senior Management Arrangements, Systems and Controls
Manual (SYSC)

• inform your FCA case officer (if you have one), call our helpline on
0300 500 0597 or email us at [email protected]

For sole traders, we have added guidance to clarify that a firm doesn’t
need to request a reference for a candidate if they were a sole trader.
We have also added a rule clarifying that that sole traders won’t need to
get references about themselves from previous employers if they will
perform a Senior Management Function as the sole trader.

A firm is only required to respond to a request for a regulatory

reference received from another FCA‑regulated firm. Firms don’t need
to respond to speculative references submitted before an individual
has been proposed for a function. For example, a recruitment
agency vetting a candidate before a firm has considered appointing
that person.

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5 Conduct Rules   

Who should read this chapter?

All firms should read this chapter.

Our proposals

5.1 In CP17/25, we proposed replacing the current Statements of Principle and Code
of Practice for Approved Persons (the APER section of the Handbook) with a set of
individual Conduct Rules for all firms. This will ensure a single standard applies across
the market. As the Conduct Rules apply directly to individuals, they will help shape
firms’ culture, standards and policies. They should also promote positive behaviours
that actively support our statutory objectives.

5.2 The Conduct Rules are made up of a general set of rules that we proposed to apply to
most employees in a firm. We also proposed a second tier of rules that only apply to
Senior Managers.

Table 4: Conduct Rules

First Tier – Individual Conduct Rules

1. You must act with integrity
2. You must act with due care, skill and diligence
3. You must be open and cooperative with the FCA, the PRA and other regulators
4. You must pay due regard to the interests of customers and treat them fairly
5. You must observe proper standards of market conduct

Second Tier – Senior Manager Conduct Rules

SC1. You must take reasonable steps to ensure that the business of the firm for which you are
responsible is controlled effectively
SC2. You must take reasonable steps to ensure that the business of the firm for which you are
responsible complies with the relevant requirements and standards of the regulatory system
SC3. You must take reasonable steps to ensure that any delegation of your responsibilities
is to an appropriate person and that you oversee the discharge of the delegated
responsibility effectively
SC4. You must disclose appropriately any information of which the FCA or PRA would reasonably
expect notice6

6 As well as Senior Managers, SC4 also applies to non‑approved Non‑Executive Directors.

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5.3 We proposed that these Conduct Rules would apply to a firm’s regulated and
unregulated financial services activities. This includes any related ancillary activities –
activities carried on in connection with a regulated activity.

5.4 We proposed to apply the Conduct Rules to:

• all Senior Managers

• all Certified individuals

• all Directors who are not Senior Managers

• all other employees, except ancillary staff (ie people who don’t perform a role
specific to financial services)

5.5 We proposed certain training and notification requirements. These included:

• for Senior Managers, the requirement for firms to notify us of breaches within seven
business days of the firm concluding disciplinary action. Disciplinary action in this
context means:

–– issuing a formal written warning

–– suspending or dismissing the individual

–– reducing or recovering any of the person’s remuneration

• for all other staff that come under the Conduct Rules, the firm should make a report
every year using REP008 on our electronic reporting system, GABRIEL

5.6 This chapter sets out the feedback we received on the Conduct Rules and
our response.

Scope of the Conduct Rules

Feedback received
Q15: Do you agree with our proposal to apply the Conduct
Rules to financial services activities?

Q16: Do you agree with our proposal to apply the Conduct

Rules to all employees who perform financial services,
with the limited exclusions listed in section 7.14
[of CP17/25]?

Q17: If you disagree, please explain why, including

(where appropriate) cost implications.

5.7 A number of respondents asked us to clarify the scope of activities subject to the
Conduct Rules and on how this relates to the fitness and propriety requirements.

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5.8 They also suggested additional roles for the ancillary staff list or that the list should not
be exhaustive. Others argued that certain roles on the ancillary staff list shouldn’t be
excluded, or that all staff should be in scope.

5.9 A number of respondents asked us to clarify the scope of the Conduct Rules where
individuals who are not on the ancillary staff list in practice don’t undertake any
financial services activities. We were also asked whether the Conduct Rules apply
to trustees.

5.10 A number of respondents suggested that the scope of application of the Conduct
Rules should be the same as the banking regime.7 Some also asked us whether
anything prevented a firm from applying the Conduct Rules to all of their employees.
Others asked if the scope of the Conduct Rules would be different for Limited
Scope firms.

Requests for clarification

5.11 Respondents asked us to clarify:

• how the Conduct Rules apply where firms carry out a mixture of financial services
and non‑financial services activities

• what the narrower application of the Conduct Rules means compared to that in
place for banking firms

Our response

We are making the rules as consulted on.

Activities the Conduct Rules apply to

The scope of activities covered by the Conduct Rules, for firms other
than banking firms, is set out in COCON 1.1.7A. Generally, this covers:

• a firm’s regulated activities

• an activity carried on in connection with a regulated activity, or held

out as being for the purposes of a regulated activity, or an activity
listed in points 2 to 15 of Annex 1 to the CRD (List of activities subject
to mutual recognition

• any activities (regulated or unregulated):

– that could affect the integrity of the UK financial system

– affect the ability of a firm to meet the fit and proper threshold
conditions, or

– affect the ability of a firm to meet requirements relating to the

firm’s financial resources

7 Under the banking regime, the Conduct Rules apply to everyone someone does on behalf of a banking firm, whether it’s regulated or
unregulated or linked to financial services.

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This is the same for all firms, whether they are Limited Scope, Core or
Enhanced.

Who the Conduct Rules apply to

If someone is working for an SM&CR firm as an employee, the Conduct
Rules apply to them – even if they don’t have a contract of employment.
FSMA provides a specific definition of ‘employee’ for the purpose of
the SM&CR, which differs from the usual meaning in law and defines an
employee as including ‘… a person who –

(a) personally provides, or is under an obligation personally to provide,

services to [a firm] under an arrangement made between [a firm] and
the person providing the services or another person, and

(b) is subject to (or to the right of) supervision, direction or control by
[a firm] as to the manner in which those services are provided.’

The Conduct Rules also apply to SMFs and Board Directors, whether or
not they come within this definition of ‘employee’.

The Conduct Rules don’t apply to people who only perform an ‘ancillary
role’. We have provided a list of ancillary roles the Conduct Rules don’t
apply to. This is set out in COCON 1.1.2 R (6). These are roles which
would be the same whether or not they are performed at a financial
services firm or a non‑financial services firm.

This means that individuals performing a role on the ancillary roles list
and also undertaking other activities would be in scope of the Conduct
Rules for any part of their role that falls into COCON 1.1.7A (ie the
financial services part of their role), but not a part of their activities that
falls outside COCON 1.1.7A. Equally, individuals at firms who are in no
way involved in financial services activities would not fall within scope of
the Conduct Rules.

Ultimately, it is for firms to decide where individuals performing ancillary

roles need to be trained on the Conduct Rules.

Trustees
The Conduct Rules only apply to SMFs, non‑SMF directors and
employees of firms. FSMA defines ‘employees’ as including contractors,
temps and secondees. On this basis, whether a trustee is in scope will
depend on whether they meet the definition of an ‘employee’.

Wider application of Conduct Rules

Firms can apply the Conduct Rules to all of their staff if they want to.
However, the training obligations, the requirement to report breaches
and the FCA’s enforcement powers in relation to the Conduct Rules only
apply to individuals in the scope of our Handbook rules.

Similarly, a solo‑regulated firm in a banking group can choose to apply

the banking scope of the Conduct Rules to all firms within the group, but
the specific regulatory requirements again only apply to those individuals
in scope of the Handbook rules.

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In short, firms can choose to have a single standard for all employees
if they want to, but our rules (including the mandatory training
and reporting obligations) only apply to the population of staff
described above.

Firms may wish to consider whether there are any impacts on contracts
of employment where they intend to apply the Conduct Rules to staff
who are not within scope of our rules.

Clarifications
Some firms offer a mix of financial and non‑financial activities. For them,
whether something is in scope of the Conduct Rules depends on
whether it meets the definition of activities covered by the Conduct
Rules. Generally, this will only be the case where there is a connection
between the financial activity and non‑financial activity.

This approach is narrower than the one we took for banking firms,
as everything that a bank does will be captured by the Conduct Rules.
For solo‑regulated firms and insurers, activity will only be captured if it
meets the definition set out in COCON 1.1.7A.

Conduct Rule Breach Reporting

Feedback received
Q18: Do you agree with our proposal to link notification
requirements for disciplinary action to breaches of the
Conduct Rules?

5.12 The majority of respondents supported our proposed Conduct Rule

reporting requirements.

5.13 A small number suggested that the reporting requirement should only apply to Senior
Managers and Certification Staff.

5.14 We were asked to explain how the FCA would use personal information and whether we
required this information for non‑certified staff.

5.15 Several respondents suggested that notification should be delayed until investigations
have been completed or a breach had been proved. Others felt firms should also notify
breaches of other conduct standards, such as those of a professional body.

5.16 Some respondents suggested a right of appeal to the FCA, to prevent malicious
reporting. They also suggested a central register to support this process.

5.17 We were asked to consider increasing the notification period to one month for Senior
Managers to allow for appeal processes. Respondents also wanted us to confirm
what firms should do when an employee leaves before disciplinary procedures
are completed.

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Our response

Section 64C of FSMA requires firms to notify the FCA of disciplinary

action taken against relevant individuals because of breaches of the
Conduct Rules. Under FSMA, disciplinary action covers:

• issuing a formal written warning

• suspension or dismissal of an individual

• reduction or recovery of any of the person’s remuneration

Firms should only report Conduct Rule breaches to us where they result
in one of these courses of action, and once the relevant disciplinary
process has been completed. This means that if an individual leaves the
firm during the disciplinary process and the process can’t be completed,
the firm should not submit a report.

We consider that the requirement that only completed disciplinary

proceedings should be reported should be enough to prevent malicious
reporting. It will also mean only proven Conduct Rule breaches will be
reported to us.

The Conduct Rule notification requirements do not change or remove

firms’ obligations to report concerns about an individual’s conduct under
existing rules or principles.

Breaches of professional body codes should not be included unless they

are also a breach of FCA Conduct Rules and the firm has disciplined the
employee in the way described above.

The Conduct Rules apply to all non‑ancillary staff, so the Conduct Rules
reporting requirements apply to these staff too. This is because staff at
all levels of a firm have the potential to cause harm.

We have considered whether we should lengthen the notification period

for Senior Managers to 1 month but have decided not to do so. The
potentially serious nature of breaches by Senior Managers means that
swift notification will often be an important factor in ensuring we can
supervise effectively.

Read our response to Question 19 for what a firm should do if the

employee appeals against disciplinary action.

Q19: Do you agree with our proposed frequency of Conduct

Rules notifications? If not, please explain why.

5.18 Respondents wanted to know how we would ensure consistent reporting across
the industry.

5.19 Some also wanted further clarity about the notification requirements for Senior
Manager Conduct Rule breaches. They were concerned that firms would be

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required to report breaches by Senior Managers without completing the firm’s

disciplinary procedures.

5.20 Some suggested that annual reporting is too infrequent if a customer‑facing employee
is dismissed for a serious breach of Conduct Rules.

5.21 A few respondents suggested that notification reporting should align with existing
reporting schedules.

Requests for clarification

5.22 Respondents asked us to clarify:

• how we will use Conduct Rule breach reports and what effect this will have on
relevant staff

• how firms should update annual Conduct Rule breach notifications where they
become aware of new information that changes a disciplinary outcome

Our response

For Senior Managers, the notification requirements apply more widely

than just the Conduct Rules. They also cover other factors including
fitness and propriety. For notifications made due to breaches of the
Conduct Rules, the 7-day period begins once disciplinary action
has been concluded. Read 5.5 above for more information on what
disciplinary action means in this context.

This does not change or remove firms’ obligations to report concerns

about an individual’s conduct under existing rules or principles, such as
Principle 11.

We consider that it would be disproportionate to require firms to report

Conduct Rule breaches for non‑Senior Managers more often than
annually (beyond existing obligations on firms to report concerns about
an individual’s conduct, for example under Principle 11). The onus is
on firms to ensure that breaches of the Conduct Rules are dealt with
effectively under the firm’s own disciplinary process. Firms must also
ensure that they appropriately address any customer harm.

We have considered whether aligning the GABRIEL annual reporting

requirement to a firm’s existing regulatory reporting schedule would be
appropriate, and understand why this would help some firms. However,
the requirement is designed to align with the banking regime and provide
a consistent reporting date for the industry. Feedback suggests that
for firms with mixed groups, such as banking groups that include asset
managers, making a change would create a complex and inconsistent
set of requirements. Different entities would have to report the same
information for different periods.

For this reason, and so that we can compare data across the whole
industry, we intend to keep the proposed reporting period of
1 September to 31 August each year for most firms (with a submission

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due date of within 2 months of the end of the reporting period). However,
for Limited Permission Consumer Credit firms – the majority of whom
are the very smallest firms we regulate – we have decided to align
the reporting period for this return with their annual reporting cycle.
We considered extending this change to other small firms, but decided
that it is only appropriate for these firms.

The Conduct Rules are designed to raise standards of behaviour at

all levels and ensure that individuals are responsible for their actions.
The onus is on firms to take appropriate disciplinary action where an
individual breaches a Conduct Rule. The information we get from these
notifications will help inform supervisory activity. If disciplinary action is
taken against an individual and they subsequently leave the firm during
the reporting period, then the breach should still be reported.

Firms should only report Conduct Rule breaches once disciplinary

action has concluded. If a firm takes disciplinary action for a Conduct
Rule breach but the employee appeals, or plans to, this should still
be reported to us. In some circumstances, individuals will appeal the
outcome of a concluded disciplinary process and the decision will be
overturned. Where an appeal is successful, firms should update us in
the following REP008 submission. We believe that these instances
will be rare given the annual submission cycle. This should only usually
occur where a disciplinary process is concluded shortly before the
due date for REP008 and there is not time to assess the appeal before
submission. In the case of a Senior Manager, a firm should report the
result of a successful appeal as soon as reasonably practicable after
the appeal.

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6 Enhanced Tier – Criteria and Extra

Requirements  

Who should read this chapter

This chapter is only relevant to Enhanced firms, or firms intending to opt‑up to the Enhanced tier of
the regime.

6.1 Feedback on Enhanced SMFs and Enhanced Prescribed Responsibilities can be found
in Chapter 2. This chapter provides our response to feedback on our proposed criteria
for identifying Enhanced firms and the rules about firms moving between tiers of
the regime.

Our proposals

6.2 In July, we proposed 6 criteria to identify those firms that we will apply extra
requirements to. We classify these firms as Enhanced. The final criteria are set out in
our legal instrument but we have summarised the changes in Table 5 below.

6.3 We also proposed rules for how firms will move between tiers of the regime when they
begin to meet, or no longer meet, the Enhanced criteria. We also proposed:

• an Overall Responsibility requirement

• a requirement that Enhanced firms create a Responsibilities Map

• requirements around Handover Procedures

6.4 This chapter sets out the feedback we received and our response. Feedback on the
extra SMFs we proposed can be found in Chapter 2.

Enhanced criteria

Feedback received
Q20: Do you agree with our proposed approach of using the
objective criteria set out above to identify firms for the
Enhanced regime? If not, please explain why and propose
alternative approaches.

6.5 Several respondents suggested that the criteria were too focused on quantitative
thresholds and that we should use qualitative thresholds instead, or as well. Some
asset management respondents felt that asset managers should never be in the
Enhanced tier as they are not systemically risky firms.

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6.6 We received a significant amount of feedback suggesting that the proposed financial
criteria were too sensitive to single year anomalies. This may bring firms into the
scope of the Enhanced tier, disproportionately. Respondents also suggested that the
financial thresholds had been set too low.

6.7 Respondents suggested various combinations of financial and contextual information,

including using staff numbers, to decide if a firm qualifies as Enhanced.

6.8 Two respondents suggested removing the CASS Large criteria. They believed that
all CASS Large firms would meet the threshold for inclusion under the IFPRU criteria.
One respondent highlighted that the CASS limit of £425m for Significant IFPRU firms is
significantly less than the £1bn client money limit for CASS Large firms.

6.9 Respondents also asked us to clarify:

• if a firm that does not submit the RMA‑B regulatory return is still subject to the
intermediation threshold

• if a firm with waivers for Significant IFPRU obligations will still be subject to the
Enhanced tier

• the application of the Enhanced tier to exempt commodities firms

Our response

We considered whether the Enhanced criteria set out in CP17/25

were too sensitive to single year anomalies that may not reflect the
real impact of a firm’s business. We agree with the feedback and have
decided to make some changes to the financial criteria. We set these out
in Table 5 below.

Table 5: Enhanced criteria and changes following feedback

Form Name Purpose/Changes
A firm that is a Significant None
IFPRU firm
A firm that is a CASS Large firm None
Firms with Assets Under Firms with Assets Under Management of
Management of £50bn or more (at £50bn or more calculated as a three year
any time in the previous 3 years) rolling average
Firms with current total Firms with current total intermediary regulated
intermediary regulated business business revenue of £35m or more per annum
revenue of £35m or more calculated as a three year rolling average
per annum

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Form Name Purpose/Changes

Firms with an annual regulated Firms with annual revenue generated by
revenue generated by consumer regulated consumer credit lending of £100m or
credit lending of £100m or more more calculated as a three year rolling average8
Please read the details in our response below
for firms that don’t yet have data covering
three complete years
Mortgage lenders (that are not Mortgage lenders and administrators (that
banks) with 10,000 or more are not banks) with 10,000 or more regulated
regulated mortgages outstanding mortgages outstanding8

The three financial criteria will now all be worked out on a 3-year rolling
average basis, with slight variations necessary due to the underlying
reporting requirements. This means that:

• the Assets under Management (AuM) threshold will now be calculated

on a 3 year rolling average, updated at every FSA038 submission. This
means that, for example, if a firm submits FSA038 on a bi‑annual/
six‑monthly basis, it would calculate its average AUM after each
submission, using the most recent return and the five preceding
returns (covering the last three years)

• the intermediation threshold drawn from section B of the RMAR

will also be calculated on a 3 year rolling average basis. There is
more information on the Retail Mediation Activities Return in SUP
16 of our Handbook. However, this threshold will only use year‑end
submissions as the underlying regulatory return is cumulative

• the consumer credit lending revenue threshold will be calculated

on a 3-year rolling basis, and will be the 3-year average drawn from
firms’ full year returns. We know that some firms won’t yet have data
covering 3 complete years. These firms should calculate the average
using data covering 2 complete years, where this is the case, or 1.
Where a firm does not have data covering 1 complete year it won’t be
considered Enhanced, unless it decides to ‘opt‑up’

We have decided not to make any changes to the absolute level of

the thresholds. We believe that the proposed levels are appropriate
indicators of impact. They are tailored to individual sectors and are clearly
defined. We also prefer quantitative thresholds as they provide firms with
stable, objective and transparent criteria. We have not used employee
numbers to decide whether a firm falls in the Core or Enhanced tier, as
we don’t want to create a disincentive for firms to hire staff. In addition,
we don’t think that the number of employees a firm has will necessarily
correlate to their potential impact on our objectives.

The Enhanced tier isn’t just designed to capture systemically risky firms
from a prudential perspective. It’s also designed to capture firms that are

8 We have also slightly amended the labelling of two of the criteria to ensure clarity. These changes ensure that the labelling in this
Policy Statement aligns with the rules we consulted on and the near-final rules in our instrument. The two changes are to clarify that
the mortgage criterion applies to mortgage lenders and administrators, and to clarify that the consumer credit lending threshold
applies to regulated consumer credit lending.

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larger in size or have more complex structures. It is in these firms that

weaknesses in accountability or governance could cause greater harm
to consumers, or impact on market integrity. The asset management
industry plays a vital role in the UK’s economy and manages the savings
and pensions of millions people. As such, we don’t agree that they should
be excluded from the Enhanced tier.

As it’s possible to be a CASS Large firm without also being a Significant

IFPRU firm, we have maintained the CASS Large criteria as proposed.
While the CASS limit for Significant IFPRU firms is lower than that for
CASS Large firms, we believe that this is appropriate as these two
thresholds target different possible harms.

There are a few firms who complete returns other than RMA‑B and
who have intermediation revenue of over £35m. Our intention was that
these firms would be captured by the threshold. We agree that the
rules as proposed did not have this effect. We plan to consult separately
on bringing these firms into the Enhanced tier before the start of
the SM&CR.

If a firm has a waiver from being a Significant IFPRU firm entirely, it

won’t meet the IFPRU criterion to make it an Enhanced firm. If a firm
has a waiver from parts of the Significant IFPRU requirements only,
they will still be an Enhanced firm. Exempt IFPRU commodities firms
that are Significant IFPRU firms will be Enhanced firms.

Moving to and from the Enhanced tier

Feedback received
Q21: Do you agree with our proposed approach to moving firms
between Core and Enhanced? If not, please explain why.

6.10 Respondents broadly supported our proposed approach to firms moving in and out of
the Enhanced tier.

6.11 Several respondents asked how the proposed approach would apply to groups. They
felt that having the ability to opt‑up to the Enhanced tier would ensure a consistent
approach for groups with entities in different tiers.

6.12 One respondent suggested that Core or Limited Scope entities in a group containing
an Enhanced firm should also be subject to the Enhanced tier. Others asked us
whether firms in this situation would be able to opt‑up into the Enhanced tier.

6.13 Some respondents wanted to extend the transition period for firms moving into the
Enhanced tier to 12 months, rather than 6 months. This would align it with the exit
transition period.

6.14 Respondents asked us to clarify:

• the approach where firms move categories during the transition period

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• whether firms could apply for waivers

• if we could ask firms to comply with the Enhanced tier even if they don’t meet
the criteria

Our response

Opting Up
We don’t believe that it would be proportionate to make all firms in a
group with an Enhanced firm automatically apply the Enhanced tier.
However, we agree that it should be easier for firms to opt into the
Enhanced tier if they want to, particularly within groups. As a result,
we have made it easier for firms to opt‑up using a notification process
and a new form (Form O). Firms can make the decision to opt‑up after
considering their specific circumstances.

Once firms have opted into the Enhanced tier they must comply with all
of the relevant rules. If they don’t it will be a breach of our rules – firms
can’t choose to apply some elements of the regime and not others.
This is to ensure consistency and transparency across all firms in the
Enhanced tier.

The SM&CR is designed to be proportionate. We don’t expect firms to

opt into the Enhanced tier for the sake of having more SMFs and opting
into the Enhanced tier must not lead to accountability at these firms
becoming unclear.

If firms choose to opt into the Enhanced tier (or from Limited Scope
to the Core), they must be ready to comply with all the rules of the
opted‑into regime 3 months after the date Form O is submitted. More
information on opting up is in SYSC 23 Annex 1.

Moving between tiers

We agree that a longer transition period would be appropriate for
firms moving into the Enhanced tier. We have therefore extended
the transition period to 12 months, which means that firms moving
into the Enhanced tier will have 12 months to prepare and make the
relevant changes, where applicable. This aligns the entry transition
period with the exit transition period. This is the amount of time that the
Enhanced tier applies once a firm no longer meets the relevant criteria.
As mentioned above, the period is 3 months if the firm opts up to the
Enhanced tier.

While we believe that the changes to the financial thresholds will make
this less common, it is possible that a small number of firms will change
regime tier during the transition to the new SM&CR. If a firm believes that
it is likely to change tiers during the transition, they should contact us as
soon as possible so that we can help them.

The existing waivers processes will continue to apply. We will consider

all requests using the existing criteria.

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Overall Responsibility Requirement

Feedback received
Q25: Do you agree with our proposal to apply the Overall
Responsibility requirement to Enhanced firms? If not,
please explain why.

6.15 We received mainly positive feedback to our proposals. Some respondents were
unclear on the difference between the Overall Responsibility requirement and the
SMF18 – Overall Responsibility Function.

6.16 A few respondents suggested that the Overall Responsibility requirement should apply
to Core firms and that we should make the SMF18 – Overall Responsibility Function
available to these firms.

6.17 One respondent noted that, as part of the re‑structuring of SYSC, we have
deleted SYSC 4.7.9G. This provided guidance on the purpose of the Overall
Responsibility requirement.

6.18 Many respondents asked for guidance on how to apply the rule, as well as for examples
of good practice. Some respondents asked which areas of their ‘unregulated’ business
had to be represented by a Senior Manager. Others wanted guidance on how to
treat business unit heads and how to distinguish between an individual holding the
Significant Management Certification Function and one holding the SMF18.

6.19 We were asked how this requirement should be applied within group structures,
particularly where the parent company has significant management influence in the
subsidiary. Respondents also wanted to know whether the changes will alter how
Overall Responsibility applies to banking firms.

6.20 One respondent asked us to consider redrafting SYSC 4.7.30G. This refers to the
inclusion of activities, transactions, business areas and management functions that
are located or take place outside the UK. They asked us whether this could be limited
to firms only operating, or dealing with customers, in the UK.

Our response

The Other Overall Responsibility Function and the Overall Responsibility

requirement are separate but related concepts:

• the Overall Responsibility requirement asks firms to ensure that

every activity, business area and management function has a Senior
Manager with ‘Overall Responsibility’ for it

• the SMF18 – Other Overall Responsibility Function is an additional

SMF. Firms can use this where an individual has ‘Overall Responsibility’
for an activity, business area, or management function, but does not
already hold an SMF

CP 17/25 set out some of the steps a firm may wish to take to comply
with the Overall Responsibility rules. We have not set out best practice
guidance as the way that firms allocate Overall Responsibility will be

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different for every firm. The Responsibilities Map should help Enhanced
firms to work out if there are any gaps in Overall Responsibility.

SMF18 – Other Overall Responsibility Function

We have addressed feedback about the difference between SMF18 and
the Significant Management Function in our response to feedback on
Enhanced SMFs.

Feedback on SMF18 is addressed in the chapter on SMFs for Core firms.

We have not applied an Overall Responsibility requirement to the Core
tier because we think it is disproportionate to require this of all Core
firms. This means we don’t require Core firms to ensure there is a Senior
Manager responsible for every area of the firm’s business.

Enhanced firms should also keep in mind that the regime applies
to individual legal entities. Firms must ensure that they identify the
individual who is genuinely accountable in the entity in question. This
is regardless of whether or not they are a director or employee of that
particular entity.

For example, there may be situations where an individual outside the

firm has Overall Responsibility for the relevant activity, business area or
management function of the firm – for example, someone in another
group entity. In most cases, this person should be approved as SMF7
– Group Entity Senior Manager. If not, they will need to be approved as
SMF18, as long as they don’t hold any other SMF at the firm.

In short, if an individual in another group entity in the scenario above

does not hold an SMF at the firm, then:

• if their role meets both the definition of SMF7 and SMF18, the
individual should be approved as SMF7

• if their role does not meet the definition of SMF7, then they should be
approved as SMF18

Overall Responsibility Requirement

We proposed new guidance in SYSC 26.2 to explain the purpose of the
Overall Responsibility requirement. This will replace the guidance in SYSC
4.7.9G. It sets out that at banking firms and Enhanced solo‑regulated
SM&CR firms a Senior Manager should be responsible and accountable
for each area of a firm’s activities. We confirm that this does not change
how Overall Responsibility applies to banking firms.

Unregulated activities will come into the scope of Overall Responsibility

where they meet the definition of ‘SMCR financial activities’ under our
Handbook. This includes:

• regulated activities

• an activity carried on in connection with a regulated activity (whether

current, past or contemplated)

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• an activity held out as being for the purposes of a regulated

activity or an activity included on the ‘List of activities subject to
mutual recognition’ in Annex 1 of the CRD (whether current, past
or contemplated)

The definition of SMCR financial activities in the Glossary contains

more detail.

There is no territorial limitation restricting the rules relating to Overall

Responsibility to transactions in the UK. Someone performing
a function for a UK entity can affect that entity even where they are
doing business outside the UK.

Responsibilities Maps

Feedback received
Q26: Do you agree with our proposal to apply Responsibilities
Maps to Enhanced firms? If not, please explain why.

6.21 Most respondents agreed with our proposals, with a significant number suggesting
that all firms should maintain a Responsibilities Map.

6.22 There was some confusion about the level of detail required in the Responsibilities
Map. Some respondents were unsure whether information in Statements of
Responsibilities should be repeated. A number of firms asked for guidance on how to
create the map and what lessons were learned when banking firms implemented this.

6.23 There were questions about when maps need to be updated and submitted to us,
following changes to the management team.

Some respondents suggested that legal entities managed as a group could submit
a single Responsibilities Map. Some respondents also asked for guidance on how
to represent key senior managers in the parent group.

Our response

Under Principle 3, all firms need to take reasonable care to organise

and control their affairs responsibly and effectively. All firms may find it
helpful to use the principles and practice of the Responsibilities Map,
but we only require Enhanced firms to create and maintain them, and
to send these to us when there is a material change. We feel it would be
disproportionate to require smaller firms to do this.

Respondents should refer to our rule in SYSC 25.2.3, which describes

what a Responsibilities Map must include. The level of detail in the
map should clearly describe the firm’s management and governance
arrangements. They can also give a collective view of how responsibilities
have been allocated and highlight issues or gaps in a firm’s
governance arrangements.

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Our rules state that Responsibilities Maps should be up‑to‑date at all

times. It is up to firms to decide how they do this and we do not require
changes to be notified to us except in specified circumstances (such as
a notification of a change to a Senior Manager’s SoR or an application
for approval of an SMF). For each significant change in the management
arrangements at a firm,9 every impacted Senior Manager will need
to update their SoR. Any significant changes to a Senior Manager’s
responsibilities must be shown on an updated SoR and re‑submitted
to us, along with an updated Responsibilities Map. In some cases, the
changes could make little difference to the overall map. In other cases,
reviewing the map could help the firm spot issues resulting from the
changes, such as gaps or overlaps in responsibilities.

We recognise respondents’ feedback on the resources required to

update the maps and SoRs. However, we think that the requirements
are proportionate. Firms with a simple allocation of responsibilities
will only need to produce simple documents. Likewise, small changes
to responsibilities will create small changes to the maps and may
not require any change to SoRs. Firms which operate within a group
should note that the SM&CR applies to legal entities individually,
rather than to a group as a whole. It is therefore not appropriate for
firms to submit only one Responsibilities Map for the entire group.
However, the guidance in SYSC 25 recognises that a firm may share
management or governance arrangements with other members of
the group. Firms should include these details in their maps to show
how their management and governance arrangements fit together
with the group.

Handover Procedures

Feedback received
Q27: Do you agree with our proposal to apply handover
procedures to Enhanced firms? If not, please explain why.

6.24 Most respondents welcomed our proposal to apply handover procedures to Enhanced
firms. In their view, firms had already developed some form of handover procedures.

6.25 While agreeing with our proposals, a few respondents suggested that we extend this to
cover Core firms as well.

6.26 Some expressed concerns – in particular, some felt that we should not prescribe or
dictate handover procedures. Others were concerned that there could be problems
applying our proposals if Senior Managers leave the role suddenly without preparing
handover materials.

9 This is required by FSMA and explained in SUP10C.11, where we provide examples of what is and isn't a significant change.

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6.27 We were asked about the detail that should be recorded in the handover template, and
asked to explain our expectations and provide good practice guidance on the following:

• reasonable steps

• what should be included in the handover policies and certificates

Our response

Having considered respondents’ feedback, we will implement our

proposals unchanged. We think there has been a misunderstanding
of the policy intention, especially around handover arrangements
and handover certificates. We want to clarify that it isn’t mandatory
to prepare a handover certificate. This is one way that firms can meet
the handover requirements, but we understand that there may be
cases where this is impractical. We think this is clear in our Handbook in
SYSC 25.9.8.

Firms should have arrangements for an orderly transition between

Senior Managers. Firms can decide how to do this. Each firm’s handover
material will depend on the business model and governance structure,
as well as the specific individual’s position and responsibilities. Handover
policies can help firms demonstrate they have taken reasonable steps to
ensure a person taking a Senior Manager role has all the information and
materials they could reasonably expect to do their job effectively, even
where the previous Senior Manager departs suddenly.

We won’t require Core firms to comply with the handover rules.

However, Senior Managers in Core and Limited Scope firms will still be
subject to SC1 of the Conduct Rules. This requires Senior Managers to
ensure that the business of the firm for which they are responsible is
controlled effectively. Core firms may find handover procedures useful
to support this, but it is not required.

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7 Applying the new regime to incoming

UK branches  

Who should read this chapter

This chapter only applies to EEA and Third Country Branches.

Our proposals

7.1 In CP17/25, we proposed a set of Senior Management Functions for EEA and non‑EEA
branches, and set out how we proposed to apply the Certification Regime and
Conduct Rules to these firms.

7.2 We also proposed a set of Prescribed Responsibilities for non‑EEA branches, 3 of which
(aa, ff and ee) are specific to non‑EEA branches.

Table 6: Application of the SM&CR to branches

Element EEA Branches Non‑EEA Branches
SMFs SMF21 – SMF19 – Head of Third Country Branch
EEA Branch
Senior Manager
SMF17 – Money SMF3 – Executive Director
Laundering
SMF16 – Compliance Oversight
Reporting
Officer (MLRO) SMF17 – Money Laundering Reporting Officer (MLRO)

Prescribed a) Performance by the firm of its obligations under the Senior

Responsibilities Managers Regime, including implementation and oversight
b) Performance by the firm of its obligations under the
Certification Regime
b-1) Performance by the firm of its obligations in respect of
notifications and training of the Conduct Rules
d) Responsibility for the firm’s policies and procedures for
N/A
countering the risk that the firm might be used to further
financial crime
z) Responsibility for the firm’s compliance with CASS
aa) Responsibility for management of the firm’s risk
management processes in the UK
ff) Responsibility for the firm’s compliance with the UK
regulatory system applicable to the firm

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Element EEA Branches Non‑EEA Branches

ee) Responsibility for the escalation of correspondence from
the PRA, FCA and other regulators in respect of the firm to
the governing body and/or the management body of the firm
or, where appropriate, of the parent undertaking or holding
company of the firm’s group
(za) Responsibility for an AFM’s value for money assessments,
independent director representation and acting in investors’
best interests
Certification
Yes
Regime
Conduct Rules Yes

Feedback received

Q28: Do you agree with our proposals for Senior Managers in

EEA branches?

Q29: Do you agree with our proposals on the Certification

Regime and Conduct Rules for EEA branches?

Q30: Do you agree with our proposals for Senior Managers in

non‑EEA branches? If you disagree, please explain why.

Q31: Do you agree with our proposals for Prescribed

Responsibilities in non‑EEA branches? If you disagree,
please explain why.

Q32: Do you agree with our proposals on the Certification

Regime and Conduct Rules for non‑EEA branches?

7.3 The majority of respondents supported our proposals for branches. They asked how
the regime would apply to EEA branches after the UK leaves the European Union.

7.4 Some challenged the additional administrative burden on Senior Managers in non‑UK
locations who are already subject to local regulations. Others noted that the Branch
Manager may not be involved in the day to day activities of the firm, particularly in
larger branches. One respondent suggested that the SMF16 – Compliance Oversight
Function should apply to EEA branches to ensure head offices appreciate the
regulatory requirements of the UK.

7.5 One respondent noted that the proposals for solo‑regulated non‑EEA branches were
inconsistent with the banking regime, as the SMF7 – Group Entity Function doesn’t
apply to solo‑regulated branches.

7.6 Respondents asked us to confirm that PRs should not be assigned to individuals in EEA
branches but should be assigned to Senior Managers in non‑EEA branches.

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7.7 Some respondents wanted the PRs to be consistent across the different categories
of firms.

7.8 Others suggested that PRs for non‑EEA firms should also include responsibility for
culture, training and conflicts of interest.

7.9 The majority of respondents agreed with our proposals on the Certification Regime
and Conduct Rules for EEA branches. However, some questioned whether it was
proportionate to have 2 Senior Managers responsible for a large certified population.
Most welcomed the exclusion of non‑UK staff from the Certification Regime, but
there was some concern that this could lead to gaps in accountability in firms with
global operations.

Our response

We explained in our Mission that we would review our Handbook after

the work on the outcome on EU withdrawal is clear. Until then, we don’t
intend to do further work on changing the structure of our Handbook,
including the SM&CR rules.

Senior Managers at EEA Branches

EEA branches have a simplified version of the Senior Managers Regime
– the only individuals who require approval are the EEA Branch Senior
Manager and the MLRO. We believe that this tailored version of the
regime is proportionate and appropriate, and reflects the split of home
and host regulator responsibilities.

EEA branches don’t need to put forward their Head of Compliance or

Compliance Officer for approval for the Compliance Oversight function
(SMF16). This is a matter reserved to the home member state. This is
consistent with the current APR for EEA branches, as well as the regime
for banking firms.

EEA Branches should still organise themselves so they meet their

regulatory responsibilities, for example with clear governance structures
and lines of accountability.

Senior Managers in EEA branches will require a SoR. We confirm that PRs
won’t apply to EEA branches.

Non‑EEA Branches and SMF7

For non‑EEA branches, we have not included the SMF7 – Group Entity
Senior Manager. This is consistent with our approach for UK‑based firms
in the Core tier, and reflects a proportionate application of the regime to
solo‑regulated firms.

Territorial Scope
Most respondents agreed with the proposed territorial application
of the regime for branches, so we have maintained this approach in
our near‑final rules. We believe this reflects the different regulatory
requirements that apply to incoming branches. This includes rules on

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fitness and propriety, and conduct, which apply to staff under their home
state regulations.

Prescribed Responsibilities for Branches

The differences in the PRs for Core and Enhanced firms and Non‑EEA
branches reflect the different natures and risks associated with
these businesses. We don’t propose applying any additional PRs to
non‑EEA branches as we think the suite we proposed is appropriate
and proportionate. It focuses accountability on the key conduct and
prudential risks that can harm our objectives. See our feedback in
Chapter 2 for more detail on this.

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8 Changes that affect banking firms and

solo‑regulated firms   

Our proposals

8.1 In CP17/25, we proposed introducing a new PR for the Conduct Rules. This means that
all firms, including banking firms, must allocate responsibility for ensuring that they
train staff in the Conduct Rules and comply with the FCA notification requirements.

8.2 The 12-week rule allows someone to cover for a Senior Manager without being
approved, where the absence is temporary or reasonably unforeseen, and the
appointment is for less than 12 consecutive weeks. We proposed to allow any
responsibility that the absent manager holds under the Overall Responsibility
requirement to be reallocated to someone who is not approved, during their absence.
We also suggested a technical change to apply the SMF27 – Partner function to banks.

8.3 This chapter sets out the feedback we received on these topics and our response.

New PR for the Conduct Rules

Feedback received
Q33: Do you agree with our proposal to introduce a new
Prescribed Responsibility for the Conduct Rules that will
apply to banking firms?

8.4 The majority of respondents supported our proposal. A small number challenged the
need for the PR and requested clarity on how to allocate it.

8.5 A small number of respondents believed that it might be difficult to allocate this PR to
one person, as training is often administered by HR, Legal and Compliance.

Our response

The Conduct Rules and this PR aim to drive up standards of

individual behaviour in financial services. We aim to improve individual
accountability and awareness of conduct issues. This will in turn achieve
the culture change that we are seeking. We want to make sure a senior
individual is accountable for ensuring adequate training and accurate
reporting of breach information to the regulator. As a result, having
considered respondents’ feedback, we believe that introducing this PR
will help achieve our aims.

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Firms must decide which Senior Manager is the best person to hold this
PR. It should be given to the Senior Manager who is the most senior
person responsible for the Conduct Rules training and notification
requirements. They must also have sufficient authority and an
appropriate level of knowledge and competence to do this properly.
In larger firms, this may be the individual accountable for ensuring that
activities undertaken across different parts of the firm (eg HR, legal and
compliance) enable the firm to comply with our requirements. It doesn’t
mean this person needs to be personally involved in these activities
day‑to‑day.

This PR should normally be held by only one person. Firms will only
be able to share this PR in limited circumstances. They must be able
to show that this is appropriate and justifiable. If a firm decides it is
appropriate to share this PR, they must show why this is justified and
confirm that this does not leave a gap.

Changes to the 12-week rule

Feedback received
Q34: Do you agree with our changes to the 12-week rule? If not,
please explain why.

8.6 Several respondents suggested extending the 12 week period or using waivers where
a firm can’t recruit a replacement within 12 weeks.

8.7 We were asked to clarify how the rule applies to a variety of reasons for an
SMF’s absence.

Our response

We intend to implement the 12-week rule as proposed. This applies

whatever the reason for the Senior Manager’s absence.

We recognise that recruitment processes can take longer than

12 weeks. However, we don’t believe that it would be appropriate for an
individual to perform a Senior Management Function for longer than
this without approval. As such, if someone is covering an absence for
longer than 12 weeks, they will need to be approved for the relevant
SMF they are covering, or the firm would need to apply for a waiver.

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Applying the Partner Function to Banks

Q35: Do you agree with our approach to applying the partner

function to banking firms? If not, please explain why.

8.8 We received 2 responses to this question. Both agreed with our approach.

Our response

We will apply the Partner Function to Banks as planned.

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9 Feedback to our Cost‑Benefit Analysis 

9.1 When proposing rules, we must publish a cost benefit analysis (CBA) under
Section 138I(2)(a) of FSMA. The CBA must include an analysis and estimate of
the costs arising from, and the benefits brought about by, our proposed rules.
We published a CBA for our proposals in July, alongside CP17/25.

9.2 This chapter sets out our response to the feedback we received on our CBA. We have
separately published an updated CBA alongside this Policy Statement.

9.3 In CP17/25 and CP17/40, we explained, as required by Section 138K of FSMA,

that we did not expect our proposals to have a significantly different impact on
mutual societies. The responses received to our consultations have not changed
this assessment.

Feedback received

Q36: Based on the summary above and the full analysis10,

do5you agree with our approach and methodology for
the cost-benefit analysis? If not, please explain why.

Q37: Based on the summary above and the full analysis10,

do you agree with our findings and conclusions for the
cost‑benefit analysis? If not, please explain why.

9.4 We received 11 responses to these questions.

9.5 Six respondents agreed with the analysis and conclusions, but asked us to work closely
with firms during implementation because of the number of other ongoing regulatory
initiatives happening at the same time. One suggested that a higher response rate to
our survey would have given greater confidence about our conclusion.

9.6 One respondent suggested that some Core firms may choose to adopt elements
of the Enhanced tier as best practice and we should consider these costs as part of
the CBA.

9.7 Another respondent agreed with the overall CBA, but said our analysis did not consider
the impact for groups with entities already under the SM&CR. They suggested that,
for these firms, the costs may be greater than the benefits. A further respondent
suggested that smaller firms pose a lower risk, so the cost‑benefit of applying the
SM&CR to these firms is less clear, particularly as they are subject to the APR.

9.8 One respondent suggested that, because the merged CBA covers both solo‑regulated
firms and insurers, this made it difficult to work out which parts of the analysis apply to
which firms.

10 www.fca.org.uk/publication/research/cba-extensionsenior-managers-certification-regime.pdf

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9.9 One respondent said that the SM&CR would result in less direct supervision of firms
and that we should take this into account. They also asked us to confirm whether our
implementation costs will come from our existing budget.

9.10 One respondent disagreed with our CBA and argued that the changes we proposed
will involve significant one‑off and ongoing costs. They noted that the CBA did not
incorporate the actual costs to banking firms and asked for further information on
our discounting of the reported costs. One respondent suggested that the quoted
costs to maintain the Certification Regime were an underestimate and that significant
work would be needed to oversee and monitor the certified population. Some other
respondents commented more generally that the costs were likely to be understated.

9.11 One industry association said we had given little explanation about why we had left out
some cost categories in the compliance costs estimates in the main part of the CBA.
Another asked why we had not separated the costs associated with the new Conduct
Rules PR for banking firms.

9.12 We were also asked to further explain what ‘average costs’ incurred by firms means.

9.13 Some respondents suggested that unintended consequences from the proposed
changes could cause considerable consumer harm, and we had overlooked the cost of
this. Another respondent suggested that the consumer protection should override any
CBA findings.

9.14 We were asked whether the following factors had been included in the CBA:

• increased headcount as a result of the SM&CR

• IT system builds to meet the additional documentation and evidencing requirements

• legal fees

• administration costs

• higher executive compensation

• training & development

9.15 Some respondents suggested that we should quantify both tangible and
intangible benefits.

Our response

We used a survey to help inform decisions about what the right package
of policy proposals was, and to assess the costs and benefits of our final
policy proposal.

We consider our position robust because we surveyed a large number

of firms (ca. 2020 of which 1690 were solo‑regulated) and do not
consider that the number of 171 responses by solo‑regulated firms in
the Core tier and 37 responses by insurers is too small to draw reliable
conclusions. Where the number of responses for the given tier was small,

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we have used the estimated costs with caution. We have undertaken

additional analysis where we do not believe we can rely on the estimates.
We have consulted on the CBA and have not received evidence that
suggests we reached a wrong conclusion.

Some Core firms may choose to adopt elements of the Enhanced tier,
but this is not required under the rules. As a result, we have not included
any additional costs from voluntary compliance with the SM&CR.

The analysis in the original CBA (and final CBA) considers the impact
of the SM&CR on groups with entities which are already subject to
SM&CR. Firms were asked for the incremental costs of the new regime
over and above the existing Approved Persons Regime and some
survey respondents are part of groups already subject to SM&CR. The
compliance cost estimates and the analysis in the CBA are therefore
based on the additional costs of the SM&CR. We have considered
different types of firms by designing 3 categories of firms within the
SM&CR (‘tiers’). The CBA concludes that the SM&CR is likely to be net
beneficial overall.

Subheadings and table headings in the CBA clarify which parts of

the compliance cost analysis and illustrative measurements of the
likely benefits refer to solo‑regulated firms and insurers. The existing
academic literature does not allow us to discuss the non‑quantifiable
costs or benefits separately for solo‑regulated firms or insurers.

The CBA shows that the SM&CR is expected to lead to significant

compliance costs for firms, but also to significant benefits. The per
firm estimates presented in the CBA are based on weighted averages
of the firms in our sample. We believe that respondents who felt that
our analysis underestimates the compliance costs are likely to be larger
firms or have more complex governance structures than most other
firms in their tier. Those who responded to the survey are larger firms
which have submitted high cost estimates. None of the respondents
has provided any extra evidence that would allow us to assess these
comments further.

We discuss the main reasons for leaving out certain cost categories from
the cost estimates included in pages 18 to 20 of the original CBA.

The costs incurred by the FCA for the implementation of the SM&CR will
be recovered separately from industry.

The CBA does not use banking firms’ compliance costs because banks
are different from solo‑regulated firms and insurers. Estimates based on
their costs would therefore not be representative for firms in scope of
the SM&CR. As the SM&CR differs from the Senior Managers Regime for
banks, compliance costs for these two regimes will likely differ.

Average costs
The average compliance costs discussed in the original CBA and in the
CBA accompanying this PS are the averages over all the cost estimates
provided by the survey respondents for each given tier. These averages

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have been weighted to ensure they represent the different types of firms
in the overall population. These averages are not typical costs – given the
broad range of firms in scope of the SM&CR it is impossible to say which
type of firm (for example, with a certain number of SMFs or employees)
would typically incur such costs. Some firms will incur higher costs
than the average and others will incur lower costs. We have used these
averages to estimate the total compliance cost for all firms in each of
the tiers.

We believe that the CBA fairly reflects the non‑quantifiable

costs. We note that respondents have not provided any detailed
arguments or evidence otherwise. This includes concerns regarding
consumer protection.

We have considered the following factors in the CBA:

• increased headcount: The cost categories in the survey included

required adjustments firms must make, including recruitment
costs, staff time for discussions of responsibilities, staff monitoring
and record keeping. These adjustments may require an increase in
headcount. We discuss the benefits of these activities in the CBA
Chapter on benefits

• costs to amend IT systems and to develop and run training and

development: These cost categories were included in the survey

• legal fees and administrative costs: Where these do not fall into the
cost categories in the survey, respondents will have included those in
the category ‘other costs’

• higher executive compensation: see section ‘Wage compensation’

(p.31 of the original CBA)

The CBA measures the expected benefits as much as is possible.

Further attempts to quantity these would have led to estimates that we
believe would not have been sufficiently reliable.

The original CBA discusses the costs and benefits of the SM&CR for
solo‑regulated firms and insurers. The compliance cost for the three
changes for banking firms are discussed in CP17/25 (at paragraph 41
of Annex 1). These were considered to be of minimal significance and
did not require a CBA according to FSMA 138L(3)(b).

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Part 2:
Feedback to CP17/40:
Transitioning FCA firms and individuals to the
Senior Managers & Certification Regime 

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10 Transitional Arrangements 

Who should read this chapter

This chapter applies to all firms..

Our proposals

10.1 This chapter contains our response to feedback we received on the transitional
arrangements we consulted on in CP17/40, including:

• the phased implementation of the Certification Regime

• the phased implementation of the Conduct Rules

• the requirement to check that the firm’s information is correct on the Financial
Services Register after automatic conversion

Figure 2. Summary of transitional arrangements

10.2 For the purposes of the near-final rules that form part of this Policy Statement, we
have assumed firms will have 12 months from the start of the regime to complete their
fitness and propriety assessments and to get the certification paperwork in place.
This is subject to commencement regulations to be made by HM Treasury.

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Feedback received

Q1: Do you have any comments on our proposed

transitional arrangements?

10.3 Respondents asked us to communicate the start date for the new regime as soon as
possible. They requested an extended time period between the publication of the final
rules and the start of the SM&CR. Some respondents suggested we should allow the
conversion process to start before Commencement. This would allow firms to identify
and correct errors or omissions which occur during the automatic conversion process.

10.4 Some respondents asked us to clarify what firms should do if, after Commencement of
the new regime, details in the Register about their Senior Managers are incorrect.

10.5 There were some practical suggestions to ease the transition process. These included
asking us to provide dedicated support during transition and improvements we might
make to the forms.

10.6 One person asked us to clarify what fitness and propriety checks firms should do
during transition, and what firms should do about long‑standing employees who
change roles after start of the regime.

10.7 We were also asked to explain how the new regime will affect Appointed
Representatives (ARs).

Our response

Commencement dates and support during the transition process

The Treasury has announced that the extension of the SM&CR will
commence on 9 December 2019 for solo‑regulated firms.

We have provided a guide to the regime and website content to help

firms move to the SM&CR. Our Contact Centre is also available to
help firms with any specific questions, as well as through firms’ usual
supervisory contacts. Contact details for the FCA are available on
our website.

Checking the Register after Commencement

Firms must check that their approvals are correct on the Financial
Services Register as soon as the new regime starts. If their approvals
are incorrect then they should submit the relevant regulatory forms to
correct this, as soon as possible. We encourage firms to ensure that their
current approvals are up to date and also to check the Register before
the new regime starts. This will minimise the number of errors that occur.

Firms can submit Form K conversion notifications to us up until a week

before Commencement. This is to give firms as much time as possible
to finalise their documentation. This means that we will be unable
to provide provisional results of conversion ahead of the start of the
new regime.

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We will convert existing functions according to the mapping tables

set out in Chapters 11 and 12. Firms can use these tables ahead of
conversion to determine which of their controlled functions will be
mapped to relevant SMFs. We have also published content on our
website to help firms with this process.

Fitness and Propriety (F&P) checks

We provide guidance on the things firms should consider when
assessing an individual’s fitness and propriety in the FIT sourcebook of
our Handbook. This guidance is being retained under the SM&CR. Firms
must decide for themselves the appropriate level of checks to conduct.

Applications under APR will use the existing forms, but applications
using the new SM&CR forms will include the amended F&P questions
consulted on in CP17/40.

Appointed Representatives
As explained in CP17/40, legislation does not provide us with the power
to extend the SM&CR to ARs. The Approved Persons Regime (APR) will
continue to apply to ARs once the extended SM&CR comes into effect.

There is one exception, for Limited Permission Consumer Credit

firms that are also ARs for other business. They will be in scope of the
SM&CR rather than remaining under the APR. This is because the legal
entity is authorised under FSMA. Governing functions at the AR side
of these firms will be converted automatically to equivalent Senior
Management Functions according to the mapping table for Core and
Limited Scope firms (read Chapter 11). Individuals approved as CF30s
for the AR will remain approved under this function.

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11 Conversion – Core and Limited Scope

Firms (including branches) 

Who should read this chapter

This chapter is relevant to Core and Limited Scope firms, and branches.

Our proposals

11.1 This chapter contains our response to the feedback we received on the conversion
approach for Core and Limited Scope firms we consulted on in CP17/40, including:

• mapping APR controlled functions to SMFs

• our proposal to convert relevant approvals at Core and Limited Scope

firms automatically

• our approach to new and in‑flight applications by Core and Limited Scope firms

• our approach to Core and Limited Scope firms applying for authorisation
(‘applicant firms’)

11.2 The final mapping of APR to SM&CR controlled functions at Core and Limited Scope
firms is set out below.

Table 7: Function mapping for Core and Limited Scope firms (including branches)11
Current controlled function Corresponding Senior Management Function(s)
CF1 – Director SMF3 – Executive Director
CF2 – Non‑Executive Director12 SMF9 – Chair
CF3 – Chief Executive SMF1 – Chief Executive
SMF19 – Head of Third Country Branch (Third Country
Branches only)
CF4 – Partner SMF27 – Partner
SMF3 – Executive Director (Third Country Branches only)
CF5 – Director of SMF3 – Executive Director
Unincorporated Association
CF6 – Small Friendly Society Function SMF3 – Executive Director
CF8 – Apportionment & Oversight SMF29 – Limited Scope

11 Firms should note that the CF30 – Customer Function will no longer be approved under the SM&CR and is therefore not available for
conversion mapping.
12 Non‑Executive Directors at Core and Limited Scope firms who are not the firm’s Chair will no longer be approved by the FCA.

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Current controlled function Corresponding Senior Management Function(s)

CF10 – Compliance Oversight SMF16 – Compliance Oversight
CF11 – Money Laundering Reporting SMF17 – MLRO
Officer (MLRO)
CF29 – Significant Management Function13 SMF21 – EEA Branch Senior Management Function

Function mapping for Core and Limited Scope firms   

Feedback received
Q2: Do you have any comments on our proposed mapping of
functions for Core and Limited Scope firms?

11.3 There was much support for the proposed mapping of APR functions to SM&CR
functions for Core and Limited Scope firms.

11.4 Respondents made a number of alternative suggestions regarding how CF roles

should map to SMF roles. These included:

• that the APR CF29 – Significant Management Function should map to the SMF18 –
Other Overall Responsibility Function

• the APR CF1 – Director function should map to the SMF9 – Chair function without
requiring an additional approval for a governing function

11.5 Respondents also asked us to clarify:

• what firms should do if they want to map roles in a different way from the proposals

• whether Senior Managers subject to automatic conversion have a permanent

exemption from submitting Statements of Responsibilities

• if firms with Partners (CF4s) who don’t meet the definition of a Senior Manager
should cancel their approvals ahead of Commencement of the new regime to avoid
automatic conversion to an SMF role

• whether the SMF16 – Compliance Oversight role will assume responsibility for the
current CF10a – CASS Oversight role

Our response

Alternative mapping suggestions

We have considered the alternative mapping suggestions but have
decided not to make any changes to our proposed rules. The SMF18
– Other Overall Responsibility Function won’t apply to Core or Limited

13 This mapping only applies for EEA Branches. Individuals holding only CF29 at other Core firms won’t be converted to a Senior
Management Function.

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Scope firms, so it won’t be possible for these firms to convert existing

CF29s to this function.

There will be individuals acting as Executive Chairs within the wide range
of firms in scope of the extended SM&CR. In CP17/25, we explained that
automatic conversion of individuals to the SMF9 – Chair function is not
possible. This is because we currently approve Non‑Executive Chairs
under the CF2 – Non‑Executive Director function and Executive Chairs
are approved under another of the governing functions. As a result, we
don’t hold data on which individuals perform the Chair role.

If a Core or Limited Scope firm submits a Form K telling us that an

individual holding the CF2 function should be converted to the SMF9 –
Chair role, the firm does not have to send us a SoR for that person.

An Executive Chair currently performing the role under an executive

governing function should:

• be automatically converted to the relevant governing function SMF

• apply for approval to perform SMF9 by submitting short Form A and a

SoR covering both functions

This reflects the additional responsibilities that distinguish an Executive

Chair from a Non‑Executive Chair.

Clarifications
The mapping table set out above shows the only direct conversions that
will be possible for Core and Limited Scope firms. If firms need to move
an individual into an unmapped role, they must submit either a Form A
(to apply for new approval), or a Form E (to transfer an existing approved
person to a new role that does map). There is information on our website
to help firms work out what they need to do in a variety of scenarios.

All Senior Managers should have a SoR, but Core and Limited Scope
firms are not required to submit these for people converted at
Commencement. This is a ‘one‑off’ exemption that only applies at
Commencement. It will enable us to automatically convert the vast
number of individuals holding controlled functions under the APR to
their relevant Senior Management Function(s). If a SoR is updated after
Commencement, the updated version will need to be submitted to us
using Form J.

Where an individual’s SoR is updated due to a significant change in their

responsibilities, firms must send the revised version to the FCA using
Form J. This applies regardless of whether the individual was converted
or a SoR was previously submitted. Core and Limited Scope firms that
submit new applications for approval under the SM&CR must also send
a SoR.

If firms have individuals currently approved in mappable roles who don’t

meet the definition of a Senior Manager, they must submit, before the
start of the regime, a Form C to take effect on the start of the regime.

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If they don’t, the individual’s function will be shown on the Register as

converted to a Senior Management Function at the start of the SM&CR.

There is no proposal for the SMF16 – Compliance Oversight Function to

assume the responsibilities for the CF10a – CASS Operational Oversight
Function under the APR. We have set out additional feedback on CASS in
Chapter 3.

Before they move from the APR to the SM&CR, we encourage firms
to consider whether partners currently approved under CF4 – Partner
Function meet the SMF definition. If they don’t, then firms will need to
submit a Form C to cancel that Partner’s approval.

Conversion for Core and Limited Scope firms

Feedback received
Q3: Do you have any comments on our approach to
conversion for Core and Limited Scope firms?

11.6 The majority of respondents agreed with our approach to conversion for Core and
Limited Scope firms.

11.7 Many respondents requested that we provide support to firms during the conversion
process. Suggestions included:

• making the forms available as soon as possible

• a facility for large firms and trade bodies to test automated systems ahead
of Commencement

• dedicated helplines

• clarity on what happens if the Register is not updated in time

• publishing reminders about firms’ responsibilities

11.8 Some respondents asked us to clarify the process by which firms move or ‘opt‑up’
between the Core and Enhanced tiers.

11.9 A respondent asked us to confirm whether submitting a conversion notification prior

to Commencement is sufficient to meet the obligations under the regime in the event
we don’t process the notification or update the Register in a timely manner. Another
respondent asked us when the new forms will be available on the Connect system and
the processing time of Service Level Agreements (SLA) for SMF roles.

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Our response

Support and systems during conversion

To support firms in moving to the SM&CR, we plan to make the relevant
forms available in Connect three months before the regime starts. While
we won’t allow firms to test the facility in advance, we will install and test
our systems to ensure they will be ready for all firms.

We have also published material on our website and provided guides

to the regime to assist firms in understanding the requirements.
In addition, our Customer Contact Centre will be available to help answer
any questions.

If a firm submits a conversion notification (Form K) prior to

Commencement and within the specified time period with all relevant
information, this will be sufficient to meet the obligations to transition to
the new regime.

Opting up
In Chapter 6 we explained the process for opting up, once the regime has
started, in our response to Q21. We also recognise that some firms will
want to opt‑up from the start of the SM&CR.

To allow this, we will make it possible for firms to notify us of

their intention to opt‑up ahead of Commencement using
a pre‑Commencement version of Form O.

New and in‑flight applications for Core and Limited Scope firms

Feedback received
Q4: Do you have any comments on our approach to new and
in‑flight applications by Core and Limited Scope firms?

11.10 The majority of respondents agreed with our approach to new and in‑flight
applications by Core and Limited Scope firms.

11.11 Many respondents put forward practical suggestions, including:

• having a 12-month gap between publication of the final rules and Commencement

• making the new forms available only at Commencement to avoid confusion

• providing an online tool to help firms work out which forms to use

11.12 A respondent asked us to clarify whether an in‑flight application using the old Form
A will be converted by:

• us granting approval as if it was an APR application and then automatically converting

the role to SM&CR

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• whether the conversion means it will be treated as an SM&CR application which

requires Statements of Responsibilities

11.13 We were also asked to clarify:

• whether the ‘12-week rule’ applies to firms after Commencement if their

applications were not processed by us in time. The rule allows an individual to cover
for a Senior Manager without approval for up to 12 weeks

• what submitting an application in ‘good time’ means

Our response

Suggested changes to our approach

The Treasury has announced that the extension of the SM&CR to FCA
solo‑regulated firms will commence on 9 December 2019. This means
that firms have approximately 18 months to prepare for the new regime.

Some firms will wish to apply for new individuals to take up SMFs at
the start of the new regime. We will, therefore, make the new SM&CR
forms available before Commencement so that firms can get these
individuals approved as quickly as possible. We are mindful of the need
for clarity around APR and SM&CR forms in the lead up to the start of
the new regime and have considered this in the design of the amended
Connect system.

We have published a guide to the regime on our website to help firms

understand what they need to do to prepare for the SM&CR.

Clarifications
In CP17/40, we proposed to convert in‑flight applications automatically
and we intend to implement this approach. This covers all applications
submitted but not processed by the start of the new regime.

If an application submitted by a Core firm is still being processed at

the start of the new regime, we will convert the application to one
for an SMF. The SMF will become effective at the date of approval.
For example, an application under APR for a CF1 – Director function
will be converted to an application for SMF3 – Executive Director upon
approval. If an application is submitted under the APR, a Statement of
Responsibilities will be required to be submitted as soon as possible
after Commencement if the application is converted in‑flight (ie is not
approved prior to Commencement).

The 12-week rule period starts again at the start of the new regime.
This means that if an individual is performing an APR controlled function
under the 12-week rule at Commencement, and the function converts
to an SMF, they can continue to cover this role for up to another
12-weeks without approval.

CP17/40 set out our intention to process all applications ahead

of conversion, as long as they are submitted in good time. We will

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communicate the cut‑off dates to firms nearer to the time. After that
date, we can’t guarantee that applications will be processed ahead of
the start of the SM&CR.

Core and Limited Scope applicant firms

Feedback received
Q5: Do you agree with our approach to Core and Limited
Scope applicant firms?

11.14 Respondents supported our approach to Core and Limited Scope applicant firms.

11.15 Some respondents suggested that our proposal to apply the APR until
Commencement is disproportionate. They suggested a 12-week transition period
before Commencement for Limited Scope and Core firms in which we won’t sign‑off
new appointments.

Our response

We will maintain the APR until the start of the SM&CR to avoid a creating
a gap in our rules. This also ensures that all relevant approved individuals
will be appropriately converted.

The existing 12-week rule will continue in force for temporary

appointments to Significant Influence Functions (SIFs) until the new
regime begins. However, the 12-week rule will not apply to someone
whose appointment is meant to be permanent. Therefore, if it is
intended that the new person should be in post before the SM&CR
begins, the firm will have to apply for them to be approved under the
APR even if the gap between appointment and the start of the SM&CR
is short. The APR 12-week rule does not apply to the CF30 – Customer
Dealing Function.

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12 Conversion – Enhanced Firms 

Who should read this chapter

This chapter only applies to Enhanced firms, or firms intending to opt‑up to the Enhanced tier of
the regime.

Our proposals

12.1 This chapter contains our response to the feedback we received on the conversion
approach we consulted on in CP17/40, including:

• mapping APR controlled functions to SMFs

• converting individuals at Enhanced firms

• our approach to new and in‑flight applications by Enhanced firms

• our approach to Enhanced applicant firms

12.2 The final mapping of APR to SM&CR controlled functions at Enhanced firms is set
out below.

Table 8: Function mapping for Enhanced firms14

Current controlled function Possible corresponding Senior Management
Function(s
CF1 – Director SMF2 – Chief Finance Officer
SMF3 – Executive Director
SMF4 – Chief Risk Officer
SMF5 – Head of Internal Audit
SMF7 – Group Entity Senior Manager
SMF24 – Chief Operations
CF2 – Non‑Executive Director SMF9 – Chair
SMF10 – Chair of the Risk Committee
SMF11 – Chair of the Audit Committee
SMF12 – Chair of the Remuneration Committee
SMF13 – Chair of the Nomination Committee
SMF14 – Senior Independent Director
SMF7 – Group Entity Senior Manager

14 Firms should note that the CF30 – Customer Function will no longer be approved under the SM&CR and is therefore not available for
conversion mapping.
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Current controlled function Possible corresponding Senior Management

Function(s
CF3 – Chief Executive SMF1 – Chief Executive
SMF2 – Chief Finance Officer
SMF4 – Chief Risk Officer
SMF5 – Head of Internal Audit
CF4 – Partner SMF27 – Partner
SMF2 – Chief Finance Officer
SMF4 – Chief Risk Officer
SMF5 – Head of Internal Audit
CF5 – Director of Unincorporated Association SMF3 – Executive Director
SMF2 – Chief Finance Officer
SMF4 – Chief Risk Officer
SMF5 – Head of Internal Audit
CF6 – Small Friendly Society Function SMF3 – Executive Director
SMF2 – Chief Finance Officer
SMF4 – Chief Risk Officer
SMF5 – Head of Internal Audit
CF10 – Compliance Oversight SMF16 – Compliance Oversight
CF10a – CASS Operational Oversight Function15 SMF18 – Other Overall Responsibility
CF11 – MLRO SMF17 – MLRO
CF28 – Systems and Controls Function SMF2 – Chief Finance Officer
SMF4 – Chief Risk Officer
SMF5 – Head of Internal Audit
CF29 – Significant Management Function SMF18 – Other Overall Responsibility
SMF24 – Chief Operations

Feedback received

Function mapping for Enhanced firms

Q6: Do you have any comments on our proposed mapping of
functions for Enhanced firms?

12.3 Most respondents agreed with our proposed mapping of functions for Enhanced firms.

12.4 Respondents made a number of alternative suggestions regarding how APR functions
should map to SMF roles. These included that:

• CF29 should map to SMF7 – Group Entity Senior Manager

15 If an Enhanced firm elects not to convert an individual performing a CF10a (CASS Oversight) function to SMF18 (Other Overall
Responsibility) function, then this individual will be expected to be certified under the Certification Regime. The CASS Prescribed
Responsibility should then be allocated to the Senior Manager to whom to the individual reports.

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• CF1 – Director should map to SMF9 – Chair

• CF10 – Compliance Oversight should map to SMF5 – Head of Internal Audit

12.5 We received a number of responses on the breadth of the SMF24 – Chief Operations
function. These included the thought that there should be a separate SMF for IT and
that the responsibilities for risk in the SMF24 role are too large for one person.

12.6 It was suggested that the Enhanced definition of Executive Directors should also cover
Group Executive Directors, as long as they hold a SMF function in at least one entity
within the Group.

12.7 One respondent suggested Form K should contain a section to present a case where
a conversion could be allowed against unmapped functions.

12.8 We were asked to clarify:

• whether the SM&CR covers both regulated and unregulated subsidiaries

• why the CF10 – Compliance Oversight function maps to the SMF24 – Chief
Operations function

• if firms will be able to allocate a PR to one individual across several entities

Our response

Alternative mapping of functions

We have decided to implement the function mappings suggested in
CP17/40 with two minor changes. These clarify that the CF5 – Director
of Unincorporated Association and CF6 – Small Friendly Society Function
cannot be converted to the SMF7 – Group Entity Senior Management
Function. The conversion of these roles is based on their equivalence.
We won’t allow conversion of functions that don’t follow the rules in
these tables. To convert unmapped functions, firms will need to apply
for new approvals using Form A, or use Form E to transfer individuals
between roles.

We have not mapped the CF29 – Significant Management Function

to the SMF7 – Group Entity Senior Manager Function. The functions
included in the Group Entity Senior Manager Function are currently
mainly included in the Director and Non‑Executive Director functions
under the APR and so a person currently carrying on the group role
should already be approved for the APR Director or Non‑Executive
Director functions.

There will be individuals acting as Executive Chairs within the wide range
of firms in scope of the extended SM&CR. A person currently performing
the Chair role as an Executive Chair under a governing function will
need to apply for the SMF9 function using a short Form A, in addition
to their existing function being converted. This application should
be accompanied by a SoR for the individual. Their current governing
function should be included on the firm’s Form K.

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We have made SMF7 – Group Entity Senior Manager Function a separate

function (rather than including it as part of the Executive Director
function) as this is a different type of role, and it is important that it is
transparent where someone is performing this. The function covers
individuals operating in either an executive or non‑executive capacity,
whose role in the Group involves exercising significant influence in the
UK firm.

We have not allowed the conversion of the CF10 – Compliance Oversight

Function to the SMF5 – Head of Internal Audit. These are different roles
representing different ‘lines of defence’. If a firm has someone they think
should map to the Head of Internal Audit Function, this person should
currently be approved under the APR Systems and Controls Function,
not the Compliance Oversight Function.

The SM&CR is designed to fit to a firm’s structure and the application of

the SMF24 – Chief Operations function will vary between firms. We set
out guidance in SUP 10C.6B on where it may be appropriate for a firm to
have more than one SMF24. We have also provided extra guidance on
the areas that we would expect to be relevant to the SMF24 function in
our Handbook.

Clarifications
The SM&CR applies on a legal entity basis. This means that we can’t
apply elements of the regime at group level. If a regulated firm has an
unregulated subsidiary, then the subsidiary won’t be subject to the
SM&CR. Whether staff at the subsidiary are subject to the SM&CR will
depend on their relationship with the parent entity. It will also depend
on whether they meet the test in FSMA 63E(9) to be considered an
‘employee’ of the parent (discussed earlier, in Chapter 5). The application
of the Conduct Rules to ‘employees’ of the parent depends on whether
their role involves financial services activities.

The potential mapping of the existing CF10 – Compliance Oversight

Officer to the SMF24 – COO function was an error in the tables
presented in the CP. This won’t be a valid scenario for conversion and
was not included in the legal instrument consulted on in CP17/40.
The CF10 role can only directly map to the SMF16 – Compliance
Oversight Function.

Conversion for Enhanced firms and applicant firms

Feedback received
Q7: Do you have any comments on our approach to
conversion for Enhanced firms?

Q9: Do you agree with our approach to Enhanced

applicant firms?

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12.9 The majority of respondents agreed with the proposed approach to conversion for
Enhanced firms.

12.10 Several respondents asked us to make the forms available as soon as possible and
allow sufficient time ahead of Commencement for completion.

12.11 We were asked for clarification on whether regulatory references for the
previous 6 years need to be obtained for existing Senior Managers and Certified Staff
from Commencement

Our response

Support and systems during conversion

We have addressed this feedback in Chapter 11.

Clarifications
Firms don’t need to get regulatory references for existing
employees, including any Senior Managers and Certified Staff,
at Commencement.

New and in‑flight applications for Enhanced firms

Feedback received
Q8: Do you agree with our approach to new and in-flight
applications by Enhanced firms?

12.12 The majority of respondents agreed with our proposals for new and in‑flight
applications by Enhanced firms.

12.13 There were concerns that our requirement to list all relevant applications on Form
K could delay when firms are able to submit it. This could be an issue for firms with
high staff turnover or restructuring where they might not submit the form until
the deadline.

12.14 A respondent asked us to clarify whether the ‘12-week rule’ applies in the case of
in‑flight applications.

Our response

Form K
In designing our approach to Form K submissions we took into account
lessons learned from the implementation of the banking regime. To give
firms as much time as possible to complete their Form K, we have set a
deadline of one week before the start of the new regime to submit this
form. This may mean that some firms leave it until quite late and we have
factored this into our planning.

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12-week rule
If an individual performing a role under the 12-week rule before
Commencement is still performing that role at the start of the new
regime, the 12-week period resets. This means that the individual can
use the rule for a role that would otherwise be a Senior Management
Function for another 12 weeks. If they are in that role for longer
than 12 weeks they will need to be approved by the FCA.

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13 Forms 

Who should read this chapter

This chapter applies to all firms.

Our proposals

13.1 This chapter contains our response to the feedback we received on the changes to
forms we consulted on in CP17/40.

13.2 The main changes being made to our regulatory forms are set out below. To reduce
the different number of forms, we have combined overlapping versions and brought
APR applications for Appointed Representatives into these new SM&CR versions.

Table 9: List of amended/amalgamated forms for FCA solo‑regulated firms

Form Name Affected Purpose
Firms
Form A (Long) – Application to All An application for an individual to perform a
perform controlled functions including specified Senior Management Function (or, for
Senior Management Functions Appointed Representatives only, controlled
function) at the firm(s).
Form A (Short) – Application to All An application for an individual to perform a
perform controlled functions including specified Senior Management Function (or, for
Senior Management Functions Appointed Representatives only, controlled
function) at the firm(s).
Form C – Notice of ceasing to perform All An application form used to cancel an
controlled functions including Senior individual approval.
Management Functions
Form D – Changes to personal All Used to notify the FCA of Conduct Rule
information/ application details and breaches by Senior Managers, disciplinary
conduct breaches/disciplinary action action taken against Senior Managers and
related to conduct changes to personal information.

Form E – Internal transfer of a person All An application for an individual to change the
performing a controlled function for approved function being performed.
solo‑regulated firms
Form I – Application for the All An application for changes to the conditions
Variation of a Conditional Approval associated with a conditional approval to
for the performance of a Senior perform a Senior Management Function.
Management Function
Form J – Notification of Significant All A notification submitted to inform the FCA
Changes in Responsibilities of a Senior of significant changes to a Senior Manager’s
Management Function Manager Statement of Responsibilities.

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Form Name Affected Purpose

Firms
Form K – Conversion Notification Enhanced, An application to convert the firm’s approved
Form – FCA solo‑regulated firms Core on an individuals from the Approved Persons Regime
exceptions to new functions under the SM&CR. This can
basis also be used to submit updates to a previous
Form K.
REP008 – Notification of Conduct All Used to notify the FCA of Conduct Rule
Rule Breaches and Disciplinary Action breaches (that resulted in disciplinary action) by
Certification and Conduct Rules Staff but not
SMFs, or to submit a nil return.
Statement of Responsibilities for All A firm must use this template to create a Senior
solo‑regulated SM&CR firms Manager’s Statement of Responsibilities.
At approval it should be attached to a Form A,
Form E or Form K submission.
A firm must also use this template when
preparing an updated SoR and it should be
attached to a Form I (application for the
variation of a conditional approval) or Form
J (notification of a significant change to a
SoR) application.

13.3 There are also some changes that we and the PRA are making to the Fitness and
Propriety questions repeated in several solo and dual‑regulated forms. The table below
summarises these.

Table 10: List of final amendments to fitness and propriety questions

Form Section Specific Explanation of change
Reference
Civil Proceedings 5.02.3(c) This question asks whether the candidate is aware of any
potential or current proceedings that may lead to a County
Court Judgment (CCJ) or judgment debt against them. We
have deleted the previous reference to claims over £1000.
Civil Proceedings 5.02.8 We have added text to include whether the candidate has
ever been found by a judge or tribunal to have lied under
oath and/or that their evidence was to be disbelieved.
Civil Proceedings 5.02.10 We have added a 10 year time limit to the period in which an
individual has to declare if a firm in which the individual has
held a position of influence has been:
• adjudged by a court to be civilly liable for any fraud,
malfeasance, wrongful trading or other misconduct
• the subject of a judgement debt or award against the firm
• party to any other civil proceedings which resulted in an
order against the firm other than above

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Changes to forms

Feedback received
Q10: Do you have any comments on our proposed changes
to forms?

13.4 Respondents broadly agreed with the proposed changes to forms.

13.5 A number of respondents provided feedback on our proposed Form A.

They highlighted that the 5-year employment history required by the form was
inconsistent with the requirement to obtain 6 years of regulatory references.
We were also asked when a firm could use a short Form A.

13.6 Respondents commented on our proposed SoRs form. Some asked whether Core
and Limited Scope firms needed to maintain these. We were also asked to make an
editable document available for Core and Limited Scope firms. This would make it
easier for them to create and update the SoRs of their Senior Managers.

13.7 Two respondents asked us to restructure the form to make it specific to particular
sectors. Another asked us to provide a template and guidance notes for SoRs.

13.8 We were given feedback on user experience with Connect. These included the ability
to print one document rather than printing in sections and changes to the permissions
of users.

13.9 We received some ideas on ways to improve the forms. Suggestions included:

• ensuring the offline and online forms are entirely consistent

• updating the forms to refer to the GDPR and Data Protection Act 2018 rather than
the Data Protection Act 1998

• addressing the difference between the Long Form A which asks for a 5 year
employment history and the regulatory references requirements in our Handbook,
which ask for a 6 year employment history

Clarifications
13.10 Respondents asked us to clarify:

• which forms or sections Appointed Representatives should use

• if forms should be submitted electronically or by post

• whether a combined Responsibilities Map could be submitted on behalf of a group

• what a summary of handover material might involve, as requested in Form A

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Our response

Forms and Appointed Representatives

As part of our proposals for the extension of the SM&CR, we sought to
streamline and reduce the number of regulatory forms. We worked with
the PRA to remove the APR forms and relocate the sections that remain
relevant to ARs to the new SM&CR versions.

ARs should therefore use the same forms as firms that are subject to the
SM&CR. There are some sections of forms that are specific to ARs and
these are clearly signposted. We think that incorporating these sections
into the new forms is a better solution than having a separate form
specifically for ARs.

To make it clear that ARs must adhere to the APR, we have amended the
declarations on forms to refer explicitly to the Statements of Principle
and Code of Practice for Approved Persons (APER). We confirm that
Question 5.05.2 is not relevant for ARs.

Form A
We acknowledge that our requirements regarding employment
history are not identical between Form A and the regulatory reference
requirements. When firms apply for Senior Managers to be authorised,
we ask for information on their employment history for the last 5 years.

Our regulatory reference requirements require firms to obtain 6 years of

employment history for Senior Managers and Certified Staff. This was
introduced with the banking regime and is mirrored in the extension of
the SM&CR. For firms subject to MiFID, European regulations require that
we ask for 10 years’ employment history.

Whilst the requirements differ, they are not contradictory. We therefore

don’t intend to change these rules at this time as we don’t think it would
be proportionate for all firms not subject to MiFID to provide 10 years’
employment history.

Long Form A should always be used for a Senior Manager or Appointed

Representative application, unless the individual meets the criteria for
the submission of a Short Form A.

Short Form A should be used where:

a) a currently approved individual is applying for an additional

controlled function at the same firm

b) an individual has stopped holding a controlled function at one firm

and now needs approval to perform a controlled function at another
firm within six months

c) an individual is applying for a controlled function, and is already

approved for a corresponding controlled function in the same group
of functions (ie governing or required functions).

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Specific detail on the use of forms is set out in our Handbook in SUP 10C
Annex 2G.

Our rules provide guidance on what should be included in handover material

in SYSC 25.4 and SUP 10C.10. This is only required for Enhanced firms.

Statements of Responsibilities
Core and Limited Scope firms don’t have to submit their Senior
Managers’ SoRs. They do have to create and maintain them for each
individual Senior Manager at the firm from Commencement of the
SM&CR. Firms told us that it would be easier to do this if we created a
template for them to download and edit. We will consider the best way to
help firms understand the requirements and will provide extra material
in due course. We don’t think that it is practical to restructure the SoRs
form to make it specific to particular sectors. Firms have different
business models and structures and need the flexibility to represent
these properly.

The reference to the Data Protection Act has been updated in separate
Handbook amendments, to reflect the recent legislative changes.
We have also made consequential changes to bring the declarations
sections of our forms into line with the GDPR.

We have also considered feedback on differences firms have

experienced between the forms in the Handbook and our Connect
system. In the Handbook versions, firms will see all questions included
on a form, but many of these questions won’t be relevant. For example,
a Limited Scope firm looking at Long Form A in the Handbook will see 20
SMFs. However, the majority of these functions won’t be displayed on
Connect as they don’t apply to them.

Consistency between Handbook and Connect

We reviewed the forms to ensure consistency during the drafting of our
rules. We have addressed feedback on inconsistencies in forms for our
near‑final rules. We will ensure consistency between the Handbook and
our systems when these go live on Connect.

Some responses about regulatory forms related to user experience with

Connect, such as requests for the ability to print forms in one document,
rather than printing in sections. If you are experiencing issues using
Connect, please contact our Customer Contact Centre for assistance.

Clarifications
Firms should use our Connect system to submit forms. In the event
that FCA systems are unavailable for a prolonged period there may
be circumstances in which firms can submit using paper versions of
the forms.

The SM&CR applies on a legal entity basis, which means that

Responsibilities Maps should be drafted at the firm, rather than
group, level.

Forms will be available three months before the start of the regime.

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Changes to Fitness & Propriety Questions

Feedback received
Q11: Do you have any feedback on our proposed amendments
to the Fitness & Propriety questions?

13.11 The majority of respondents agreed with our proposed amendments.

13.12 Several respondents asked us to confirm that the rules on criminal records checks
comply with current privacy law. Others had specific queries about the Disclosure
and Barring Service (DBS), for example to confirm that firms will have the authority to
register with the DBS. Another suggested that individuals should be able to access the
DBS checking service and obtain certificates to submit to employers.

13.13 Some respondents queried the proposed 10 year time period for civil procedures
disclosures. A few suggested a 5 year period was more appropriate and consistent with
wider practice. A respondent noted candidates might not be able to answer questions
about court judgements involving large firms at which they were an employee.

13.14 Several respondents queried the proposed requirement to disclose involvement in

arbitration proceedings.

13.15 We were asked to confirm that declarations by candidates are sufficient evidence for
firms to meet the employment requirements.

13.16 One respondent was concerned about how professional bodies which issue
Statements of Professional Standing might engage in the SM&CR process, as they
believe that it is difficult for trade bodies to discipline members.

13.17 We were also asked whether we will make any changes to the questions in Form
A to reflect the Ministry of Justice consultation on aspects of Default County Court
Judgements (CCJs).

Our response

Fitness and Propriety Questions

Employers have legal obligations to process sensitive personal data, such
as criminal records. We don’t think it’s appropriate for us to give guidance
on privacy law. However, we want firms to be confident that they can
comply with the SM&CR.

Firms will need to decide how they should obtain the criminal records
checks they need. This may be through an umbrella organisation or by
registering directly with the DB organisation. Our rules require the firm to
obtain a criminal records check, rather than the candidate. A candidate’s
declaration in relation to criminal records checks would not be sufficient.

We will review any changes to the management of CCJs following the

publication of any policy statement by the Ministry of Justice.

The new form introduces a time limit to some of the questions about
civil proceedings. Previously, there was no time limit on this question.

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This change is designed to make this requirement more proportionate.

We have chosen a time limit of 10 years to recognise that civil
proceedings can sometimes take many years to conclude.

We think it is reasonable for senior level candidates to disclose whether

their previous firms have been subject to civil proceedings if they held a
position of influence in those firms. This is because the applicants using
the forms will be applying for senior roles and they should be mindful of
such information. We removed Question 5.02.3(c), as we considered it to
duplicate other questions asked in this section.

Disclosure of arbitration proceedings is only required for Solvency

II firms. This is set out in our Forms but was incorrectly summarised
in CP17/40 as potentially also applying to solo‑regulated firms.
Solo‑regulated firms don’t need to complete this section.

In relation to the employment requirements, some firms may wish to

conduct further checks on what the candidate has declared. It is for firms
to decide whether this is appropriate.

Professional bodies
Professional bodies and trade bodies have an important role to play in
strengthening professionalism amongst their membership.

We expect all bodies with responsibility for standards of professionalism

of a group of individuals involved in UK financial services, whether
through Royal Charter or otherwise, to have systems and controls
in place to effectively supervise and enforce non‑compliance by
their members.

Where they issue Statements of Professional Standing, we already

expect Accredited Bodies16 to act in the public interest. They should
work to raise consumer confidence and professional standards in retail
investment advice and promote the profession.17

Application of REP008 and the late returns fee

Feedback received
Q12: Do you have any comments on our proposal to extend the
use of REP008 to all SM&CR firms?

Q13: Do you have any comments on our proposal to require

a nil return to be submitted where no Conduct Rules
breaches have occurred, and to apply the late returns fee
to late or non‑submitters of REP008?

16 www.handbook.fca.org.uk/handbook/glossary/?filter‑title=ACCREDITED+BODIES
17 www.handbook.fca.org.uk/handbook/TC/App/6/1.html

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13.18 The majority of respondents supported our proposed extension of REP008 to all
SM&CR firms. Respondents generally supported our proposal to require a nil return
and extend the late returns fee for late or non‑submission.

13.19 Some suggested that REP008 and the nil returns requirement should not apply to
different types of Limited Scope firms.

13.20 One suggested that for groups where employees have roles at multiple subsidiaries,
it would be difficult to identify which legal entity should submit the report. In these
cases a group return would be more suitable.

13.21 Several respondents requested we send reminders to firms ahead of the REP008 due
submission date. Another respondent asked us to allow firms to set a timetable that
aligns with other relevant regulatory reporting dates.

13.22 There were some questions about our proposal on nil returns. They included:

• the argument that if REP008 is not submitted it is reasonable to assume a breach

has not occurred

• the suggestion that it is inconsistent to require a sole trader to submit a

self‑certifying return each year

13.23 We were also asked for more guidance on the reporting of Conduct Rule breaches.

Our response

Our Conduct Rules are intended to drive up standards of behaviour in

financial services. They represent a meaningful change in the standards
of behaviour we expect from people working in the industry. For this
reason they will apply to all solo‑regulated firms, including those in the
Limited Scope tier.

Group submissions
The SM&CR applies on a legal entity basis and our Conduct Rule
reporting requirements are consistent with this. If an individual works
across more than one entity within a group, breaches should be
reported under the firm in which the individual meets the definition of an
employee, and was undertaking the activity related to the breach.

Under FSMA s.63E(9), an employee in this context is defined as:

• a person who personally provides, or is under an obligation personally

to provide, services to [a firm] under an arrangement made between
[a firm] and the person providing the services or another person, and

• is subject to (or to the right of) supervision, direction or control by [a

firm] as to the manner in which those services are provided

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Reporting schedules and reminders

We have considered aligning the annual reporting requirement to a
firm’s existing regulatory reporting schedule. We understand this could
be helpful to some firms. However, the requirement is designed to align
with the banking regime and provide a consistent industry reporting
date. For firms with mixed groups (eg banking groups that contain asset
managers), we understand that changes could create a complex and
inconsistent set of requirements. It would mean different entities having
to report the same information for different periods.

We want to be able to compare the same period of data across the

whole industry. We therefore intend to retain the proposed reporting
period of 1 September to 31 August each year for the majority of
firms. For Limited Permission Consumer Credit firms – the majority of
whom constitute our very smallest firms – we have decided to align the
reporting period for this return with their annual reporting cycle.

We considered whether it would be appropriate to extend this change

to other small firms but concluded that it is only appropriate to do so for
these particular firms.

As with all of our regulatory reporting, firms will receive 3 email reminders
from our GABRIEL reporting system ahead of the REP008 due date.

Nil returns and the late returns fee

As the Conduct Rules are designed to raise standards of conduct across
the industry, we think that it is appropriate and proportionate to ask firms
to confirm whether there have been any Conduct Rule breaches during
the year. Where there have been none we will make it quick and easy to
confirm this through a nil return on GABRIEL. It will clarify whether a firm
has had no Conduct Rule breaches during the period, or has simply failed
to report those that have occurred. This will help us assess trends across
the industry.

REP008 will apply to sole traders because the Conduct Rules will apply
to employees of a sole trader, where they have staff. We won’t be
able to distinguish between sole traders with employees, and those
without. The circumstances of these firms may change over time.
Where a sole trader has no employees, it will be quick and simple for
them to submit a nil return using GABRIEL.

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14 Consequentials 

Who should read this chapter

This chapter applies to all firms.

Our proposals

14.1 This chapter contains our response to the feedback we received on the consequential
amendments proposed in CP17/40.

14.2 These included:

• a series of consequential amendments to reflect the retention of the APR for ARs

• amendments to glossary definitions

• the application of gender‑neutral language

• extra guidance on the SMF24 – Chief Operations function

Consequential amendments

Feedback received
Q14: Do you have any comments on our proposed
consequential amendments?

14.3 Respondents broadly agreed with the proposals.

14.4 Some respondents suggested subjecting firms to both the APR and SM&CR might
confuse and burden firms. One person asked us to explain why we plan to retain the
APR for ARs. Some others asked us to clarify how principal firms subject to the SM&CR
should oversee ARs subject to the APR.

14.5 There were requests to re‑structure our Handbook into different sections covering
each type of firm or business eg asset managers, intermediaries, credit firms.
Another person asked us to establish separate rulebooks for Limited Scope, Core and
Enhanced firms. One other suggested that an SMF’s SoR form should only reference
the list in SYSC 25 Annex 1 if the activities are relevant to their industry sector.
We were also asked to confirm that references to ‘shared services’ relate to banks and
not asset managers.

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14.6 One respondent expressed concern that we had classified the proposed changes
to the remit of SMF24 – Chief Operations function as ‘consequential amendments’.
Two further respondents were concerned that the categorisation of SMF24 is not
appropriate for all firms. Another asked us to confirm that only one individual holds the
SMF24 function.

Our response

APR and the SM&CR

The APR and the SM&CR won’t apply at the same time to the same
firms. As soon as the SM&CR commences, APR will no longer apply to
FSMA‑authorised firms.

As previously stated, the APR will continue to apply to Appointed

Representatives. This is because the legislation does not give us power
to apply the SM&CR to them. Principal firms, including the Senior
Managers of principal firms, remain fully responsible for ensuring
that their ARs and networks comply with our rules, including the APR.
Firms should already have structures and processes in place to do this.

Structure of Handbook
We recognise that there are different sections in our Handbook that
firms need to navigate to understand the SM&CR. However, most
elements of the SM&CR are applicable to all firms. For example, the
Certification Regime, the Conduct Rules and Fit & Proper requirements
are the same for almost every firm. This means that creating
sourcebooks for each tier of the regime would lead to a lot of duplication
in our Handbook. SYSC 23 summarises the whole of the SM&CR
and explains where the relevant Handbook material can be found for
each element.

The main differences are in how the Senior Managers Regime applies
to firms. In particular, the SMFs and PRs that apply, and the rules around
Overall Responsibility, Responsibilities Maps and handover procedures.
We have tried to mark these clearly in the Handbook, for example using
tables showing how the requirements apply to different firms. We also
flagged in our Mission that we would review our Handbook after the work
on the outcome on EU withdrawal is clear. Until then, we don’t intend to
do further work on changing the structure of our Handbook.

SYSC 25 Annex 1
We confirm that there is no requirement for firms to refer to the activities
and business areas in SYSC 25 Annex 1. This is made clear in SYSC 25.7.2
and in 8.27 of CP17/25 – ‘Firms may find it useful to refer to Annex 1
of SYSC 25 as a starting prompt to think about their own business is
organised, but this is not mandatory or exhaustive’. There is similar
guidance on Form A that makes it clear that this Annex is not mandatory
or exhaustive.

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Chief Operations Function

We have set out a number of examples of how the SMF24 – Chief
Operations Function could apply, in SUP 10C.6B. This will depend on how
the firm is organised and how it has allocated responsibility for the firm’s
internal operations and technology.

We confirm that the additional guidance on SMF24 – Chief Operations

Function, including on shared services, applies to all Enhanced firms, not
just banking firms.

We have given further feedback on this function in the section on

SMFs for Enhanced firms.

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15 Changes affecting banking firms 

Who should read this chapter

This chapter only applies to banking firms.

Our proposals

15.1 This chapter contains our response to the feedback we received on our proposed
changes affecting banking firms.

Conduct Rules PR implementation date

Feedback received
Q15: Do you agree with our proposal to implement the new
Conduct Rules Prescribed Responsibility for firms subject
to the Banking Regime ahead of the Commencement of
the extended SM&CR?

15.2 The majority of respondents agreed with the timing approach for implementing the
new Conduct Rules PR.

15.3 Several respondents made suggestions:

• Commencement for banks should be the same as for the wider regime, with banks
implementing the change ahead of time on a voluntary basis

• the PR holder should be required to have professional qualifications or meet

professional standards

Our response

Banking firms are already required to train staff on the Conduct Rules. We
think that allocation of the new PR is an incremental change for these
firms. We will implement the new PR on 1 November 2018 and intend to
make the relevant updated forms available for submission from the first
half of September. Firms must submit the relevant documentation by
1 November.

By commencing the PR ahead of the Commencement date for insurers,

we will ensure that we are able to efficiently process Forms J and updated
SoRs, and avoid unnecessary delays.

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We don’t think that it would be appropriate to require the PR holder to

hold specific qualifications. It is for firms to determine who the most
appropriate Senior Manager to hold the PR.

Application of the Late Returns Fee for REP008 to banking firms

Feedback received
Q16: Do you have any comments on our proposal to apply the
late returns fee to late or non‑submitters of REP008?

15.4 Respondents agreed with the proposed changes.

Our response

We will apply the Late Returns Fee as planned.

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Annex 1   
List of non‑confidential respondents

This Policy Statement incorporates feedback to two SM&CR Consultation Papers

for solo‑regulated firms – CP17/25 and CP17/40. Where relevant, feedback to the
equivalent CPs for insurers (CP17/26 and CP17/41) has also been considered. We also
engaged over 2000 individuals as part of our regional and industry engagement.

We have included respondents who only provided feedback on the Register but this
feedback will be fed into a separate consultation in due course.

The following respondents provided non‑confidential feedback to our consultations:

CP17/25
Ablestoke Wealth Management
Aegon UK
Age Partnership
Alternative Investment Management Association (AIMA) & Managed Funds
Association (MFA)
AJ Bell
Alan Duff
Alan Kendrick
Alastair Lyon
Alex De Silva & Co
Alva Capital
Amati Global Investors
Anders Bayley Scott
Anderson Strathern
Andrew Formica
Ashlea Financial Planning
Ashwood Tax & Law
Aspley Compliance
Association of British Credit Unions (ABCUL)
Association for Financial Markets in Europe (AFME) & UK Finance
Association of Foreign Banks (AFB)
Association of Investment Companies (AIC)
Association of Mortgage Intermediaries (AMI)
Association of Member‑Directed Pension Schemes (AMPS)
Association of Professional Compliance Consultants (APCC)
Association of Short Term Lenders (ASTL)
AXA UK
Banking Standards Board (BSB)
British Insurance Brokers Association (BIBA)
BNY Mellon
Board Strategy
Bovill
BPH Wealth Management
British Retail Consortium (BRC)
Brenda Santimano
Brewin Dolphin

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British Property Federation

Broker Network
Bryan Hollingsworth
Building Societies Association (BSA)
British Private Equity and Private Capital Association (BVCA)
Callcredit Information Group
Cambrian Associates
Cameron Hume
Capital One
Charles Stanley & Co
Chartered Banker Institute (CBI)
Chartered Institute of Internal Auditors (CIIA)
Christmas Financial Planners
Chartered Institute of Insurers (CII) & Personal Finance Society (PFS)
Chartered Institute for Securities & Investment (CISI)
Clearview Independent Financial Advisors
Confederation of British Industry (CBI)
Consumer Finance Association (CFA)
Coventry Building Society
Credit Services Association (CSA)
David Booth
David de Freitas
Dave Knight
Dennis Hall
Dentons
Derek Baptist
Derek Mckechnie
Dewhurst Torevell & Co
DWF
Eastern Financial Consultants
Elementary Financial Planning
Elm Partners Management (UK)
ELP Wealth
Employment Lawyers Association (ELA)
Enhance Support Solutions
Equilibrium Asset Management
ETF Securities (UK)
European American Capital Services
European Venues & Intermediaries Association (EVIA)
Express Gifts
Finance & Leasing Association (FLA)
Financial Escape
Financial Services Consumer Panel (FSCP)
Fox Williams
Fulcrum Compliance
Funding Knight
FXPRO UK
Gemini Compliance Solutions
GP Consulting
GQ Employment Law
Graham Pratley
Grant Thornton
GVS Prepaid

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Hargreaves Lansdown
Hartley Wadsworth and Partners
Hartsfield Financial Services
Henson Crisp
HomeServe Membership
HSBC
Ian Line
Institute of Chartered Accountants in England & Wales (ICAEW)
ICE Futures Europe
IDS Financial Services
IFS Wealth & Pensions
Independent Wealth Management Consultants
Invesco Perpetual
Investment Association (IA)
Investor in Customers
Irish League of Credit Unions (ILCU)
Janus Henderson Investors
JM Finn & Co
Just Financial Group
Kevin A Render
Kevin Titmus
Killik & Co
Kingsley Napley
KR Group
Lark Group & Aston Scott
Latham & Watkins
LEBC Group
LGT Vestra
Little Venice Partners
Liverpool John Moores University
Loans 2 Go
London and International Insurance Brokers' Association (LIIBA)
Margaret Abrahams
Mark Henderson
Matrix Solutions
Matthew Lambe
McInroy & Wood
Medics Financial Services
Medius Consulting
Mortgage Wyse
Mr R.J. Martin
My Jar
N M Rothschild & Sons
National Franchised Dealers Association (NFDA)
National Pawnbrokers Association (NPA)
Neil Rowland
Nick Muir
Otus
Paul Wallis Financial Solutions
Peter Dart
Phillips 66
PI Financial
Personal Investment Management and Financial Advice Association (PIMFA)

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Plutus Wealth Management

Premium Credit
Questa Chartered
Quilter Cheviot Investment Management
Raymond James
Red Sky Capital Solutions
Responsible Finance
RFIB Group
Rhys Jackson
Riverfall Financial
Rixons Wealth Management
RKH Specialty
Robinson Investment Solutions
Rosediem
Royal & Sun Alliance
Russ Bubley
SA Compliance Management
Saga Services
Schroders
Sesame Bankhall Group
Seven Financial Group
ShareAction
Simmons & Simmons
SimplyBiz Group
Society of Lloyd's
Society Of Pension Professionals
SSE
St James Place Wealth Management
Stirling House Financial Services
Stockdale Asset Management
Stonehage Fleming UK
Strategic Insight
TC Compliance Services
Tenet
The Cattellyst Consultancy
The CFA Society
The Law Society
The Money Advice Trust
The Pension Drawdown Company
Thompson Heath and Bond
THB Risk Solutions
Thomson Gray Wealth Management
Threesixty Services
Throgmorton Financial Services
Tilney Financial Planning
Tax Incentivised Savings Association (TISA)
TMA Mortgage Club
Tom Ogg
True Potential Wealth Management
Truly Independent
UK Crowdfunding Association (UKCFA)
Unbiased Financial Group
Unicorn Underwriting

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USSIM
Virgin Money
Vouched For
Wealth Harbour Services
Wescot Credit Services
Whitechurch Securities
Willis Towers Watson
Worksmart
Zedra Trust Company (UK)
Zurich

CP17/40
Association of Professional Compliance Consultants (APCC)
Aviva
Connells
Create Solutions
European Venues & Intermediaries Association (EVIA)
The Investment Association (IA)
Money Advice Trust
RKH Specialty Limited
Rosediem

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Annex 2   
Abbreviations in this document

AFM Authorised Fund Manager

AIF Alternative Investment Fund
AIFMD Alternative Investment Fund Managers Directive
Statements of Principle and Code of Practice for Approved
APER
Persons (Handbook)
APF Authorised Professional Firm
APR Approved Persons Regime
AUM Assets Under Management
Banks, Building Societies, Credit Unions and PRA‑designated
Banking firms
Investment Firms
Prudential sourcebook for Banks, Building Societies and Investment
BIPRU
Firms (Handbook)
CASS Client Assets Sourcebook (Handbook)
CBA Cost Benefit Analysis
CCJ County Court Judgment
CF Controlled Function
COCON Conduct Rules (Handbook)
COLL Collective Investment Schemes Sourcebook (Handbook)
CP Consultation Paper
CRD Capital Requirements Directive
DBS Disclosure and Barring Service
DEPP Decision Procedure and Penalties Manual (Handbook)
EEA European Economic Area
EU European Union
F&P Fitness and Propriety
FCA Financial Conduct Authority
FEMR Fair and Effective Markets Review
FIT The Fit and Proper Test for Approved Persons (Handbook)
FSMA Financial Services and Markets Act 2000
GDPR General Data Protection Regulation
HR Human Resources
IFPRU Prudential Sourcebook for Investment Firms (Handbook)
IT Information Technology

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MiFID Markets in Financial Instruments Directive

MRT Material Risk Taker
PCBS Parliamentary Commission on Banking Standards
PR Prescribed Responsibility
PRA Prudential Regulation Authority
RMAR Retail Mediation Activities Return
SIF Significant Influence Function
SLA Service Level Agreement
SM&CR Senior Managers and Certification Regime
SMF Senior Management Function
SMR Senior Managers Regime
SUP Supervision Manual (Handbook)
Senior Management Arrangements, Systems and Controls
SYSC
(Handbook)
TC Training and Competence Sourcebook (Handbook)
UCITS Undertakings for Collective Investment in Transferable Securities
UK United Kingdom

Disclaimer
We have developed the policy in this Consultation Paper in the context of the existing UK and EU
regulatory framework. The Government has made clear that it will continue to implement and apply
EU law until the UK has left the EU. We will keep the proposals under review to assess whether any
amendments may be required in the event of changes in the UK regulatory framework in the future.
We make all responses to formal consultation available for public inspection unless the respondent
requests otherwise. We will not regard a standard confidentiality statement in an email message as a
request for non‑disclosure.
Despite this, we may be asked to disclose a confidential response under the Freedom of Information
Act 2000. We may consult you if we receive such a request. Any decision we make not to disclose the
response is reviewable by the Information Commissioner and the Information Rights Tribunal.
You can download this Consultation Paper from our website: www.fca.org.uk.
All our publications are available to download from www.fca.org.uk. If you would like to receive this
paper in an alternative format, please call 020 706 0790 or email: [email protected] or
write to: Editorial and Digital team, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN

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Appendix 1   
Near-Final Rules

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 FCA 2018/XX

INDIVIDUAL ACCOUNTABILITY (FCA-AUTHORISED FIRMS) INSTRUMENT

2018

Powers exercised

A. The Financial Conduct Authority makes this instrument in the exercise of the
following powers and related provisions in the Financial Services and Markets Act
2000 (“the Act”):

(1) section 55U (Applications under this Part);

(2) section 59 (Approval for particular arrangements);
(3) section 59AB(1) (Specifying functions as controlled functions: transitional
provision);
(4) section 60 (Applications for approval);
(5) section 60A (Vetting candidates by authorised persons);
(6) section 61 (Determination of applications);
(7) section 62A (Changes to responsibilities of senior managers);
(8) section 63ZA (Variation of senior manager’s approval at request of authorised
person);
(9) section 63ZD (Statement of policy relating to conditional approval and
variation);
(10) section 63C (Statement of policy);
(11) section 63E (Certification of employees by authorised persons);
(12) section 63F (Issuing of certificates);
(13) section 64A (Rules of conduct);
(14) section 64C (Requirements for authorised persons to notify regulator of
disciplinary action);
(15) section 69 (Statement of policy);
(16) section 137A (The FCA’s general rules);
(17) section 137T (General supplementary powers);
(18) section 138D (Action for damages);
(19) section 139A (Power of the FCA to give guidance);
(20) section 395 (The FCA’s and PRA’s procedures); and
(21) paragraph 23 of Schedule 1ZA (Fees).

B. The rule-making powers listed above are specified for the purpose of section 138G(2)
(Rule-making instruments) of the Act.

Commencement

C. This instrument comes into force on [ ] 20[ ] [main commencement date for solo-
regulated firms] except as follows :

Annex Date comes into force

Part 1 of Annex B [ ] 20[ ] [about six months before main
commencement date for solo-regulated
firms]
 FCA 2018/XX

Part 1 of Annex J [ ] 20[ ] [about six months before main

commencement date for solo-regulated
firms]
Part 1 of Annex Q [ ] 20[ ] [about six months before main
commencement date for solo-regulated
firms]
Part 2 of Annex A [ ] 20[ ] [one year after main
commencement date for solo-regulated
firms]
Part 2 of Annex C [ ] 20[ ] [one year after main
commencement date for solo-regulated
firms]

Amendments to the Handbook

D. The FCA’s Handbook of rules and guidance is amended in accordance with

paragraphs E and F of this instrument.

E. The modules of the FCA’s Handbook of rules and guidance listed in column (1)
below are amended in accordance with the Annexes to this instrument listed in
column (2) below:

(1) (2)
Glossary of definitions Annex A
Senior Management Arrangements, Systems and Controls Annex B
sourcebook (SYSC)
Code of Conduct (COCON) Annex C
Threshold Conditions (COND) Annex D
Statements of Principle and Code of Practice for Approved Persons Annex E
(APER)
Fit and Proper test for Employees and Senior Personnel (FIT) Annex F
Prudential sourcebook for Investment Firms (IFPRU) Annex G
Conduct of Business Sourcebook (COBS) Annex H
Client Assets (CASS) Annex I
Supervision manual (SUP) Annex J
Dispute Resolution: Complaints (DISP) Annex K
Credit Unions sourcebook (CREDS) Annex L

F. In each case in which one of the Annexes listed in column (2) of the table in
paragraph E of this instrument says that the module of the FCA’s Handbook of rules
and guidance to which that Annex relates is amended by inserting a new form into
that module as set out in Annex Q of this instrument, that module is amended
accordingly.

Amendments to the material outside the Handbook

G. The material outside the Handbook listed in column (1) below is amended in
accordance with the Annexes to this instrument listed in column (2) below:

Page 2 of 211
 FCA 2018/XX

(1) (2)
The Energy Market Participants guide (EMPS) Annex M
The Oil Market Participants guide (OMPS) Annex N
Service companies guide (SERV) Annex O
General guidance on Benchmark Administration, Contribution and Annex P
Use (BENCH)

Text amended by this instrument

H. The amendments made by this instrument are to the Handbook and the material listed
in paragraph G of this instrument as amended by the Individual Accountability (Dual-
Regulated Firms) Instrument 2018.

Citation
I. This instrument may be cited as the Individual Accountability (FCA-Authorised
Firms) Instrument 2018.

By order of the Board

[date] 2018

Page 3 of 211
 FCA 2018/XX

Annex A

Amendments to the Glossary of definitions

In this Annex, underlining indicates new text and striking through indicates deleted text,
unless otherwise stated.

Part 1: Comes into force [ ] 20[ ] [main commencement date for solo-regulated firms]

Insert the following new definitions in the appropriate alphabetical position. The text is not
underlined.

APER employer (in APER and in relation to an approved person whose approval is
given under SUP 10A (FCA Approved Persons in Appointed
Representatives):

(a) the appointed representative in relation to which that

approved person performs the controlled function in SUP
10A; and

(b) the authorised approved person employer.

[Note: For the purposes of Statements of Principle 5 to 7 the APER

employer only includes (a).]

chair of the audit FCA controlled function SMF11 in the table of FCA-designated
committee function senior management functions, described more fully in SUP
10C.5A.9R.

chair of the governing FCA controlled function SMF9 in the table of FCA-designated
body function senior management functions, described more fully in SUP
10C.5A.7R.

chair of the FCA controlled function SMF12 in the table of FCA-designated

remuneration senior management functions, described more fully in SUP
committee function 10C.5A.10R.

chair of the risk FCA controlled function SMF10 in the table of FCA-designated
committee function senior management functions, described more fully in SUP
10C.5A.8R.

chief finance officer FCA controlled function SMF2 in the table of FCA-designated
function senior management functions, described more fully in SUP
10C.6A.3R.

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 FCA 2018/XX

chief operations FCA controlled function SMF24 in the table of FCA-designated

function senior management functions, described more fully in SUP
10C.6B.2R.

chief risk officer FCA controlled function SMF4 in the table of FCA-designated
function senior management functions, described more fully in SUP
10C.6A.4R.

core SMCR firm a firm identified as a core SMCR firm in the decision tree in SYSC
23 Annex 1 (Definition of SMCR firm and different types of SMCR
firms).

EEA core SMCR firm a core SMCR firm that is an incoming EEA firm or incoming Treaty
firm.

enhanced scope SMCR a firm identified as an enhanced scope SMCR firm in the decision
firm tree in SYSC 23 Annex 1 (Definition of SMCR firm and different
types of SMCR firms).

group entity senior FCA controlled function SMF7 in the table of FCA-designated
manager function senior management functions, described more fully in SUP
10C.5B.1R.

head of internal audit FCA controlled function SMF5 in the table of FCA-designated
function senior management functions, described more fully in SUP
10C.6A.6R.

head of third country FCA controlled function SMF19 in the table of FCA-designated
branch function senior management functions, described more fully in SUP
10C.5.24R.

limited scope function FCA controlled function SMF29 in the table of FCA-designated
senior management functions, described more fully in SUP
10C.6.5R.

limited scope SMCR a firm identified as a limited scope SMCR firm in the decision tree
firm in SYSC 23 Annex 1 (Definition of SMCR firm and different types
of SMCR firms).

non-SMF board (in relation to an SMCR firm) a board director of the firm who
director subject to meets the following conditions:
competence
requirements

(a) they are not an SMF manager of the firm; and

(b) the firm is required to assess their fitness and propriety

under the competent employee rule, SYSC 28 (Insurance
distribution: specific knowledge, ability and good repute
requirements) any directly applicable EU legislation or any
other requirement of the regulatory system.

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 FCA 2018/XX

overseas core SMCR a core SMCR firm that is an overseas firm.

firm

senior independent FCA controlled function SMF14 in the table of FCA-designated

director function senior management functions, described more fully in SUP
10C.5A.11R.

UK core SMCR firm a core SMCR firm that is a UK domestic firm.

Amend the following definitions as shown.

accountable functions (in relation to an approved person) the functions described in APER
1.1A.2R, which are in summary:

(a) FCA controlled functions under SUP 10A (FCA Approved

persons in Appointed Representatives); and

advising on (1) (except in SUP 10A (FCA Approved Persons in Appointed

investments Representatives), SYSC 27 (Senior managers and
certification regime: Certification regime), APER and
CONRED 2) the regulated activities, specified in articles
53(1) to (1D) of the Regulated Activities Order (Advising on
investments), which are:

(a) advising on investments (except P2P agreements);

and

(b) advising on P2P agreements.

(2) (in SUP 10A (FCA Approved Persons in Appointed

Representatives), SYSC 27 (Senior managers and
certification regime: Certification regime) and APER) the
regulated activities specified in articles 53(1) to (1D) and
53(2) (Advising on investments) of the Regulated Activities
Order. For these purposes, advising on investments includes
any activities that would be included but for the exclusion in
article 72AA (Managers of UCITS and AIFs) of the
Regulated Activities Order.

certification employee …

(2) …

(3) (in relation to an SMCR firm that is an FCA-authorised

person) an employee (as defined in section 63E of the Act)

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of an SMCR firm who performs a certification function

under an arrangement entered into by the SMCR firm in
relation to the carrying on by the SMCR firm of a regulated
activity, even though the obligation of the SMCR firm to
issue a certificate under section 63F of the Act has not yet
come into force.

[Note: Paragraph (3) of this definition applies until [ ] 20[ ]

[one year after commencement for solo-regulated firms].]

chief executive (1) (for an SMCR firm) FCA controlled function SMF1 in the
function table of FCA-designated senior management functions,
described more fully in SUP 10C.5.21R;

(2) (in relation to an appointed representative) FCA controlled

function CF3 the table of FCA controlled functions,
described more fully in SUP 10A.6.17R.

compliance oversight (1) (for SMCR firms) FCA controlled function SMF16 in the
function table of FCA-designated senior management functions,
described more fully in SUP 10C.6.1R; and .

(2) (for other firms) FCA controlled function CF10 in the table
of FCA controlled functions, described more fully in SUP
10A.7.8R.

compliance any of the following requirements:

requirements for
SMCR firms

(a) SYSC 3.2.8R (The compliance function);

(b) SYSC 6.1 (Compliance);

(c) article 22 of the MiFID Org Regulation (Compliance); or

(d) article 22 of the MiFID Org Regulation (as applied in

accordance with SYSC 1 Annex 1 2.8AR, SYSC 1 Annex 1
3.2-AR, SYSC 1 Annex 1 3.2-BR, SYSC 1 Annex 1 3.2CR
and SYSC 1 Annex 1 3.3R); or

(e) article 61 of the AIFMD level 2 regulation (Permanent

compliance function).

controlled function a function, relating to the carrying on of a regulated activity by a

firm, which is specified by:

(a) either the FCA in:

(i) (for SMCR firms) the table of FCA-designated senior

management functions; or

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 FCA 2018/XX

(ii) (for other firms and in relation to appointed

representatives) the table of FCA controlled
functions; or

director (1) …

(c) (in SYSC, COCON, MIPRU 2 (Responsibility for

insurance distribution and MCD credit intermediation
activity), SUP 10A (FCA Approved persons in
Appointed Representatives) and SUP 10C (FCA
senior managers regime for approved persons in
SMCR firms) a partnership;

(d) (in SYSC and , SUP 10A (FCA Approved persons)

and SUP 10C (FCA senior managers regime for
approved persons in SMCR firms) a sole trader;

employee …

(4A) (for the purposes of SYSC 22 (Regulatory references)) has

the same meaning as in (3) and, in addition, includes a
person who:

(c) performs any service or function for another person

(“the employer”) in their capacity as an employee of
another member of the employer’s group. For the
purpose of (c) an employee of another member of the
employer’s group means:

(iii) a person who performs a function of that

group member under an arrangement entered
into by the group member or a contractor of
the group member; or

(d) is a board director of a person (the “employer”) who

is not an SMF manager or certification employee of
the employer.

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 FCA 2018/XX

FCA controlled a controlled function which is specified by the FCA under section
function 59 of the Act (Approval for particular arrangements) in:

(a) (for SMCR firms) the table of FCA-designated senior

management functions; or

(b) (for other firms and in relation to appointed representatives)

the table of FCA controlled functions.

FCA required any of the FCA controlled functions labelled as FCA required
functions functions in :

(a) (for SMCR firms) the table of FCA-designated senior

management functions; or .

(b) (for other firms) the table of FCA controlled functions.

internal audit any of the following requirements:

requirements for
SMCR firms

(a) SYSC 3 (Systems and controls) insofar as it relates to

internal audit;

(b) SYSC 6.2 (Internal audit);

(c) article 24 of the MiFID Org Regulation (Internal audit); or

(d) article 24 of the MiFID Org Regulation (Internal audit) (as

applied in accordance with SYSC 1 Annex 1 2.8AR, SYSC 1
Annex 1 3.2-AR, SYSC 1 Annex 1 3.2-BR, SYSC 1 Annex 1
3.2CR and SYSC 1 Annex 1 3.3R); or

(e) article 62 of the AIFMD level 2 regulation (Permanent

internal audit function).

money laundering (1) (for SMCR firms) FCA controlled function SMF17 in the
reporting function table of FCA-designated senior management functions,
described more fully in SUP 10C.6.2R; and .

(2) (for other firms) FCA controlled function CF11 in of the

table of FCA controlled functions, described more fully in
SUP 10A.7.10R.

partner function (1) (for an SMCR firm) FCA controlled function SMF27 in the
table of FCA-designated senior management functions,
described more fully in SUP 10C.5.14R to SUP 10C.5.17R
SUP 10C.5.19R;

(2) (for other firms and in relation to appointed representatives)

FCA controlled function CF4 in the table of FCA controlled

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 FCA 2018/XX

functions, described more fully in SUP 10A.6.23R to SUP

10A.6.27R.

proprietary trader (in SYSC 27 (Senior managers and certification regime:

Certification regime), SUP 10A (FCA Approved Persons in
Appointed Representatives), COCON and APER) a person (A)
whose responsibilities include committing another person (B) as
part of B’s proprietary trading.

proprietary trading (in SYSC 27 (Senior managers and certification regime:

Certification regime), SUP 10A (FCA Approved Persons in
Appointed Representatives), COCON and APER) dealing in
investments as principal as part of a business of trading in specified
investments. For these purposes dealing in investments as principal
includes any activities that would be included but for the exclusion
in Article 15 (Absence of holding out), Article 16 (Dealing in
contractually based investments) or, for a UK AIFM or UK UCITS
management company, article 72AA (Managers of UCITS and
AIFs) of the Regulated Activities Order.

risk control any of the following requirements:

requirements for
SMCR firms

(a) SYSC 3 (Systems and Controls) insofar as it relates to risk

controls;

(b) SYSC 7.1.6R, SYSC 7.1.21R and SYSC 7.1.22R;

(c) COLL 6.11 (Risk control and internal reporting);

(d) article 23 of the MiFID Org Regulation (Risk management);

or

(e) article 23(2) of the MiFID Org Regulation (as applied in

accordance with SYSC 1 Annex 1 2.8AR, SYSC 1 Annex 1
3.2-AR, SYSC 1 Annex 1 3.2-BR, SYSC 1 Annex 1 3.2CR
and SYSC 1 Annex 1 3.3R); or

(f) articles 38 to 45 of the AIFMD level 2 regulation (Risk

management).

significant-influence (for the purposes of controlled functions specified in SUP 10A

function (FCA Approved persons in Appointed Representatives) and in
relation to the carrying on of a regulated activity by an authorised
person) a function that is likely to enable the person responsible for
its performance to exercise a significant influence on the conduct of
the authorised person’s affairs, so far as relating to the activity.

staff being assessed (in FIT and in relation to an SMCR firm) those persons set out in
under FIT FIT 1.1.1G(4) to (7) (8).

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 FCA 2018/XX

Delete the following definitions. The text is not shown struck through.

apportionment and FCA controlled function CF8 in the table of FCA controlled
oversight function functions, described more fully in SUP 10A.7.1R.

CASS operational FCA controlled function CF10a in the table of FCA controlled
oversight function functions, described more fully in SUP 10A.7.9R.

significant FCA controlled function CF29 in the table of FCA controlled

management function functions, described more fully in SUP 10A.9.9R.

small friendly society FCA controlled function CF6 in the table of FCA controlled
function functions, described more fully in SUP 10A.6.31R to SUP
10A.6.32R.

systems and controls FCA controlled function CF28 in the table of FCA controlled
function functions, described more fully in SUP 10A.8.1R and SUP
10A.8.1AR.

Part 2: Comes into force [ ] 20[ ] [one year after main commencement date for solo-
regulated firms]

certification employee …

(3) (in relation to an SMCR firm that is an FCA-authorised

person) an employee (as defined in section 63E of the Act)
of an SMCR firm who performs a certification function
under an arrangement entered into by the SMCR firm in
relation to the carrying on by the SMCR firm of a regulated
activity, even though the obligation of the SMCR firm to
issue a certificate under section 63F of the Act has not yet
come into force.

[Note: Paragraph (3) of this definition applies until [ ] 2020

[one year after commencement for solo-regulated firms].]

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 FCA 2018/XX

Annex B

Amendments to the Senior Management Arrangements, Systems and Controls

sourcebook (SYSC)

In this Annex, underlining indicates new text and striking through indicates deleted text,
unless otherwise stated.

Part 1: Comes into force [ ] 20[ ] [about three months before main commencement date for
solo-regulated firms]

TP 7 Bank of England and Financial Services Act 2016: Certification and

regulatory references

7.1 Application and purpose

7.1.2 R Table: Application of SYSC TP 7

Type of firm Parts of SYSC TP 7 that apply

A firm in the insurance All applies except SYSC TP 7.7

sector except one in the
following row

A Solvency II firm All applies except as follows:

(including a large non- ...
directive insurer)
(3) …
(4) SYSC TP 7.7 does not apply.

A core SMCR firm, an All applies

enhanced scope SMCR
firm and a limited scope
SMCR firm

All other firms Only SYSC TP 7.4.6R, SYSC TP 7.4.7G, SYSC TP

7.6 apply applies.

7.1.3 G SYSC TP 7:

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 FCA 2018/XX

(1) explains how the certification regime described in SYSC 27 applies

during the certification transitional period periods described in
SYSC TP 7.2.1G;

(3) has certain other transitional provisions relating to the amendments

made to the FCA Handbook by the Individual Accountability (Dual-
Regulated Firms) Instrument 2018 and the Individual Accountability
(FCA-Authorised Firms) Instrument 2018.

7.1.4 G (1) The main time period for which SYSC TP 7 operates is 2018 to 2019
20[ ] [year after the main commencement date for solo-regulated
firms].

7.1.6 R Table: glossary of bespoke terms used in SYSC TP 7

Part Two: Dates

(1) (2) (3)

Defined term Meaning: Insurers Meaning: Others

certification … 20[ ] to 20[ ] [the one year

transitional period following the main
period commencement date for solo-
regulated firms]

general … 20[ ] [the main commencement

commencement date for solo-regulated firms]
date

Note (1): Column (2) (Insurers) applies to a firm in the insurance sector (to the
extent that SYSC TP 7 applies to such firms).

Note (2): Column (3) (Others) applies to a core SMCR firm, an enhanced scope
SMCR firm and a limited scope SMCR firm.

7.4 Transitional provisions about regulatory references

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 FCA 2018/XX

7.4.2 R SYSC 22.2.1R (Obligation to obtain a regulatory reference) does not apply to
an application for approval as an approved person that:

(1) is made before the general commencement date and is continued in

force by SUP TP 11.7 or SUP TP 12.7 (In-flight applications:
Conversion); or

(2) is made under SUP TP 11.15 or SUP TP 12.15 (Applications of

approved persons to take effect from the commencement date).

7.6.2 G …

7.7 Qualification conditions for FCA-authorised firms

Firm classification: Effect of pre-commencement events

7.7.1 R If a firm is treated as a core SMCR firm, an enhanced scope SMCR firm or a
limited scope SMCR firm before the general commencement date for the
purposes of SUP TP 12 (Bank of England and Financial Services Act 2016:
Approved persons in solo-regulated firms) it retains that status after the
general commencement date unless and until it changes under SYSC 23
Annex 1 (Definition of SMCR firm and different types of SMCR firms).

7.7.2 G For example if before the general commencement date a firm has opted up
to be an enhanced scope SMCR firm it remains an enhanced scope SMCR
firm after the general commencement date. It may then elect to cease being
an enhanced scope SMCR firm using a Form O under the procedure in SYSC
23 Annex 1 unless it also meets one of the other qualifications for being an
enhanced scope SMCR firm.

Financial qualification conditions for enhanced scope SMCR firms

7.7.3 G (1) SYSC 23 Annex 1 7.15R deals with cases in which the period in
relation to which the financial calculations are made to test whether a
firm meets one of the financial qualification conditions for being an
enhanced scope SMCR firm is adjusted because the relevant
reporting requirements did not apply for the whole period. SYSC 23
Annex 1 7.16G gives examples of why this may happen.

(2) Another reason why SYSC 23 Annex 1 7.15R may apply is that the
relevant reporting requirements have not existed for the whole of the
period. A particular example of this is consumer credit reporting
requirements. At the time the financial qualification conditions for
being an enhanced scope SMCR firm first came into force in 20[ ]
[the year in which the main commencement date for solo-regulated
firms falls], the relevant reporting requirements had not existed for a
full three years.

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 FCA 2018/XX

7.7.4 G A calculation period, an averaging period or a reporting period as referred to

in Part Seven of SYSC 23 Annex 1 (Part Seven: Financial qualification
condition for being an enhanced scope SMCR firm) may begin or end before
the general commencement date.

Part 2: Comes into force [ ] 20[ ] [main commencement date for solo-regulated firms]

1 Application and purpose

1.1A Application

1.1A.1A G The application of this sourcebook to specific firms that are not PRA-
authorised persons is summarised at a high level in the following table. The
detailed application is cut back in SYSC 1 Annex 1 and in the text of each
chapter.

Type of firm Applicable chapters

Full-scope UK Chapters 4 to 10, 12, 18, 19B, 19F.2, 21, 22, 23, 24, 25, 26,
AIFM 27, 28

BIPRU firm Chapters 4 to 10, 12, 18, 19C, 19F.2, 20, 21, 22, 23, 24, 25,
(including a 26, 27, 28
third-country
BIPRU firm)

IFPRU Chapters 4 to 10, 12, 18, 19A, 19F.2, 20, 21, 22, 23, 24, 25,
investment 26, 27, 28
firm (including
an overseas
firm that would
have been an
IFPRU
investment
firm if it had
been a UK
domestic firm)

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 FCA 2018/XX

1 Annex Detailed application of SYSC

1

Part 2 Application of the common platform requirements

2.3 R For a sole trader:

(1) SYSC 4.3 and 4.4 do does not apply as long as he does they do not
employ any person who is required to be approved under section 59
of the Act (Approval for particular arrangements);

(2) …

Part 3 Tables summarising the application of the common platform requirements to

different types of firm

Table A: Application of the common platform requirements in SYSC 4 to SYSC 10

Provision COLUMN A COLUMN A+ COLUMN A++ COLUMN B

SYSC 4 … … … …

… … … … …

SYSC … … … Rule applies this section only

4.4.1AR to:
(1) an authorised professional
firm in respect of its non-
mainstream regulated
activities unless the firm is
also conducting other
regulated activities and has
appointed approved persons
to perform the governing
functions with equivalent
responsibilities for the firm's
non-mainstream regulated

Page 16 of 211
 FCA 2018/XX

activities and other regulated

activities;
(2) activities carried on by a
firm whose principal purpose
is to carry on activities other
than regulated activities and
which is:
(a) an oil market participant;
(b) a service company;
(c) an energy market
participant;
(d) a wholly-owned
subsidiary of:
(i) a local authority;
(ii) a registered social
landlord;
(e) a firm with permission to
carry on insurance
distribution activity in
relation to non-investment
insurance contracts but no
other regulated activity
except advising on P2P
agreements;
(2A) a credit firm which
holds a limited permission
(other than a not-for-profit
debt advice body) with
respect to the relevant credit
activity (as defined in
paragraph 2G of Schedule 6
to the Act) for which it has
limited permission;
(3) an incoming Treaty firm,
an incoming EEA firm and a
UCITS qualifier, (but only
SYSC 4.4.5R(2) applies for
these firms); and
(4) a sole trader, but only if
he employs any person who
is required to be approved
under section 59 of the Act
(Approval for particular
arrangements).

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 FCA 2018/XX

As specified in SYSC
4.4.1AR.

… … … … …

4 General organisational requirements

4.4 Apportionment of responsibilities

Application

4.4.1A R (-2) This section applies to:

(a) a limited scope SMCR firm; and

(b) an authorised professional firm that is a core SMCR firm.

(-1) The application of this section is further limited by the rest of this
rule.

(1) This section applies to an authorised professional firm as follows:

(a) it only applies in respect of its non-mainstream regulated

activities; and

(b) unless it does not apply if the firm:

(i) is also conducting other regulated activities; and

(ii) has appointed approved persons to perform the FCA

governing functions with equivalent responsibilities
for the firm’s non-mainstream regulated activities and
other regulated activities; .

(2) activities carried on by a firm whose principal purpose is to carry on

activities other than regulated activities and which is:

(a) an oil market participant; or

(b) a service company; or

(c) an energy market participant; or

(d) a wholly-owned subsidiary of:

(i) a local authority; or

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 FCA 2018/XX

(ii) a registered social landlord; or

(e) a firm with permission to carry on insurance distribution

activity in relation to non-investment insurance contracts but
no other regulated activity (except advising on P2P
agreements); [deleted]

(3) a credit firm which holds only a limited permission (other than a not-
for-profit debt advice body) with respect to the relevant credit
activity (as defined in paragraph 2G of Schedule 6 to the Act) for
which it has limited permission; [deleted]

(4) Only SYSC 4.4.5R(2) applies to an incoming Treaty firm, or an

incoming EEA firm. or a UCITS qualifier (but only SYSC 4.4.5R(2)
applies for these firms); and

(5) This section only applies to a sole trader, but only if they:

(a) he employs have any person who is required to be approved

under section 59 of the Act (Approval for particular
arrangements); or

(b) are an authorised approved person employer; or

(c) have any certification employees.

4.4.6 G Frequently asked questions about allocation of functions in SYSC 4.4.5R

Question Answer

1 Does an individual to An individual to whom a function is

whom a function is allocated under SYSC 4.4.5R Yes. They
allocated under SYSC will be performing the apportionment
4.4.5R need to be an and oversight limited scope function (CF
approved person or a 8, see SUP 10A.7.1R) and an application
certification employee? must be made under section 59 of the Act
for approval of the individual before the
function is performed. There are
exceptions from this in SUP 10A.1
(Approved persons - Application).
However, the limited scope function does
not apply to an EEA SMCR firm or an
authorised professional firm that is a core
SMCR firm.
The apportionment and oversight
function does not apply to a relevant
authorised person. However, a person
performing the role in SYSC 4.4.5R will

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 FCA 2018/XX

fall into the certification regime in SYSC

5.2 (Certification Regime), unless the
person performing it is an approved
person. A person performing the role in
SYSC 4.4.5R may be an approved person
because of another role that they perform
(such as being an executive director).

… … …

3 What is meant by The allocation of functions should be

“appropriately allocate” in compatible with delivering compliance
this context? with Principle 3, SYSC 4.4.3R and SYSC
4.1.1R. The appropriate regulator FCA
considers that allocation to one or two
individuals is likely to be appropriate for
most firms.

… … …

7 If a firm has an individual …

as chief executive, must the If the firm chooses to allocate the
functions be allocated to functions to a director or senior manager
that individual? responsible for the overall management
of a relevant group division, the FSA
FCA would expect that individual to be
of a seniority equivalent to or greater than
a chief executive of the firm for the
allocation to be appropriate.
See also Question 14.

… … …

11 How does the requirement The firm must appropriately allocate

to allocate the functions in those functions to one or more
SYSC 4.4.5R apply to an individuals, in accordance with SYSC
overseas firm which is not 4.4.5R, but:
an incoming EEA firm, …
incoming Treaty firm or
UCITS qualifier? The apportionment and oversight
function applies to such a firm, unless it
falls within a particular exception from
the approved persons regime (see
Question 1).

12 How does the requirement SYSC 1 Annex 1.1.1R(2) and SYSC 1

to allocate the functions in Annex 1.1.8R restrict the application of
SYSC 4.4.5R apply to an SYSC 4.4.5R for such a firm.
Accordingly:

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 FCA 2018/XX

incoming EEA firm or …

incoming Treaty firm? (2) Such a firm is required to allocate the
function of oversight in SYSC 4.4.5R(2).
However, the systems and controls that
must be overseen are those relating to
matters which the appropriate regulator
FCA, as Host State regulator, is entitled
to regulate (there is guidance on this in
SUP 13A Annex 2). Those are primarily,
but not exclusively, the systems and
controls relating to the conduct of the
firm’s activities carried on from its UK
branch.
…

13 What about a firm that is a The appropriate regulator FCA

partnership or a limited envisages that most if not all partners or
liability partnership? members will be either directors or
senior managers, but this will depend on
the constitution of the partnership
(particularly in the case of a limited
partnership) or limited liability
partnership. A partnership or limited
liability partnership may also have a
chief executive (see Question 5). A
limited liability partnership is a body
corporate and, if a member of a group,
will fall within SYSC 4.4.5R, row (1) or
(2).

… … …

6 Compliance, internal audit and financial crime

6.2 Internal audit

6.2.2 G …

(2) For a firm that is not an SMCR firm, the internal audit function is not
a controlled function itself, but is part of the systems and controls
function (CF28). [deleted]

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 FCA 2018/XX

(3) For an SMCR firm that is a PRA-authorised person, the internal audit
function is a PRA controlled function (SMF5). For an enhanced
scope SMCR firm it is an FCA controlled function (SMF5).

7 Risk control

7.1 Risk control

7.1.8 G …

(3) For a firm that is not an SMCR firm, the risk management function is
not a controlled function itself, but is part of the systems and
controls function (CF28). [deleted]

(4) For an SMCR firm that is a PRA authorised person, the risk
management function is a PRA controlled function (SMF4). For an
enhanced scope SMCR firm it is an FCA controlled function.

21 Risk control: additional guidance

21.1 Risk control: guidance on governance arrangements

Chief Risk Officer

21.1.2 G …

(2) Firms will need to seek the appropriate regulator's FCA’s or PRA’s
(as appropriate) approval for a Chief Risk Officer to perform:

(a) (for an SMCR firm that is a PRA-authorised person) the

PRA’s Chief Risk Function controlled function; or

(b) (for any other firm an enhanced scope SMCR firm) the
systems and controls function (see SUP 10A (FCA approved
persons)) chief risk officer function.

22 Regulatory references

22.1 Application

General application

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 FCA 2018/XX

22.1.1 R This chapter applies to all SMCR firms (subject to SYSC 22.1.5R).

22.1.1A G (1) Despite SYSC 22.1.1R, this chapter distinguishes between SMCR
firms and other firms to which this chapter applies. The reason for
this is SYSC 22.8.4R, which imposes some requirements on SMCR
firms in relation to appointed representatives but fewer than it
applies to SMCR firms themselves.

(2) Therefore when this chapter refers to a person to which the

requirements of this chapter apply as an employer (current, past or
future) but who is not an SMCR firm, it is referring to an appointed
representative. However it refers to an appointed representative on
the basis that the requirements of this chapter only apply to it
indirectly, through the SMCR firm that is its principal.

Territorial scope and overseas firms

22.1.3 R There is no territorial limitation on the application of this chapter, subject to

SYSC 22.1.5R and SYSC 22.1.6R.

22.1.5 R This chapter does not apply to: [deleted]

(1) an overseas firm that does not have an establishment in the United
Kingdom; or

(2) a UCITS qualifier (see section 266 of the Act (Disapplication of

rules));

(3) an AIFM qualifier; or

(4) incoming EEA firm that is an EEA pure reinsurer.

22.2 Getting, giving and updating references: the main rules

Obligation to obtain references (applicable to SMCR firms)

22.2.1 R (1) If an SMCR firm (A) is considering:

(a) permitting or appointing someone (P) to perform a controlled

function; or

(b) issuing a certificate under the certification regime for P; or

(ba) appointing a board director;

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22.2.3 R Table: What positions need a reference

Position When to obtain reference Comments

(C) … … …

(D) Appointing Before appointment Only applies to a UK

someone to be a SMCR firm that is:
non-SMF board (a) a core SMCR firm; or
director subject to
competence (b) an enhanced scope
requirements. SMCR firm.

22.2.7 R …

Sole traders

22.2.8 R The obligation in SYSC 22.2.1R (Obligation to obtain references (SMCR

firms only)) does not apply if A and P (as referred to in that rule) are the
same person.

22.2.9 G An example of SYSC 22.2.8R is this. Say that P works at a firm (B) and
leaves to become a firm and a sole trader. P appoints themselves to perform
the compliance oversight function. P does not need to get a regulatory
reference from B about themselves.

22.2.10 G (1) If a firm is appointing someone who was a sole trader to a position
that would normally require a regulatory reference under SYSC
22.2.1R, it does not have to request a reference from the sole trader
themselves. That is because SYSC 22.2.1R only requires a firm to
request a reference from a previous employer and a sole trader is not
their own employer.

(2) An example of (1) is this. Say that P was a firm and a sole trader and
performed the compliance oversight function themselves. P goes to
work for another firm (A). A does not need to request a regulatory
reference from P about P.

22.5 Giving references: additional rules and guidance for all firms

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… Criminal record checks

22.5.19 G A firm giving a reference need not include information from a criminal
records check it has carried out under Part V of the Police Act 1997
(Certificates of Criminal Records, &c). The recruiting firm should carry out
a criminal records check itself if necessary. The main FCA Handbook
requirements on a recruiting firm to carry out a criminal records check are:

(1) SUP 10C.10.16R requires (an SMCR firm to should carry out such a
check when appointing an SMF manager); and

(2) SYSC 23.4 (Criminal record checks for certain directors).

22.8 Additional rules and guidance for all firms

Appointed representatives

22.8.4A R (1) The approved person’s authorised approved person employer is

responsible for compliance with SYSC 22.8.3R in the case of a
requirement to give a reference about an approved person whose
approval is under SUP 10A.1.15R to SUP 10A.1.16BR (Appointed
representatives) SUP 10A (FCA Approved Persons in Appointed
Representatives).

22.8.5 G One effect of SYSC 22.8.3R is that when an appointed representative

appoints an approved person under SUP 10A.1.16BR (appointed
representatives of an SMCR firm) SUP 10A there is no requirement for the
appointed representative or its principal to request a reference.

22.8.5A G This chapter does not apply in relation to an appointed representative of a

firm that is not an SMCR firm.

22 Annex Template for regulatory references given by SMCR firms and disclosure
1R requirements

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 FCA 2018/XX

[Editor’s note: The underlining in the heading of each question in the remaining portion of Part
One of SYSC 22 Annex 1R is in the existing Handbook text and does not indicate new text.]

Question B:

Has the individual performed one or more of the following roles in relation to our firm:
(1) notified non-executive director;
(2) credit union non-executive director; or
(3) key function holder (other than a controlled function); or
(4) board director.
…

Section One: Meaning of certain terms and phrases

Defined term or phrase Meaning

Certification function, approved person, …

controlled function and PRA controlled
function

Board director Non-SMF board director subject to

competence requirements, as defined in the
Glossary.

22 Annex Factors to take into account when asking for and giving regulatory
2 references

Matters to take into account Comments

(C) Section 5 of the relevant Form A in SUP

10A Annex 4 (Application to perform
controlled functions under approved persons

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 FCA 2018/XX

regime) or SUP 10C Annex 3 (Application

to perform senior management functions)

23 Senior managers and certification regime: Introduction and classification

23.1 Purpose

23.1.1 G The purpose of this chapter is to:

(1) explain what the senior managers and certification regime is and
where to find the main Handbook provisions;

(2) define which firms the regime applies to; and

(3) define the different kinds of SMCR firm; and

(4) require certain firms to carry out criminal record checks before
appointing certain board directors.

23.2 Definitions and types of firms

23.2.1 R …

23.2.2 G Broadly speaking, firms covered by the senior managers and certification
regime that are dual-regulated by the FCA and the PRA are divided into two
categories:

(1) Banks and deposit-takers. They are called SMCR banking firms.

(2) Insurers.

23.2.3 G Broadly speaking, firms covered by the senior managers and certification
regime that are regulated by the FCA are divided into three categories:

(1) Firms regulated by the FCA that do not fall into (2) or (3). They are
called core SMCR firms. A large number of firms will be in this
category.

(2) Certain large firms. These are called enhanced scope SMCR firms.
Relatively few firms fall into this category.

(3) Firms whose business is limited to certain types. These are called
limited scope SMCR firms. A large number of firms will be in this
category. The main examples are:

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(a) limited permission consumer credit firms;

(b) an authorised professional firm whose only regulated

activities are non-mainstream regulated activities;

(c) internally managed AIFs; and

(d) firms whose main business is not regulated and whose

regulated business is (with limited exceptions) restricted to
insurance distribution activity in relation to non-investment
insurance contracts.

23.3 Overview of the senior managers and certification regime

23.3.2 G The table in SYSC 23.3.3G gives more details about each of those three
elements. The first two columns of the table apply to all firms. The third
column only covers firms that are not regulated by the PRA.

23.3.3 G Table: Summary of the senior managers and certification regime

(1) (2) (3)

Description of component of the Handbook Application to
regime provisions solo-regulated
firms

The senior managers regime: Parts that apply to all firms

Pre-approval by the FCA of senior SUP 10C Applies to all

management (the FCA Handbook solo-regulated
calls senior management subject to firms
pre-approval SMF managers)

Firm to be satisfied that a person is This Applies to all

fit and proper before applying for requirement solo-regulated
them to be approved as an SMF comes from firms
manager by the FCA or PRA section 60A of
the Act. There is
guidance on it
in SUP
10C.10.14G
(Vetting of
candidates by
the firm)

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Annual assessment of fitness and This Applies to all

propriety by the SMF managers’ requirement solo-regulated
firms comes from firms
section 63(2A)
of the Act.
There are
related
notification
obligations in
SUP
10C.14.18R to
SUP
10C.14.25G
(Notifications
about fitness,
disciplinary
action and
breaches of
COCON).

A firm should carry out criminal SUP Applies to all

records checks before applying for 10C.10.16R solo-regulated
someone to be approved as an SMF (Criminal firms except for a
manager records checks sole trader
and verifying without
fitness and employees
properness)

A firm should ask for a regulatory SYSC 22 Obligation to

reference before appointing someone (Regulatory give a reference
to be an SMF manager, or to certain references) applies to all
other senior management positions, solo-regulated
and give one if asked to by another firms.
firm doing so Obligation to ask
for one applies to
all solo-regulated
firms except for a
sole trader
without
employees.

Statements of responsibilities SUP 10C.11 Applies to all

(Statements of solo-regulated
This is a document that sets out the
responsibilities that an SMF manager responsibilities). firms
performs as part of their designated Many of the
senior management function. It is requirements
prepared as part of the firm’s are in the Act
application to the FCA or (if the firm itself but they
is a PRA-authorised person) PRA for

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them to be approved as an SMF are summarised

manager. It should be updated after in SUP 10C.11.
approval when there has been any SUP 10C.11
significant change in the also adds some
responsibilities of the SMF manager further
requirements,
particularly
about there
being one
statement of
responsibilities
per SMF
manager per
firm.

The senior managers regime: Parts that apply to many firms

A firm should allocate certain SYSC 24 Does not apply to

specified management (Senior a limited scope
responsibilities among its SMF managers and SMCR firm.
managers certification Applies to a core
regime:
The FCA Handbook calls them FCA- SMCR firm and
Allocation of
prescribed senior management an enhanced
prescribed
responsibilities scope SMCR
responsibilities) firm.

A firm solo-regulated by the FCA SYSC 23.4 Does not apply to

should carry out criminal records (Criminal a limited scope
checks before appointing a board record checks SMCR firm.
director who is not an SMF manager for non- Applies to a core
executive SMCR firm and
directors) an enhanced
scope SMCR
firm.

The senior managers regime: Parts that only apply to a limited range of
firms

A firm should maintain a SYSC 25 Does not apply to

comprehensive and up-to-date (Senior a limited scope
document (called the management managers and SMCR firm or a
responsibilities map) that describes certification core SMCR firm.
its management and governance regime: Applies to an
arrangements Management enhanced scope
responsibilities SMCR firm.
maps and
handover
procedures and
material)

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 FCA 2018/XX

A firm should ensure that, at all SYSC 26 Does not apply to

times, one or more of its SMF (Senior a limited scope
managers have overall responsibility managers and SMCR firm or a
for each of the activities, business certification core SMCR firm.
areas and functions of the firm regime: Overall Applies to an
and local enhanced scope
responsibility) SMCR firm.

A firm should ensure that a person SYSC 25.9 Does not apply to
becoming an SMF manager has all (Handover a limited scope
the information and material that procedures and SMCR firm or a
they could reasonably expect to have material) core SMCR firm.
to perform their responsibilities Applies to an
enhanced scope
SMCR firm.

The senior managers regime: Parts outside the Handbook

Criminal offence relating to a This is Does not apply to

decision that causes a financial contained in any solo-
institution to fail. section 36 of the regulated firm
Financial
It applies to a UK SMCR banking
Services
firm but does not apply to a credit
(Banking
union.
Reform) Act
It does not apply to any firm that is 2013
not a UK SMCR banking firm.

The certification regime

A firm should not permit an Most of the Applies to all

employee to carry out certain requirements of solo-regulated
functions (certification functions) this regime are firms except for
unless it has issued them with a in sections 63E internally
certificate. (Certification of managed AIFs
employees by and certain firms
The certificate is only valid for a
year. The firm will have to renew it if authorised that only carry
persons) and out benchmark
the employee is to carry on
63F (Issuing of activities.
performing the function.
certificates) of
A firm may not issue or renew a the Act.
certificate unless it is satisfied that
SYSC 27
the person is fit and proper.
(Senior
Certification does not involve pre- managers and
approval by the FCA or PRA. certification
regime:
Certification
regime)
describes the

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regime and
explains which
employees are
covered.

A firm should ask for a regulatory SYSC 22 Applies to all

reference before appointing someone (Regulatory solo-regulated
to perform an FCA certification references) firms
function (or a PRA equivalent) and
give one if asked to by another firm
doing so

Conduct rules (applies to all firms)

Rules of conduct that apply directly COCON Applies to all

to a firm’s workforce other than solo-regulated
ancillary staff firms

A firm should report breaches of SUP 15.11 Applies to all

COCON to the FCA (Notification of solo-regulated
COCON firms
breaches and
disciplinary
action)

A firm should: These Applies to all

obligations are solo-regulated
(a) ensure that all persons subject to
COCON are notified of the rules that in section 64B firms
of the Act
apply to them; and
(Rules of
(b) take all reasonable steps to ensure conduct:
that they understand how COCON responsibilities
applies to them of authorised
persons).
There is
guidance in
COCON 2.3
(Firms: Training
and breaches).

23.3.4 G …

23.4 Criminal record checks for certain directors

23.4.1 R This section applies to a UK SMCR firm that is:

(1) an enhanced scope SMCR firm; or

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(2) a core SMCR firm.

23.4.2 R A firm must (as part of its assessment of the fitness and propriety of any of
its non-SMF board directors subject to competence requirements (P)) obtain
the fullest information that it is lawfully able to obtain about P under Part V
of the Police Act 1997 (Certificates of Criminal Records, &c) and related
subordinated legislation of the UK or any part of the UK before P’s
appointment as a board director.

23.4.3 G The guidance in SUP 10C.10.17G, SUP 10C.10.18G and SUP 10C.10.21G
about criminal record checks for candidates to be an SMF manager applies
to criminal record checks under this section.

23 Annex Definition of SMCR firm and different types of SMCR firms

1

Part One: Flow diagram and other basic provisions

1.1 R …

1.2 R Flow diagram: Types of SMCR firm

Delete the flow diagram in SYSC 23 Annex 1 1.2R and replace it with the following. The
deleted text is not shown.

Are you a firm? You are not an SMCR firm

No

Yes

Are you an exempt firm (see You are not an SMCR firm
Part 2 of this Annex)? Yes

No

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 FCA 2018/XX

You are an SMCR firm.

Are you an SMCR banking You are not a core SMCR
Yes
firm? firm, an enhanced scope
SMCR firm or a limited scope
SMCR firm.

No

Are you in the insurance You are an SMCR firm.

sector as defined in Part 4 of You are not a core SMCR
Yes
this Annex? firm, an enhanced scope
SMCR firm or a limited scope
SMCR firm.

No

Have you elected to

Do you meet the No
be a core SMCR
requirements for
Yes firm or an enhanced
being a limited
scope SMCR firm in
scope firm as
accordance with this
defined in Part 4 of
Annex?
this Annex?

Yes You are an SMCR

firm and a limited
scope SMCR firm

No

You are an SMCR

firm. You are either
a core SMCR firm
or an enhanced
scope SMCR firm,
depending on your
election.

Have you
elected to be
an enhanced Yes You are an SMCR firm and an
scope SMCR enhanced scope SMCR firm
firm?

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 FCA 2018/XX

No

Are you excluded

from the enhanced You are an
regime as defined Yes SMCR firm
in Part 6 of this and a core
Annex? SMCR firm

No

Do you meet one of the

qualification conditions for You are an SMCR firm and an
Yes enhanced scope SMCR firm
the enhanced requirements in
accordance with Parts 6 to 9
of this Annex (other than
electing to be an enhanced
scope SMCR firm)?

No

You are an SMCR firm and a

core SMCR firm

Note: The categorisation in this flow diagram is subject to SYSC 23 Annex 1 2.1R. This note forms part of the
flow diagram.
…

Amend the following as shown.

Part Two: Changing category

2.1 R If a firm is subject to a requirement that it must comply with the rules in
the FCA Handbook applicable to one of the categories of SMCR firm set

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out in this Annex, it is to be treated as falling into that category of SMCR

firm for all purposes.

2.2 G (1) The FCA may, on a case-by-case basis, require a limited scope
SMCR firm or a core SMCR firm to comply with the requirements
that apply to an enhanced scope SMCR firm if the FCA considers it
appropriate to do so to advance one or more of its operational
objectives under the Act.

(2) The most common example of a requirement described in SYSC 23

Annex 1 2.1R is likely to be one of the kind described in (1).

(3) One effect of SYSC 23 Annex 1 2.1R is that if a firm is moved from
the limited scope SMCR firm or core SMCR firm category to the
enhanced scope SMCR firm category, the FCA-designated senior
management functions that will apply to it are the ones for
enhanced scope SMCR firms.

2.3 (1) In practice it is unlikely that the procedure described in SYSC 23

Annex 1 2.1R will be used to move a firm from a category
applicable to PRA-authorised persons to one applicable to FCA-
authorised persons or vice versa.

(2) This is because the FCA’s regime for PRA-authorised persons is

designed on the basis that the PRA’s regime also applies to those
firms while the regime for FCA-authorised persons is designed on
the basis that no PRA requirements apply.

2.4 G (1) Where a firm becomes or stops being an enhanced scope SMCR
firm under the procedure described in SYSC 23 Annex 1 2.1R, the
material in Parts 9 and 10 of this Annex about when the change of
status becomes effective will not apply. Instead the timing will be
dealt with in the variation of permission.

(2) If the variation does not specify the timing of the change, the
change is likely to take effect when the variation does.

2.5 R (1) This rule deals with a notification under:

(a) SYSC 23 Annex 1 5.11R (opting to become a core SMCR

firm);

(b) SYSC 23 Annex 1 5.12R (opting to stop being a core SMCR

firm);

(c) SYSC 23 Annex 1 8.1R(3) (opting to become an enhanced

scope SMCR firm); and

(d) SYSC 23 Annex 1 10.4R (opting to stop being an enhanced

scope SMCR firm).

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(2) The notification takes effect in accordance with the applicable Part
of this Annex. The notice may not specify when it is to take effect.

(3) The notification must be made in accordance with SUP 10C.15.11R

(Method of submission: electronic submission).

(4) A firm must use the version of the form made available for this
purpose on the electronic system referred to in SUP 10C.15.11R,
which is based on the version found in SYSC 23 Annex 2R (Form
O).

(5) If SUP 10C.15.11R requires the notification to be in accordance

with SUP 10C.15.14R (Method of submission: other forms of
submission), the firm must use the version of the form found in
SYSC 23 Annex 2R.

(6) A firm may, by notice to the FCA, withdraw a notice in (1) at any
time before the firm becomes or, as the case may be, ceases to be,
an enhanced scope SMCR firm or, as the case may be, a core SMCR
firm.

2.6 R (1) The following may also give a notice described in SYSC 23 Annex
1 2.5R(1)(a) or SYSC 23 Annex 1 2.5R(1)(c):

(a) an applicant for Part 4A permission; and

(b) other persons seeking to carry on regulated activities as an

SMCR firm.

(2) The notice becomes effective when it becomes an SMCR firm.

(3) SYSC 23 Annex 1 2.5R(3) to (6) apply to a notice in (1).

2.7 D If a person in SYSC 23 Annex 1 2.6R(1) wishes to rely on SYSC 23

Annex 1 2.6R, it must make, or, as the case may be, amend its
application so as to meet the relevant requirements of this Annex
about the notices described in SYSC 23 Annex 1 2.6R(1).

2.8 G (1) This paragraph relates to the withdrawal of a notice in SYSC 23

Annex 1 2.5R(1) as described in SYSC 23 Annex 1 2.5R(6).

(2) If a firm decides to give a withdrawal notice, it should send it to the

FCA as soon as possible.

(3) A firm should give a withdrawal notice in accordance with SUP

15.7 (Form and method of notification). There is no specified form
for the notice.

2.9 G (1) This paragraph relates to SYSC 23 Annex 1 2.6R.

(2) This Annex restricts who can elect to opt up to a higher category of
SMCR firm. In a case covered by this paragraph, this restriction

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relates to the category of SMCR firm of which the person would be

a member when it becomes an SMCR firm if it had not made the
election.

(3) (2) also applies to the requirements about how to notify the FCA.

2.10 G (1) A firm may elect to opt up to a higher category of SMCR firm (see
SYSC 23 Annex 1 2.5R(1)(a) and (c)) and then later meet one of the
other qualification conditions for that higher category.

(2) The table in SYSC 23 Annex 1 2.11G gives examples of various

scenarios that can follow on from that.

2.11 G Table: Examples involving a firm that opts up a category (this table
belongs to SYSC 23 Annex 1 2.10G)

Scenario Treatment under this Annex

(1) A firm elects to opt up to a higher The firm remains in the higher
category. It later meets one of the category because its election remains
other qualification conditions for that in force.
higher category. It ceases to meet that
second qualification condition some
time later.

(2) A firm elects to opt up to a higher The firm remains within that higher
category. It later meets one of the category despite cancelling its
other qualification conditions for that election because it still meets that
higher category. It later cancels its second qualification condition.
election.

(3) A firm elects to opt up to a higher The firm remains within that higher
category. It later cancels its election. category despite the cancellation
During the one year period in Part notice.
Five or Part Ten of this Annex
following its cancellation notice it
meets one of the other qualification
conditions for that higher category.

(4) A firm elects to opt up to a higher The cancellation notice has no

category. It later meets one of the immediate effect (see Example (2)).
other qualification conditions for that However when it ceases to meet the
higher category. It later cancels its second qualification condition it
election. Some time after that, it ceases to be in the higher category. In
ceases to meet the second contrast to Example (1), its election is
qualification condition.
no longer in force when ceases to
meet the second qualification
condition.

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 FCA 2018/XX

Note: When this table refers to the cancellation of an election it refers to

cancelling that election under this Annex after it has taken effect and not to
withdrawing it before it takes effect.

Part Three: Definition of exempt firm

3.3 R …

3.4 R A UCITS qualifier is an exempt firm (see section 266 of the Act
(Disapplication of rules)).

3.5 R An AIFM qualifier is an exempt firm.

Insert the following new Parts in SYSC 23 Annex 1 where indicated. The text is not
underlined.

Part Four: Definition of insurance sector

4.2 R …

Part Five: Definition of limited scope SMCR firm

5.1 R (1) This Part sets out the requirements for being a limited scope SMCR
firm referred to in the flow diagram in Part One of this Annex.

(2) Where this Part says that a firm is a limited scope SMCR firm, that
means that the firm meets those requirements.

(3) This Part also sets out a procedure for a firm that would otherwise
have been a limited scope SMCR firm to elect to be a core SMCR
firm and to reverse that election.

5.2 G A firm that would otherwise have been a limited scope SMCR firm may
elect to be an enhanced scope SMCR firm and may reverse that election.
Parts Eight and Ten of this Annex deal with this.

5.3 R A firm listed in the table in SYSC 23 Annex 1 5.4R is a limited scope
SMCR firm if:

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(1) its principal purpose is to carry on activities other than regulated

activities; and

(2) it is not a MiFID investment firm.

5.4 R Table: List of limited scope SMCR firms referred to in SYSC 23 Annex 1
5.3R

(1) Oil market participant

(2) Service company

(3) Energy market participant

(4) A wholly owned subsidiary of:

(a) a local authority; or

(b) a registered social landlord.

(5) A firm that meets the following conditions:

(a) it has permission to carry on insurance distribution activity in relation to

non-investment insurance contracts; and

(b) it either:

(i) does not have permission to carry on any other regulated

activity; or

(ii) has permission to carry on no other regulated activity except

advising on P2P agreements.

5.5 G It will be a matter of fact in each case whether, having regard to all the
circumstances, including in particular where the balance of the business
lies, a firm’s principal purpose is to carry on activities other than
regulated activities. If a firm wishes to rely on SYSC 23 Annex 1 5.3R, it
should be in a position to demonstrate that its principal purpose is to carry
on activities other than regulated activities.

5.6 R A sole trader is a limited scope SMCR firm.

5.7 R A firm whose permission is limited to the carrying on of a relevant credit

activity (as defined in paragraph 2G of Schedule 6 to the Act) (a limited
permission) is a limited scope SMCR firm.

5.8 R A not-for-profit debt advice body is a limited scope SMCR firm.

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5.9 R An authorised professional firm whose only regulated activities are non-
mainstream regulated activities is a limited scope SMCR firm.

5.10 R A firm is a limited scope SMCR firm if it meets the following conditions:

(1) it is an internally managed AIF;

(2) it is a body corporate; and

(3) it is not a collective investment scheme.

5.11 R (1) A limited scope SMCR firm may notify the FCA in accordance with
this Part that it intends to become a core SMCR firm.

(2) A firm that gives notice under (1) must comply with the
requirements for core SMCR firms (and becomes a core SMCR
firm) from three months after the FCA receives the notice in (1).

(3) SYSC 23 Annex 1 2.5R applies to a notice in (1).

5.12 R (1) This rule deals with a firm that has elected to become a core SMCR
firm under SYSC 23 Annex 1 5.11R.

(2) The firm may notify the FCA that it intends to cancel its election to
be a core SMCR firm under SYSC 23 Annex 1 5.11R.

(3) The notification takes effect one year after the FCA receives the
notice.

(4) SYSC 23 Annex 1 2.5R applies to notifications under this rule.

Part Six: Exclusion from enhanced regime

6.1 R This Part sets out which firms are excluded from the enhanced regime for
the purposes of the flow diagram in Part One of this Annex.

6.2 R An overseas SMCR firm is excluded from the enhanced regime.

6.3 R A firm is excluded from the enhanced regime if its permission only covers
being the full-scope UK AIFM of:

(1) an unauthorised AIF; or

(2) an authorised AIF only marketed to investors that are professional

clients.

6.4 R A firm is excluded from the enhanced regime if:

(1) it is exempt from MiFID under article 2(1)(j); and

(2) its only permission is bidding in emissions auctions.

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Part Seven: Financial qualification condition for being an enhanced scope

SMCR firm

7.1 R A firm meets a qualification condition for the purposes of identifying an

enhanced scope SMCR firm under the flow diagram in Part One of this
Annex if it meets one of the criteria set out in column (1) of the table in
SYSC 23 Annex 1 7.2R.

7.2 R Table: Financial qualification conditions

(1) (2) (3)

Qualification Reporting requirement Comments
condition

Part One: Point in time measurements

(1) The average amount of Assets under management are SYSC 23 Annex 1 7.7R(2)
the firm’s assets under calculated in accordance with and SYSC 23 Annex 1
management (calculated as a the method that must be used 7.10R apply to this
three-year rolling average) is to calculate the amount to be calculation.
£50 billion or more recorded in data element 1A
(Total funds under
management) in data item
FSA038 (Volumes and Type
of Business)

(2) The firm currently has A firm’s outstanding regulated

10,000 or more outstanding mortgages are calculated as
regulated mortgages follows:

(a) calculate the amount that

must be recorded in row
E4.5 (Total) in the box
under the successive
headings and sub-
headings “Regulated
Loans”, “Balances
outstanding” and
“Number” in the MLAR;

(b) calculate the amount that

must be recorded in row
G1.1(d) (total) under the
successive headings and
sub-headings “As
PRINCIPAL
administrator” and

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“Regulated loans” in the

MLAR; and

(c) add those amounts

together.

Part Two: Revenue measurements

(3) The average amount of Total intermediary regulated SYSC 23 Annex 1 7.7R(3)
the firm’s total intermediary business revenue is calculated applies to this calculation.
regulated business revenue in accordance with the method
(calculated as a three-year that must be used to calculate
rolling average) is £35 the amount to be recorded in
million per annum or more data element 4E (Total
regulated business revenue) in
Section B (Profit and Loss
account) of the RMAR

(4) The average amount of Annual revenue generated by SYSC 23 Annex 1 7.7R(3)
the firm’s annual revenue regulated consumer credit applies to this calculation.
generated by regulated lending is calculated as
consumer credit lending follows:
(calculated as a three-year
rolling average) is £100
million or more

(a) calculate each amount

that must be recorded in
column B (Revenue) for
the rows headed
“Lending” in data item
CCR002 (Consumer
Credit data: Volumes);
and

(b) add those amounts

together.

Note 1: Where Parts 7 to 10 of SYSC 23 Annex 1 refer to a calculation period they refer to
the annual period in column (1) for the calculations in Part Two of this table.

Note 2: Where Parts 7 to 10 of SYSC 23 Annex 1 refer to an averaging period they refer to
the three year period in column (1).

Note 3: Where Parts 7 to 10 of SYSC 23 Annex 1 refer to a reporting period they refer to
the period for which reports in column (2) are prepared.

7.3 G (1) Column (2) of the table in SYSC 23 Annex 1 7.2R refers to the FCA
Handbook versions of the relevant data items.

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(2) The boxes referred to in row (2) (outstanding regulated mortgages)

correspond to the online version of the MLAR as follows:

(a) paragraph (a) corresponds to data item c3; and

(b) paragraph (b) corresponds to data item G1.1 c1 (d).

7.4 R If the applicable financial reporting requirements in column (2) of the

table in SYSC 23 Annex 1 7.2R have changed during the relevant period,
the calculations must be made in accordance with whatever requirements
applied for the applicable period.

7.5 R The calculations are made on a solo basis.

7.6 R (1) The calculation periods, averaging periods and dates in column (1)
of the table in SYSC 23 Annex 1 7.2R are defined so as to be
consistent with the financial reporting periods used for the
corresponding data item in column (2) of that table. The rest of this
rule gives examples of this principle.

(2) If a calculation in column (1) of the table in SYSC 23 Annex 1 7.2R

is based on per annum or annual revenue and the reporting period
in column (2) is based on the firm’s accounting period:

(a) the calculation periods in column (1) are also based on the
firm’s accounting period; and

(b) the averaging period in column (1) is made up of the

applicable number of accounting periods.

(3) If a calculation in column (1) of the table in SYSC 23 Annex 1 7.2R

is based on per annum or annual revenue and the reporting period
in column (2) is based on a calendar year:

(a) the calculation periods in column (1) are also based on a

calendar year; and

(b) the averaging period in column (1) is made up of the

applicable number of calendar years.

(4) Where row (2) of column (1) of the table in SYSC 23 Annex 1 7.2R
refers to a firm’s current financial figures it refers to the figures for
its most recent reporting period in column (2).

(5) A firm’s most recent reporting period is the one for the data item
whose required submission date has passed most recently.

7.7 R (1) This rule deals with the establishment of a firm’s averaging periods.

(2) When the table in SYSC 23 Annex 1 7.2R specifies that this
paragraph (2) applies:

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(a) each averaging period ends on the last day of a reporting

period; and

(b) there is an averaging period that ends on each such day.

(3) When the table in SYSC 23 Annex 1 7.2R specifies that this
paragraph (3) applies:

(a) each averaging period ends on the last day of a year; and

(b) there is an averaging period that ends on each such day.

(4) The term ‘year’ in (3) has the meaning in SYSC 23 Annex 1 7.6R.

7.8 G (1) SYSC 23 Annex 1 7.7R(2) provides for a firm’s status to be tested
every six months if the relevant data item is reported in six-month
intervals and to be tested yearly if the relevant data item is reported
yearly.

(2) SYSC 23 Annex 1 7.7R(3) provides for a firm’s status to be tested

once a year even if the relevant data item is reported in six-month
intervals.

7.9 R (1) This rule applies to calculations in Part Two of the table in SYSC 23
Annex 1 7.2R.

(2) If:

(a) the firm reports the relevant data items more than once a
year; and

(b) each successive report covers the whole year to date;

the calculations in the table are only based on the data item that
covers the full year.

(3) The term year in (2) has the meaning in SYSC 23 Annex 1 7.6R.

7.10 R When the table in SYSC 23 Annex 1 7.2R specifies that this rule applies,
the calculation of the average involves calculating the relevant amount for
each reporting period relating to the averaging period, summing those
amounts and dividing the result by the applicable number of reporting
periods.

7.11 R (1) This rule applies where:

(a) the calculation is under Part Two of the table in SYSC 23

Annex 1 7.2R;

(b) the reporting period in column (2) is based on the firm’s

accounting period;

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(c) any of the firm’s accounting periods in the applicable

averaging period is not twelve months; and

(d) as a result the averaging period would not be a whole number

of calendar years.

(2) Where this rule applies, the firm must adjust the minimum
qualification amount in column (1) proportionately.

7.12 G The main example of when SYSC 23 Annex 1 7.11R may apply is where a
firm changes its accounting reference date.

7.13 G (1) The financial reporting period may be shorter than the
corresponding calculation period.

(2) For example, the calculation period may be based on annual

revenue but the firm may have to prepare the corresponding data
item in column (2) of the table in SYSC 23 Annex 1 7.2R for
revenue arising in six-month periods.

(3) If SYSC 23 Annex 1 7.9R applies this does not matter as the
calculation is based on the figures for the full year.

(4) If SYSC 23 Annex 1 7.9R does not apply, in the example in (2):

(a) the calculation of the firm’s most recent annual revenue in

column (1) is based on the most recently ended six-month
period and the six-month period before that; and

(b) each year within the three year average is based on two six-
month periods.

7.14 R A qualification condition in column (1) of the table in SYSC 23 Annex 1

7.2R does not apply to a firm if the corresponding reporting requirement
referred to in column (2) of the table does not currently apply to the firm.

7.15 R Subject to SYSC 23 Annex 1 7.14R, if the reporting requirement referred

to in column (2) of the table in SYSC 23 Annex 1 7.2R did not apply to the
firm for the whole of its most recent averaging period as defined in SYSC
23 Annex 1 7.2R, the averaging period is shortened to cover the period for
which those requirements did apply.

7.16 G Reasons why SYSC 23 Annex 1 7.15R may apply to a firm include the
following:

(1) the firm has only recently been authorised;

(2) the firm’s Part 4A permission has only recently been varied to
include the relevant regulated activities; or

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(3) the firm has only recently become subject to the relevant reporting
requirements.

7.17 G (1) This paragraph gives an example of how SYSC 23 Annex 1 7.15R
works.

(2) In this example:

(a) the relevant qualification condition is one of those in Part

Two of the table in SYSC 23 Annex 1 7.2R;

(b) the reporting requirement is based on a firm’s accounting

year and reports are due every six months;

(c) the firm’s accounting year ends on 31st December;

(d) the firm is authorised or the relevant regulated activities are

included in its permission in February (referred to in this
paragraph as the date on which it is authorised).

(2) The firm will not meet the qualification condition before the end of
the accounting year in which the firm is authorised, however large
its business is in the period from February to June. This is because
the calculations are based on calculation periods of a year and the
firm will not have data for the year.

(3) Following the end of accounting year in which it is authorised, the

assessment of whether the firm meets the qualification condition is
based on the figures for the accounting year in which it is
authorised. There is no adjustment to take account of the fact that
the firm was only authorised part of the way through that period.

(4) After the end of the second accounting year, the averaging period is
two years.

(5) After the end of the third accounting year there is no further need
for SYSC 23 Annex 1 7.15R.

Part Eight: Other qualification conditions for being an enhanced scope SMCR
firm

8.1 R A firm meets a qualification condition for the purposes of identifying an

enhanced scope SMCR firm under the flow diagram in Part One of this
Annex if it meets one of the following criteria:

(1) the firm is a significant IFPRU firm;

(2) the firm is a CASS large firm; or

(3) the firm notifies the FCA in accordance with this Part that it intends
to become an enhanced scope SMCR firm.

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8.2 R (1) This rule deals with a notification under SYSC 23 Annex 1 8.1R(3).

(2) The notification may (subject to SYSC 23 Annex 1 2.6R) only be

given by:

(a) a limited scope SMCR firm;

(b) a core SMCR firm; or

(c) an enhanced scope SMCR firm that is within the one year
period in Part Ten of this Annex (When a firm stops being an
enhanced scope SMCR firm).

(3) SYSC 23 Annex 1 2.5R applies to notifications under this rule.

8.3 G If a firm is subject to a requirement that it must comply with the rules in
the FCA Handbook applicable to one of the categories of firm in SYSC 23
Annex 1 8.1R(1) or SYSC 23 Annex 1 8.1R(2) it is to be treated as falling
into that category of firm for the purpose of this Annex as well.

Part Nine: When a firm becomes an enhanced scope SMCR firm

General rule

9.1 R (1) A firm must comply with the requirements for enhanced scope
SMCR firms (and becomes an enhanced scope SMCR firm) from
the date specified in this rule.

(2) If a firm:

(a) was not an enhanced scope SMCR firm; and

(b) then meets one of the qualification conditions in Part 7 or

Part 8 of this Annex;

the date is twelve months after it first meets the first qualification
condition that it met.

(3) Where the first qualification condition it meets is the one in SYSC
23 Annex 1 8.1R(3), the date is three months after the FCA receives
the notice in SYSC 23 Annex 1 8.1R(3).

(4) (3) also applies if:

(a) it meets the qualification condition in SYSC 23 Annex 1

8.1R(3) after it meets another qualification condition; and

(b) the result of applying (3) would be that the firm would
become an enhanced scope SMCR firm sooner.

Meeting the financial thresholds in Part 7

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9.2 R (1) A firm meets one of the qualification conditions in Part 7 of this
Annex (financial qualification conditions) on the due date for
submission of the relevant data item (see (2) and (3) for the
meaning of relevant data item).

(2) Except where (3) applies, the relevant data item is the data item for
the final financial reporting period applicable to the averaging
period for which the firm first meets that qualification condition.

(3) Where the qualification condition is the one in row (2) of the table
in SYSC 23 Annex 1 7.2R, the relevant data item is the one for the
reporting period for which the firm first meets that qualification
condition.

Meeting the qualification conditions in Part 8

9.3 R A firm meets one of the qualification conditions in Part 8 of this annex
(other qualification conditions) on the date when:

(1) the status in SYSC 23 Annex 1 8.1R(1) or SYSC 23 Annex 1

8.1R(2) becomes effective; or (as the case may be)

(2) the FCA receives the notice in SYSC 23 Annex 1 8.1R(3).

9.4 G SYSC 23 Annex 1 9.1R and SYSC 23 Annex 1 9.3R mean that a firm
becomes an enhanced scope SMCR firm under Part 8 of this Annex on the
date in column (2) of the table in SYSC 23 Annex 1 9.5G.

9.5 G Table: Date firm becomes an enhanced scope firm

Qualification condition Date firm becomes an enhanced scope SMCR

firm

The firm is a significant IFPRU firm It becomes an enhanced scope SMCR firm one year
and three months after the date in IFPRU 1.2.3R
(the three-month period in IFPRU 1.2.6R(2) plus
the one year in this Part).

The firm is a CASS large firm If the firm notifies the FCA in accordance with
CASS 1A.2.9R(1) or CASS 1A.2.9R(2), it becomes
This includes a firm that has elected to
an enhanced scope SMCR firm one year following
be treated as a CASS large firm
the 1 February following the notification under
CASS.
If the firm notifies the FCA in accordance with
CASS 1A.2.9R(3), it becomes an enhanced scope
SMCR firm one year after the day it begins to hold
client money or safe custody assets.

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If the firm makes an election under CASS

1A.2.5R(1), it becomes an enhanced scope SMCR
firm one year after the day the notification made
under CASS 1A.2.5R(2)(a) states that the election is
intended to take effect.

The firm opts to be an enhanced scope It becomes an enhanced scope SMCR firm three
SMCR firm by notifying the FCA using months after the FCA receives the notice
Form O

9.6 G (1) The purpose of the one year or three-month period between meeting
the conditions for being an enhanced scope SMCR firm and the firm
becoming subject to the requirements for such firms is to allow it to
make preparations to comply with the new requirements.

(2) For example, a core SMCR firm opting up to be an enhanced scope

SMCR firm should use this period to apply for approval for its
personnel to perform the new designated senior management
functions that will apply because it has become an enhanced scope
SMCR firm.

9.7 G (1) A firm retains its old status during the one year or three-month
period described in this Part.

(2) For example, a core SMCR firm that meets one of the qualification
conditions for being an enhanced scope SMCR firm in SYSC 23
Annex 1 8.1R(1) or SYSC 23 Annex 1 8.1R(2) will remain as a core
SMCR firm for one year after it meets the qualification condition.

Part Ten: When a firm stops being an enhanced scope SMCR firm

General rule

10.1 R A firm that:

(1) was an enhanced scope SMCR firm; and

(2) then meets none of the qualification conditions in this Annex;

ceases to be subject to the requirements for enhanced scope SMCR firms

(and ceases to an enhanced scope SMCR firm) one year after it ceases to
meet the last qualification condition that it met.

Ceasing to meet the financial thresholds in Part 7

10.2 R A firm ceases to meet one of the qualification conditions in Part 7 of this
Annex (financial qualification conditions) on whichever of the following
is applicable:

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(1) the due date for submission of the data item for the final financial
reporting period applicable to the averaging period for which the
firm first ceases to meet that qualification condition; or

(2) (where the qualification condition is the one in row (2) of the table
in SYSC 23 Annex 1 7.2R) the due date for submission of the data
item for the reporting period for which the firm first ceases to meet
that qualification condition; or

(3) the date the relevant reporting requirement ceases to apply as

referred to in SYSC 23 Annex 1 7.14R.

Ceasing to meet the qualification conditions in Part 8

10.3 R A firm ceases to meet one of the qualification conditions in SYSC 23

Annex 1 8.1R(1) or SYSC 23 Annex 1 8.1R(2) (other qualification
conditions) on the date that the status in SYSC 23 Annex 1 8.1R ceases to
apply.

10.4 R (1) This rule deals with a firm that has elected to become an enhanced
scope SMCR firm under SYSC 23 Annex 1 8.1R(3).

(2) A firm may notify the FCA that it intends to cancel its election to be
an enhanced scope SMCR firm under SYSC 23 Annex 1 8.1R(3).

(3) The firm ceases to meet the qualification condition under SYSC 23
Annex 1 8.1R(3) on the date the FCA receives the notice.

(4) SYSC 23 Annex 1 2.5R applies to notifications under this rule.

Only meeting qualification conditions for a short time

10.5 G If the firm ceases to meet the relevant qualification condition while the
one-year period in Part 9 of this Annex is still running, the one-year
period in this Part does not apply. Instead, the firm will simply not
become an enhanced scope SMCR firm in the first place.

Only ceasing to meet qualification conditions for a short time

10.6 R If:

(1) the one-year period in SYSC 23 Annex 1 10.1R is still running; and

(2) the firm again meets a qualification condition in Part Seven or Eight
of this Annex;

then:

(3) the firm remains an enhanced scope SMCR firm; and

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(4) the one-year or three-month period in Part 9 of this Annex does not
apply.

Insert the following annex in the appropriate position. The text (which consists of a form) is
included in Part Two of Annex Q of this instrument.

23 Annex Form O: Changing firm status under the Senior Managers and
2R Certification Regime

Amend the following as shown.

24 Senior managers and certification regime: Allocation of prescribed

responsibilities

24.1 Application

Main application rules

24.1.1 R This chapter applies to an SMCR firm, except to the extent that this chapter
applies a narrower scope to a particular provision. However, this chapter
does not apply to:

(1) an EEA SMCR firm; or

(2) a limited scope SMCR firm.

24.2 Allocation of FCA-prescribed senior management responsibilities: Main

allocation rules

What the FCA-prescribed senior management responsibilities are

24.2.6 R Table: FCA-prescribed senior management responsibilities

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FCA-prescribed Explanation Reference letter

senior management
responsibility

(9) Responsibility for: (1) This responsibility (j)

includes responsibility
(a) safeguarding the
for:
independence of; and
(a) safeguarding the
(b) oversight of the
independence of; and
performance of;
(b) oversight of the
the internal audit
performance of;
function, in accordance
with the internal audit a person approved to
requirements for SMCR perform the Head of
firms. Internal Audit function
for the firm if that
function applies to the
firm.
…

(4) The Head of

Internal Audit function
means the PRA’s Head
of Internal Audit
designated senior
management function
or the head of internal
audit function.

(11) Responsibility for: (1) This responsibility (l)

includes responsibility
(a) safeguarding the
for:
independence of; and
(a) safeguarding the
(b) oversight of the
independence of; and
performance of;
(b) oversight of the
the risk function, in
performance of;
accordance with the
risk control a person approved to
requirements for SMCR perform the Chief Risk
firms. function for the firm if
that function applies to
the firm.
…

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(4) The Chief Risk

function means the
PRA’s Chief Risk
designated senior
management function
or the chief risk officer
function.

(17) … … …

(18) Responsibility for This only applies if the (j-3)

taking reasonable steps firm outsources its
to ensure that every internal audit function.
person involved in the
performance of the
firm’s internal audit
function is independent
from the persons who
perform external audit,
including:

(a) supervision and

management of the
work of outsourced
internal auditors; and
(b) management of
potential conflicts of
interest between the
provision of external
audit and internal audit
services.

(19) Responsibility for: Stress testing refers to (s)

stress testing under
(a) managing the firm’s
internal stress tests; and SYSC 20 (Reverse
stress testing).
(b) ensuring the
This responsibility only
accuracy and timeliness
applies to a firm to
of information
which SYSC 20 applies.
provided to the FCA
and other regulatory
bodies for the purposes
of stress testing.

(20) The Only applies to a firm (za)

responsibilities to which the rules in
allocated under COLL column (1) apply.
6.6.27R or COLL

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8.5.22R (Allocation of
responsibility for
compliance to an
approved person).

(21) Responsibility for Business model means (t)

the development and the same thing as it
maintenance of the does in Schedule 6 to
firm’s business model the Act (Threshold
by the governing body. Conditions).
This responsibility
applies even if the
business model
threshold condition
does not apply to it.

24.3 Who prescribed responsibilities should be allocated to

Seniority and authority

24.3.1 G The FCA expects that a person who has responsibility for an FCA-
prescribed senior management responsibility :

(1) will generally (in the case of the FCA-prescribed senior management
responsibilities in SYSC 24.3.3G SYSC 24.3.3G(1)) be the most
senior employee or officer responsible for managing that area (or the
most senior below the chief executive); and

Executive or non-executive

24.3.3 G (1) The Subject to (2), the FCA expects that normally a firm will allocate
the other FCA-prescribed senior management responsibilities to an
SMF manager who performs executive functions for the firm.

(2) The relevant rules in COLL deal with the persons to whom a firm
should allocate FCA-prescribed senior management responsibility
(za) (COLL value for money assessment and independent director
requirements).

Exceptions for small non-complex firms

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24.3.4 G The FCA accepts that it may not be practical for a small non-complex firm
to comply with the parts of SYSC 24.3.1G(1), SYSC 24.3.2G and SYSC
24.3.3G SYSC 24.3.3G(1) that would otherwise apply to it.

Not assigning too many responsibilities to one person

24.3.10 G …

(2) The firm should make the judgement:

(d) any other applicable Handbook requirements, including :

(ii) SYSC 24.3.7G to SYSC 24.3.9G; and

(iii) article 21 of the MiFID Org Regulation (as applied in

accordance with SYSC 1 Annex 1 2.8AR, SYSC 1
Annex 1 3.2-AR, SYSC 1 Annex 1 3.2-BR, SYSC 1
Annex 1 3.2CR and SYSC 1 Annex 1 3.3R); and

24 Which FCA-prescribed senior management responsibilities apply to which

Annex 1 kind of firm

Introduction and exclusions

1.3 G …

1.4 R The following FCA-prescribed senior management responsibilities do not

apply to a full-scope UK AIFM in relation to its managing an AIF:

(1) responsibility (j) (internal audit oversight);

(2) responsibility (k) (compliance oversight);

(3) responsibility (l) (risk oversight);

(4) responsibility (j-3) (independence of outsourced internal audit); and

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(5) responsibility (t) (business model);

Insert the following new Parts in SYSC 24 Annex 1 where indicated. The text is not
underlined.

Insurance sector firms

3.3 R Table: FCA-prescribed senior management responsibility applying to

insurance sector firms

Brief description of Reference Solvency Third Other ISPV

responsibility letter of II firm country insurance
responsibility branches sector

… … … … … …

Solo regulated firms

4.1 R (1) The table in SYSC 24 Annex 1 4.2R sets out which FCA-prescribed
senior management responsibilities apply to which type of core
SMCR firm and enhanced scope SMCR firm.

(2) SMCR firms in (1) are divided into the following categories for the
purposes of in (1):

(a) UK core SMCR firm;

(b) overseas core SMCR firm (excluding an EEA SMCR firm);

and

(c) enhanced scope SMCR firm.

4.2 R Table: FCA-prescribed senior management responsibility applying to solo

regulated firms

(1) (2) (3) (4) (5)

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Brief description of Reference UK core Third Enhanced

responsibility letter of firm country scope firm
responsibility core firm

Responsibility for the firm’s (a) ✓ ✓ ✓

performance of its obligations
under the senior managers
regime

Responsibility for the firm’s (b) ✓ ✓ ✓

performance of its obligations
under the employee certification
regime

Financial crime (d) ✓ ✓ ✓

COCON (b-1) ✓ ✓ ✓

Management responsibilities (c) × × ✓

maps

Internal audit oversight (j) × × ✓

Compliance oversight (k) × × ✓

Risk oversight (l) × × ✓

CASS (z) ✓ ✓ ✓

Independence of outsourced (j-3) × × ✓

internal audit

Business model (t) × × ✓

Stress tests (s) × × ✓

COLL value for money (za) ✓ ✓ ✓

assessment and independent
director requirements)

UK risk management (aa) × ✓ ×

Compliance with UK regulatory (ff) × ✓ ×

system

Escalation of correspondence (ee) × ✓ ×

Note: The categories of firm in the column headings of this table are to be interpreted in
accordance with the classification of firms in SYSC 24 Annex 1 4.1R. Therefore:
(1) UK core firm (column three) refers to SYSC 24 Annex 1 4.1R(2)(a);

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(2) Third country core firm (column four) refers to SYSC 24 Annex 1 4.1R(2)(b); and
(3) Enhanced scope firm (column five) refers to SYSC 24 Annex 1 4.1R(2)(c).

Amend the following as shown.

25 Senior managers and certification regime: Management responsibilities maps

and handover procedures and material

25.1 Application and purpose

Main application rules

25.1.1 R This chapter applies to:

(1) an SMCR banking firm; and

(2) a Solvency II firm (including a large non-directive insurer) but

excluding:

(a) an insurance special purpose vehicle; and

(b) a firm in SYSC 23 Annex 1 4.2R (firms in run-off); and

(3) an enhanced scope SMCR firm;

except to the extent that this chapter applies a narrower scope to a particular
provision.

25.3 Management responsibilities maps: Exclusion of non-financial services

activities for some firms [This part has been left blank deliberately]

25.3.1 R An enhanced scope SMCR firm may prepare its management responsibilities
map so that (subject to SYSC 25.3.4R) it only includes its management and
governance arrangements to the extent that they cover, support or otherwise
relate to its SMCR financial activities.

25.3.2 G Support functions that should be covered by a management responsibilities

map despite SYSC 25.3.1R might include:

(1) human resources;

(2) the firm’s information technology; and

(3) compliance and legal services.

25.3.3 G (1) A firm may have a non-financial services business in addition to

carrying on its SMCR financial activities. Its support services may

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support both aspects of its business and its management

responsibilities map may therefore still need to cover the support
services even though they also cover the firm’s non-financial
services business.

(2) Take for example human resources. If the firm’s human resources
function covers the firm’s entire workforce without separating the
parts that deal with the firm’s financial services and its other
business, the management responsibilities map should cover the
entire human resources function.

(3) On the other hand, the firm may separate the part of its human
resources function that deals with those working in its financial
services business from the part that deals with the other part of its
business. In that case the management responsibilities map may
leave out (subject to SYSC 25.3.4R) the part of the human resources
function that covers its non-financial services business.

25.3.4 R If a firm uses the exclusion in SYSC 25.3.1R it must include sufficient
information about the excluded management and governance arrangements
to show how the included management and governance arrangements fit in
with the firm’s management and governance arrangements as a whole.

25.4 Guidance about what should be in a management responsibilities map

25.4.11 G The executive director function, the other local responsibility function, the
group entity senior manager function, the partner function and the other
overall responsibility function are defined generally and generically and can
be performed by several people. Therefore, there is no need to explain why
several people perform one of the functions.

25.9 Handover procedures and material

Application

25.9.3 R [This has been left blank deliberately] This section does not apply to a full-
scope UK AIFM in relation to its managing an AIF.

26 Senior managers and certification regime: Overall and local responsibility

26.1 Application

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Main application rules

26.1.1 R This chapter applies to:

(1) an SMCR banking firm; and

(2) a Solvency II firm (including a large non-directive insurer) but

excluding:

(a) an insurance special purpose vehicle; and

(b) a firm in SYSC 23 Annex 1 4.2R (firms in run-off); and

(3) an enhanced scope SMCR firm;

except to the extent that this chapter applies a narrower scope to a particular
provision.

Territorial scope

26.1.7 R Table: Application of this chapter to a third-country SMCR firm

Reference in this Modification

chapter

… …

chief executive branch manager or the person

performing the head of third country
branch function or the PRA’s Head of
Overseas Branch designated senior
management function

26.2 Purpose

26.2.1 G The purpose of this chapter is to ensure, together (in the case of a PRA-
authorised person) with the equivalent PRA requirements and the
requirements about FCA-prescribed senior management responsibilities in
SYSC 24 (Senior managers and certification regime: Allocation of prescribed
responsibilities), that:

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26.4 Exclusions

Exclusions where other requirements apply

26.4.1 R …

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

Exclusion where the 12-week rule applies

26.4.6 R (1) This rule applies where:

(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) the
PRA equivalent; and

(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) the PRA equivalent.

(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) the PRA equivalent is still in force the firm may
allocate the Responsibilities to an employee who is not an SMF
manager.

26.4.8 G …

Exclusion of non-financial services activities

26.4.9 R SYSC 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.

26.4.10 G SYSC 25.3.2G and SYSC 25.3.3G (Management responsibilities maps:

Exclusion of non-financial services activities for some firms) are relevant to
when an enhanced scope SMCR firm may exclude support services from the
allocation of responsibilities under this chapter.

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Exclusion for AIFMD

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

26.10 Group management arrangements and outsourcing

26.10.2 G …

26.10.3 G (1) This chapter does not cover responsibility for an aspect of a firm’s
PRA-authorised person’s affairs managed by an individual approved
to perform the Group Entity Senior Manager or the Group Entity
Senior Insurance Manager PRA-designated senior management
function (see SYSC 26.4.2R (Exclusions where other requirements
apply).

(2) Where a responsibility is held by someone approved to perform one

of those PRA-designated senior management functions for the firm
PRA-authorised person, there is no need to appoint that person under
this chapter and apply the arrangements in SYSC 26.10.1G.

27 Senior managers and certification regime: Certification regime

27.2 Requirements of the certification regime

Fitness to act

27.2.8 G …

(3) In deciding how much reliance to put on the contractor, the firm
should take into account:

(a) the familiarity of the contractor with the obligations of firms

under this chapter, the corresponding PRA requirements (if
the firm is a PRA-authorised person) and the requirements of
the Act described in this chapter;

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27.6 Other exclusions

27.6.6 R …

Exclusions: Sole traders

27.6.7 G (1) An individual sole trader will not themselves be a certification

employee.

(2) However members of a sole trader’s staff may be.

(3) Therefore the certification regime does not apply to a sole trader
with no employees.

Exclusions: Internally managed AIFs

27.6.8 R This chapter does not apply to a firm that meets the following conditions:.

(1) it is an internally managed AIF;

(2) it is a body corporate; and

(3) it is not a collective investment scheme.

27.8 Definitions of the FCA certification functions

CASS oversight function

27.8.1 R (1) Each of the following is an FCA certification 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 of operational
effectiveness);

(c) in relation to a CASS small firm, the function of acting in the

capacity of a person who is allocated the function in CASS
1A.3.1R (oversight of operational effectiveness).

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Material risk takers

27.8.15 R Table: Definition of material risk taker

Type of SMCR firm Employees included

(3) …

(4) A firm falling within SYSC Each member of the Remuneration

19A.1 (application provisions for Code staff of the firm in column (1).
the remuneration code for
IFPRU investment firms)

(5) A firm that would fall within In relation to a firm in column (1), the
SYSC 19A.1 if it applied to an definition of Remuneration Code staff
incoming EEA firm is extended so that it includes
employees of this kind of firm in the
For these purposes sub-
same way as it includes employees of
paragraphs (i) and (ii) in SYSC
an overseas firm in row (4) of this
19A.1.1R(1)(d) (application of
table.
the Remuneration Code) do not
apply.

(6) A firm falling within SYSC Each member of the AIFM

19B.1 (application provisions for Remuneration Code staff of the firm in
the remuneration code for a full- column (1).
scope UK AIFM)

(7) An above-threshold non-EEA In relation to a firm in column (1), the

AIFM or an incoming EEA AIFM definition of AIFM Remuneration
Code staff is extended so that it
includes employees of this kind of
firm in the same way as it includes
employees of firms in row (6) of this
table.

(8) A firm falling within SYSC Each member of the BIPRU

19C.1 (application provisions for Remuneration Code staff of the firm in
remuneration code for BIPRU column (1).
firms)

(9) A firm that would fall within In relation to a firm in column (1), the
SYSC 19C.1 if it applied to an definition of BIPRU Remuneration
Code staff is extended so that it

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incoming EEA firm or an includes employees of this kind of

incoming Treaty firm firm in the same way as it includes
employees of a third country BIPRU
firm in column (1) of row (8) of this
table.

(10) A firm falling within SYSC Each member of the UCITS

19E.1 (application provisions for Remuneration Code staff of the firm in
remuneration code for UCITS column (1).
management companies)

(11) An EEA UCITS In relation to a firm in column (1), the

management company definition of UCITS Remuneration
Code staff is extended so that it
includes employees of this kind of
firm in the same way as it includes
employees of firms in row (10) of this
table.

TP 6 Transitional Provision 6

(1) (2) Material (3) (4) Transitional provision (5) (6)

provision to Transitional Handbook
which provision: provisions:
transitional dates in coming
provision force into force
applies

5 …

6 SYSC R The rule in column 2, as it From 29 Already in

5.2.30R was in force on 28 June June 2018 force
(row 2) and 2018, continues to apply to
SYSC a benchmark
5.2.33R administrator, until that
administrator becomes
[deleted]
authorised or registered
under the benchmarks
regulation, or ceases to be
authorised for

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administering a specified
benchmark.

… … … … … …

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Annex C

Amendments to the Code of Conduct sourcebook (COCON)

In this Annex, underlining indicates new text and striking through indicates deleted text.

Part 1: Comes into force [ ] 20[ ] [main commencement date for solo-regulated firms]

1 Application and purpose

1.1 Application

To whom does it apply?

1.1.2 R Table: To whom does COCON apply?

Persons to whom COCON Applies Comments

(6) … …

(B) …

(C) This row (6) also does not

apply to an employee of an SMCR
firm that is an FCA-authorised
person until [ ] 20[ ] [one year
after main commencement date for
solo-regulated firms].

To what conduct does it apply?

1.1.8A R (1) This rule applies to a person (P):

(a) who is an approved person approved to perform a controlled

function under SUP 10A.1.15R to SUP 10A.1.16BR
(appointed representatives) SUP 10A (FCA Approved
Persons in Appointed Representatives) in relation to an
appointed representative (AR); and

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(b) for whom P’s authorised approved person employer is an

SMCR firm (F); and

(c) to whom COCON also applies in P’s capacity as a member of

F’s the conduct rules staff of AR’s principal.

(2) …

(a) …

(i) …

(ii) in relation to the carrying on of a regulated activity by

the appointed representative in SUP 10A.1.15R to
SUP 10A.1.16BR concerned AR; and

4 Specific guidance on individual conduct rules

4.2 Specific guidance on senior manager conduct rules

4.2.16 G The following is a non-exhaustive list of examples of conduct that would be

in breach of rule SC2.

(8) For a senior conduct rules staff member who is responsible for the
compliance function, failing to ensure that:

(e) the method of determining the remuneration complies, where

applicable, with the Remuneration Code or, for a Solvency II
firm or a small non-directive insurer, other relevant
requirements in relation to remuneration, as well as those
remuneration codes applicable to firms as set out in SYSC
19B – 19E.

Part 2: Comes into force [ ] 20[ ] [one year after main commencement date for solo-
regulated firms]

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1 Application and purpose

1.1 Application

To whom does it apply?

1.1.2 R Table: To whom does COCON apply?

Persons to whom COCON Applies Comments

(6) Any employee of an SMCR firm …

not coming within another row of this
table, except one listed in column (2)
of this table.

(C) This row (6) also does not

apply to an employee of an SMCR
firm that is an FCA-authorised
person until [ ] 20[ ] [one year
after main commencement date for
solo-regulated firms].

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Annex D

Amendments to the Threshold Conditions (COND)

In this Annex, underlining indicates new text.

2 The threshold conditions

2.5 Suitability

2.5.3 G (1) The emphasis of the threshold conditions set out in paragraphs 2E
and 3D of Schedule 6 of the Act is on the suitability of the firm itself.
The suitability of each person who performs a controlled function
will be assessed by the FCA and/or the PRA, as appropriate, under
the approved persons regime (in relation to an FCA-approved
person, see SUP 10A (FCA Approved Persons in Appointed
Representatives), SUP 10C (FCA senior managers regime for
approved persons in SMCR firms) and FIT). In certain
circumstances, however, the FCA may consider that the firm is not
suitable because of doubts over the individual or collective
suitability of persons connected with the firm.

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Annex E

Amendments to the Statements of Principle and Code of Practice for Approved Persons
(APER)

In this Annex, underlining indicates new text and striking through indicates deleted text,
unless otherwise stated.

1.1A Application

Who?

1.1A.1 R APER applies to FCA-approved persons who are either:

(1) approved persons of firms that are not SMCR firms; or

(2) approved persons approved to perform a controlled function in SUP

10A.1.15R to SUP 10A.1.16BR (appointed representatives) SUP
10A (FCA Approved Persons in Appointed Representatives).

1.1A.1A G (1) APER does not apply to FCA-approved persons of SMCR firms.
COCON applies instead.

(2) However, APER applies to approved persons approved to perform a

controlled function under SUP 10A.1.15R to SUP 10A.1.16BR
(appointed representatives) even if the appointed representative's
principal is an SMCR firm. [deleted]

What?

1.1A.2 R (1) APER applies to the performance by an approved person of FCA

controlled functions in SUP 10A (FCA Approved Persons in
Appointed Representatives) (whether or not approval has been
sought and granted) .

(5) APER does not apply to conduct unless it is within the scope of
section 64A(4) of the Act (Rules of conduct).

Coverage of APER

1.1A.6 G APER 1.1A.7G gives examples of the effect of APER 1.1A.1R and APER
1.1A.2R. The first column says whether the example involves an FCA-
approved person in relation to one or two firms. The second column
explains what functions APER covers in the scenario set out in the first
column. [deleted]

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1.1A.7 Table: Examples of what activities APER covers

FCA approved Coverage of APER

(1) Yes, in Applies to the FCA controlled function. Also applies to any
relation to firm A other function performed for firm A in relation to the
carrying on by firm A of a regulated activity even if it is
not a controlled function.

(2) Yes, in In relation to firm A, the answer is the same as for scenario
relation to firm (1). However, APER does not apply to any function that the
A. No, in relation approved person carries on in relation to firm B even if that
to firm B, function relates to regulated activities carried out by firm
B. However, if the function that they perform in relation to
firm B is a controlled function the approved person and
firm B may be subject to legal sanctions (see SUP
10A.13.1G to SUP 10A.13.2G).

1.1A.8 G (1) A person may be an approved person in relation to more than one
firm. When that is the case, APER applies in relation to all those
firms.

(2) APER does not apply if the firm is an SMCR firm, except for
approved persons of an appointed representative of an SMCR firm.

(3) If a person is an approved person of a firm (A) that is not an SMCR

firm and also of another firm (B) that is an SMCR firm, the result is:

(a) APER applies to the approved person in relation to firm A;

and

(b) COCON applies to the approved person in relation to firm B.

[deleted]

1.1A.9 G (1) APER 1.1A refers to an approved person’s firm. This means their
authorised approved person employer. APER 1.1A also refers to an
approved person of a firm.

(2) Under section 59 of the Act (Approval for particular arrangements)

there are two kinds of approved person.

(3) Section 59(1) of the Act describes the first. It covers a person who
performs a controlled function under an arrangement entered into by
an authorised person (“A”). In this case, the authorised approved
person employer is A.

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(4) Section 59(2) of the Act describes the second. It covers a person who
performs a controlled function under an arrangement entered into by
a contractor ("B") of an authorised person (“A”). In this case, the
authorised approved person employer is A (and not B). [deleted]

Replace the defined term “firm” wherever it appears in APER 2, APER 3 and APER 4 with
the defined term “APER employer”. This change is not made in those provisions of APER
amended in the following portion of this annex.

3 Code of Practice for Approved Persons: general

3.1 Introduction

3.1.7A G Statements of Principle 1 to 4 apply to all approved persons. A person

performing an accountable higher management function is also subject to
the additional requirements set out in Statements of Principle 5 to 7 in
performing that accountable function. Those responsible under SYSC 4.4.5R
(Apportionment of responsibilities) for the firm’s apportionment obligation
will be specifically subject to Statement of Principle 5 (and see, in
particular, APER 4.5.6G). In addition, it will be the responsibility of any
such approved person to oversee that the firm has appropriate systems and
controls under Statement of Principle 7 (and see, in particular, APER
4.7.3G).

3.1.7B G (1) Statements of Principle 1 to 4 apply to an approved person’s conduct

in relation to:

(a) the appointed representative for which they work; and

(b) things directly done for their authorised approved person

employer.

(2) Statements of Principle 5 to 7 only apply to an approved person’s

management functions in relation to the appointed representative for
which they work.

3.1.9 G (1) UK domestic firms An APER employer that has its registered office
(or, if it has no registered office, its head office) in the United
Kingdom with a premium listing of equity shares are is subject to the
UK Corporate Governance Code, whose internal control provisions
are amplified in the publication entitled ‘Guidance on Risk
Management, Internal Control and Related Financial and Business
Reporting (September 2014)’ issued by the Financial Reporting

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Council. Firms regulated by the FCA An APER employer in this

category will be subject to that code as well as to the requirements
and standards of the regulatory system.

(2) In Where (1) applies, in forming an opinion whether approved

persons have complied with its the requirements of the regulatory
system, the FCA will give due credit for their following
corresponding provisions in the UK Corporate Governance Code
and related guidance.

3.1.10 R (1) In the case of an approved person approved to perform a controlled

function in SUP 10A.1.15R to SUP 10A.1.16BR (appointed
representatives), a reference in in APER 2 to APER 4 to a firm is a
reference to:

(a) the appointed representative in relation to which that

approved person performs the controlled function in SUP
10A.1.15R to SUP 10A.1.16BR; and

(b) their authorised approved person employer.

(2) For the purposes of Statements of Principle 5 to 7 the reference is

only to (a). [deleted]

4 Code of Practice for Approved Persons: specific

4.5 Statement of Principle 5

4.5.2 G In the opinion of the FCA, conduct of the type described in APER 4.5.3G,
APER 4.5.4G, APER 4.5.6G or APER 4.5.8G does not comply with
Statement of Principle 5.

4.5.6 G In the case of an approved person who is responsible under SYSC 4.4.5R(1)
for dealing with the appointment of responsibilities under SYSC 4.4.3R,
failing to take reasonable care to maintain a clear and appropriate
apportionment of significant responsibilities among the firm’s directors and
senior managers falls within APER 4.5.2G. [deleted]

4.5.7 G Behaviour of the type referred to in APER 4.5.6G includes, but is not limited
to:

(1) failing to review regularly the significant responsibilities which the

firm is required to apportion;

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(2) failing to act where that review shows that those significant
responsibilities have not been clearly apportioned. [deleted]

4.7 Statement of Principle 7

4.7.3 G Failing to take reasonable steps to implement (either personally or through a

compliance department or other departments) adequate and appropriate
systems of control to comply with the relevant requirements and standards
of the regulatory system in respect of the regulated activities of the firm
APER employer in question (as referred to in Statement of Principle 7) falls
within APER 4.7.2G. In the case of an approved person who is responsible,
under SYSC 4.4.5R(2), with overseeing the firm’s obligation under SYSC
4.1.1R, failing to take reasonable care to oversee the establishment and
maintenance of appropriate systems and controls falls within APER 4.7.2G.

4.7.9 G In the case of the money laundering reporting officer, failing to discharge
the responsibilities imposed on them by the firm in accordance with SYSC
6.3.9R falls within APER 4.7.2G. [deleted]

4.7.10 G In the case of an approved person performing an accountable higher

management function responsible for compliance in respect of the following
provisions, failing to take reasonable steps to ensure that appropriate
compliance systems and procedures are in place falls within APER 4.7.2G:
[deleted]

(1) [deleted]

(2) SYSC 6.1.4R; or

(3) article 22(3) of the MiFID Org Regulation (as applied in accordance
with SYSC 1 Annex 1 2.8AR, SYSC 1 Annex 1 3.2-AR, SYSC 1
Annex 1 3.2-BR, SYSC 1 Annex 1 3.2CR and SYSC 1 Annex 1
3.3R); or

(4) SYSC 6.1.4AR.

4.7.11A G Where the approved person is a proprietary trader under SUP 10A.9.10R,
failing to maintain and comply with appropriate systems and controls in
relation to that activity falls within APER 4.7.2G. [deleted]

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Annex F

Amendments to the Fit and Proper test for Employees and Senior Personnel sourcebook
(FIT)

In this Annex, underlining indicates new text and striking through indicates deleted text.

1 General

1.1 Application and purpose

1.1.1 G FIT applies to:

(1) a firm (including an SMCR firm);

(6) a certification employee performing an FCA certification function;

and

(7) a person whom an SMCR firm is proposing to certify to perform an

FCA certification function; and

(8) a board director as set out in FIT 1.1.2(e).

1.1.2 G The purpose of FIT is to set out and describe the criteria that:

(1) an SMCR firm should consider when:

(c) assessing the fitness and propriety of a person whom the firm
is proposing to certify to perform an FCA certification
function; and

(d) assessing the continuing fitness and propriety of a person

whom the firm has certified to perform an FCA certification
function; and

(e) (in the case an FCA-authorised person that is not a limited

scope SMCR firm) assessing the fitness of a non-SMF board
director subject to competence requirements under the
competent employees rule, any directly applicable EU
legislation or any other requirement of the regulatory system.

1.1.3 G The table in FIT 1.1.4G summarises the situations to which FIT applies.
[deleted]

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1.1.4 G Table: Situations to which FIT applies [deleted]

What FIT applies Does it Does it Comment

to apply to apply to
SMCR firms that
firms? are not
SMCR
firms?

(1) A firm Yes No However, the answer to

assessing the Question 11 in SUP 10A
fitness and Annex 1 (Frequently
propriety of a asked questions) says that
candidate whom the FCA’s approval
the firm is process is not a substitute
proposing to put for the checks that a firm
forward for should be carrying out on
approval its prospective recruits.
FIT may be a useful guide
to matters that a firm that
is not an SMCR firm
should take into account.

(2) A firm Yes No However, a firm should

assessing the employ personnel with the
continuing fitness skills, knowledge and
and propriety of an expertise necessary for the
approved person discharge of the
responsibilities allocated
to them (SYSC 5.1). FIT
may be a useful guide to
matters which a firm
should take into account if
it is not an SMCR firm.

(3) The FCA Yes Yes

assessing the
fitness and
propriety of a
candidate for
approval as an
approved person

(4) The FCA Yes Yes

assessing the
continuing fitness
and propriety of an
approved person

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(5) A firm Yes No See the comment on row

assessing the (2)
fitness and
propriety of a
person whom a
firm is proposing to
certify to perform
an FCA
certification
function

(6) A firm Yes No See the comment on row

assessing the (2)
continuing fitness
and propriety of a
person whom a
firm has certified to
perform an FCA
certification
function

1.2 Introduction

1.2.-1 G Under section 60A(1) of the Act, before an SMCR a firm may make an
application for the FCA’s approval of a controlled function the firm must be
satisfied that the person for whom the application is made is a fit and proper
person to perform that function.

1.2.1B G Under sections 60A and 63F of the Act, in assessing whether a person is a fit
and proper person to perform an FCA designated senior management
function or an FCA certification function, an SMCR a firm must have
particular regard to whether that person:

1.3 Assessing fitness and propriety

1.3.2A G An SMCR A firm assessing the fitness and propriety of staff being assessed
under FIT should consider:

1.3.2B G An SMCR A firm is reminded that, in assessing a candidate for a position

within the management body of the firm, SYSC 4.3A.3R(3) requires the firm

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to ensure that the management body, as a collective, possesses adequate

knowledge, skills and experience to understand the firm’s activities.

1.3.3 G The criteria listed in FIT 2.1 to FIT 2.3 are guidance and will be applied in
general terms when the FCA is determining a person’s fitness and propriety.
It would be impossible to produce a definitive list of all the matters which
would be relevant to a particular determination. An SMCR A firm assessing
the fitness and propriety of staff being assessed under FIT should be guided
by substantially the same criteria in FIT 2.1 to FIT 2.3 (to the extent
applicable to the firm), recognising that this is not intended to be a definitive
list of matters to be considered.

1.3.4 G If a matter comes to the FCA’s attention which suggests that the person
might not be fit and proper, the FCA will take into account how relevant and
how important it is. In the same way, if a matter comes to the attention of an
SMCR a firm which suggests that any staff being assessed under FIT might
not be fit and proper, the firm should take into account how relevant and
how important that matter is.

1.3.4A G An SMCR A firm assessing the continuing fitness and propriety of an

approved person is required to notify the FCA under section 63(2A) of the
Act if it forms the opinion that there are grounds on which the FCA could
withdraw its approval (see SUP 10C.14.24R). In discharging its obligation
to notify the FCA, an SMCR a firm should take into account how relevant
and how important the matter is that comes to its attention which suggests an
approved person might not be fit and proper before determining that a
notification should be made.

1.3.4B G An SMCR A firm assessing the continuing fitness and propriety of staff
being assessed under FIT should assess the role that the individual is
actually performing at the time the assessment is done. For this purpose, the
assessor(s) should be provided with an up-to-date job description for that
individual in advance of the assessment.

2 Main assessment criteria

2.1 Honesty, integrity and reputation

2.1.1A G An SMCR A firm determining the honesty, integrity and reputation of staff
being assessed under FIT, should consider all relevant matters, including
those set out in FIT 2.1.3G, which may have arisen either in the United
Kingdom or elsewhere. Firms should inform themselves of relevant matters,
including checking for convictions for criminal offences (where possible)
and contacting previous employers who have employed that candidate or
person. If any staff being assessed under FIT has a conviction for a criminal
offence, the firm should consider the seriousness of and circumstances
surrounding the offence, the explanation offered by that person, the

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relevance of the offence to the proposed role, the passage of time since the
offence was committed and evidence of the individual’s rehabilitation.

2.1.2A G In considering the reputation of staff being assessed under FIT 2.1.1AG an
SMCR a firm should have regard to whether that person’s reputation might
have an adverse impact upon the firm for which the function is to be
performed and the person’s responsibilities.

2.1.3 G The matters referred to in FIT 2.1.1G to which the FCA will have regard,
and to which an SMCR a firm should also have regard, include, but are not
limited to:

2.2 Competence and capability

2.2.1A G In determining a person’s competence and capability to perform an FCA

designated senior management function or an FCA certification function, an
SMCR a firm, in accordance with FIT 1.1.2G, should have regard to all
relevant matters including but not limited to:

2.2.2A G The FCA would expect an SMCR a firm determining the competence and
capability of staff being assessed under FIT to consider convictions,
dismissals and suspensions from employment for drug or alcohol abuses or
other abusive acts only in relation to a person’s continuing ability to perform
the particular FCA designated senior management function or an FCA
certification function for which the person is, or is to be, employed.

2.3 Financial soundness

2.3.1 G In determining a person’s financial soundness, the FCA will have regard,
and an SMCR a firm should also have regard, to any factors including, but
not limited to:

2.3.2 G The FCA will not normally require a candidate to supply a statement of
assets or liabilities. The fact that a person may be of limited financial means
will not, in itself, affect their suitability to perform a controlled function.

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The FCA would expect an SMCR a firm to take a similar view in assessing
whether staff being assessed under FIT, are fit and proper.

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Annex G

Amendments to the Prudential sourcebook for Investment Firms (IFPRU)

In this Annex, underlining indicates new text and striking through indicates deleted text.

4 Credit risk

4.3 Guidance on internal ratings based approach: high level material

Corporate governance

4.3.8 G …

(2) The FCA expects an appropriate individual in a significant-influence

function designated senior management function role to provide to
the FCA on an annual basis written attestation that the rating system
permissions required by the EU CRR have been carried out
appropriately.
[Note: see articles 189 and 20(6) of the EU CRR and article 3(1)(7)
of CRD]

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Annex H

Amendments to the Conduct of Business sourcebook (COBS)

In this Annex, underlining indicates new text and striking through indicates deleted text

19 Pensions supplementary provisions

19.5 Independent governance committees (IGCs)

19.5.8 G (1) A firm should consider allocating responsibility for the management
of the relationship between the firm and its IGC to a person at the
firm holding an FCA significant-influence function or a designated
senior management function.

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Annex I

Amendments to the Client Assets sourcebook (CASS)

In this Annex, underlining indicates new text and striking through indicates deleted text.

1A CASS firm classification and operational oversight

1A.3 Responsibility for CASS operational oversight

1A.3.1 R …

(2) A CASS small firm that is not an SMCR firm must make the
allocation in (1) to a director or senior manager who is approved to
perform a significant influence function for that firm. [deleted]

1A.3.1-A G The material in CASS 1A.3.1BG about how CASS 1A.3 fits into the FCA
senior managers and certification regime for SMCR firms also applies to a
CASS small firm that is an SMCR firm and the function in CASS 1A.3.1R.
However :

(1) the function in CASS 1A.3.1R is not a separate FCA certification

function; and

(2) the person performing that function will not necessarily be subject to
the employee certification regime described in SYSC 27 (Senior
managers and certification regime: Certification regime).

The approved persons senior managers regime and the certification regime

1A.3.1B G (1) (a) CASS 1A.3.1AR describes the FCA controlled function
known as the CASS operational oversight function (CF10a).
The table of FCA controlled functions in SUP 10A.4.4R
together with SUP 10A.7.9R specify the CASS operational
oversight function as an FCA required function for a firm to
which CASS 1A.3.1AR applies. This paragraph CASS
1A.3.1BG describes how CASS 1A.3.1AR applies to SMCR
firms.

(b) The CASS operational oversight function does not apply to

an SMCR firm. For an SMCR firm, the The function in CASS
1A.3.1AR is not a separate controlled function and
performing that function does not require approval as an

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approved person. Paragraphs (1A) to (4) describe how CASS

1A.3.1AR applies to SMCR firms.

1A.3.1C R If, at the time a firm that is not an SMCR firm becomes a CASS medium firm
or a CASS large firm in accordance with CASS 1A.2.12R(1) or CASS
1A.2.12 R(2), the firm is not able to comply with CASS 1A.3.1AR because it
has no director or senior manager who is an approved person in respect of
the CASS operational oversight function, the firm must:

(1) take the necessary steps to ensure that it complies with CASS
1A.3.1AR as soon as practicable, which must at least include
submitting an application for a candidate in respect of the CASS
operational oversight function within 30 business days of the firm
becoming a CASS medium firm or a CASS large firm; and

(2) until such time as it is able to comply with CASS 1A.3.1AR, allocate
to a director or senior manager performing a senior management
function responsibility for:

(a) oversight of the firm’s operational compliance with CASS;

(b) reporting to the firm’s governing body in respect of that

oversight; and

(c) completing and submitting the CMAR to the FCA in

accordance with SUP 16.14. [deleted]

1A.3.1D G (1) CASS 1A.3.1CR provides a grace period for a firm that is not an
SMCR firm to apply for someone to be approved to perform the
CASS operational oversight function.

(2) There is no equivalent to CASS 1A.3.1CR for an SMCR firm,

because a person does not need specific FCA approval before
carrying out the function. This is explained in (3) to (5), below.

(3) As explained in CASS 1A.3.1BG(2), the function in CASS 1A.3.1AR

is not, by itself, a controlled function.

(4) Therefore, if an approved person is to perform the function for a an

SMCR firm, it can be allocated to any director or senior manager
who is already an approved person who is suitable to carry it out.

(5) If the function is to be carried out by a certification employee:

(a) FCA approval is not needed because performance of a role

that falls into the certification regime does not require FCA
approval;

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(b) the firm should:

(i) either issue them with a certificate under SYSC 27

(Senior managers and certification regime:
Certification regime) before the firm becomes a CASS
medium firm or a CASS large firm; or

(ii) give the function to a suitable approved person

pending issue of the certificate. [deleted]

1A.3.3 R (1) Subject to (2), a firm must make and retain an appropriate record of
the person to whom responsibility is allocated in accordance with
CASS 1A.3.1R, or CASS 1A.3.1AR or CASS 1A.3.1CR(2).

11 Debt management client money chapter

11.3 Responsibility for CASS operational oversight

CASS small debt management firm other than a not-for-profit debt advice body

11.3.1 R …

(2) A firm that is not an SMCR firm must make the allocation in (1) to a
director or senior manager approved to perform a significant
influence function in relation to that firm. [deleted]

CASS small debt management firm that is a not-for-profit debt advice body

11.3.2 R …

11.3.2A G (1) CASS 11.3.3G(5) to (11) do not apply to a CASS small debt
management firm that is a not-for-profit debt advice body. This is
because neither SYSC 24 (Senior managers and certification regime:
Allocation of prescribed responsibilities) nor SYSC 26 (Senior
managers and certification regime: Overall and local responsibility)
apply to it.

(2) It will not have any SMF managers as no designated senior

management functions apply to it.

(3) The function in CASS 11.3.2R is not a separate FCA certification

function and the person performing that function will not necessarily

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be subject to the employee certification regime described in SYSC 27

(Senior managers and certification regime: Certification Regime).

CASS large debt management firms firm: the CASS operational oversight
function (CF10a)

11.3.3 G (1) CASS 11.3.4R describes the FCA controlled function known as the
CASS operational and oversight function (CF10a) in relation to
CASS large debt management firms, including not-for-profit debt
advice bodies. [deleted]

(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 debit advice body fitting into that
category) the function described in CASS 11.3.4R is required to be
discharged by a director or senior manager.

(3) In the case of a firm that is not an SMCR firm, the director or senior
manager in (2) should be an approved person under the approved
persons regime provided for in SUP 10A (FCA Approved Persons).

(4) However, the CASS operational oversight function does not apply to
an SMCR firm. [deleted]

11.3.5 R If, at the time a CASS debt management firm that is not an SMCR firm
becomes a CASS large debt management firm in accordance with CASS
11.2.8R, the firm is not able to comply with CASS 11.3.4R because it has no
director or senior manager who is an approved person in respect of the
CASS operational oversight function, the firm must:

(1) take the necessary steps to ensure that it complies with CASS
11.3.4R as soon as practicable, which must at least include
submitting an application for a candidate in respect of the CASS
operational oversight function within 30 business days of the firm
becoming a CASS large debt management firm; and

(2) until such time as it is able to comply with CASS 11.3.4R, allocate to
a director or senior manager performing a significant-influence
function responsibility for:

(a) oversight of the firm’s operational compliance with CASS;

(b) reporting to the firm’s governing body in respect of that

oversight; and

(c) completing and submitting the CMAR to the FCA in

accordance with SUP 16.14. [deleted]

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11.3.5A G (1) CASS 11.3.5R provides a grace period for a firm that is not an SMCR
firm to apply for someone to be approved to perform the CASS
operational oversight function.

(2) There is no equivalent to CASS 11.3.5R for an SMCR firm, because a

person does not need specific FCA approval before carrying out the
function. This is explained in (3) to (5), below.

(3) As explained in CASS 11.3.3G, the function in CASS 11.3.5R is not,

by itself, a controlled function.

(4) Therefore, if an approved person is to perform the function for an

SMCR firm, it can be allocated to any director or senior manager
who is already an approved person who is suitable to carry it out.

(5) If the function is to be carried out by a certification employee:

(a) FCA approval is not needed because performance of a role

that falls into the certification regime does not require FCA
approval;

(b) the firm should:

(i) either issue them with a certificate under SYSC 27

(Senior managers and certification regime:
Certification regime) before the firm becomes a CASS
large debt management firm; or

(ii) give the function to a suitable approved person

pending issue of the certificate. [deleted]

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Annex J

Amendments to the Supervision manual (SUP)

In this Annex, underlining indicates new text and striking through indicates deleted text,
unless otherwise stated.

Part 1: Comes into force [ ] 20[ ] [about six months before main commencement date for
solo-regulated firms]

After SUP TP 11 (Bank of England and Financial Services Act 2016: Approved persons in
insurers) insert a new SUP TP 12. The text is not underlined.

TP 12 Bank of England and Financial Services Act 2016: Approved persons in solo-
regulated firms

12.1 Application and purpose

12.1.1 R (1) SUP TP 12 applies to solo-regulated SMCR firms.

(2) SUP TP 12.15 applies to every firm.

12.1.2 G (1) SUP TP 12 has transitional provisions relating to the changes to the
approved persons regime made by Part 2 of the Bank of England and
Financial Services Act 2016 and the Individual Accountability
(FCA-Authorised Firms) Instrument 2018.

(2) In particular, it has procedures for converting existing approvals for

the performance of controlled functions into approvals for the
corresponding designated senior management functions.

12.1.3 G (1) The main time period for which SUP TP 12 operates is [the year in
which the main commencement date for solo-regulated firms falls].

(2) There are transitional provisions that can apply beyond that period.
They are based on events occurring during that period.

12.1.4 G Most of SUP TP 12 relates SUP 10C.

12.1.5 G SUP TP 12.22 has a glossary of terms used in SUP TP 12 which have
meanings that only apply in SUP TP 12. These terms appear in bold type in
SUP TP 12.

12.2 Conversion of existing approvals

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12.2.1 R If the conditions set out in SUP TP 12.2.2R are met, a pre-implementation
approval in relation to a particular approved person (AP) and a particular
solo-regulated SMCR firm (F) has effect on and after the commencement
date as if it had been given in relation to the FCA-designated senior
management function or FCA-designated senior management functions
specified in SUP TP 12.2.2R(2) and (3).

12.2.2 R Those conditions are:

(1) the pre-implementation approval is in effect in relation to F:

(a) (where SUP TP 12.2.10R applies this condition) at the firm

specific date; and

(b) immediately before the commencement date;

(2) AP is performing an FCA-designated senior management function in

relation to F on the commencement date;

(3) the pre-implementation approval in (1) is potentially convertible

into approval for the FCA-designated senior management function in
(2); and

(4) (where SUP TP 12.2.10R applies this condition) F has notified the
FCA:

(a) between the first notification date and the commencement

date;

(b) that it considers that the pre-implementation approval will

be converted into approval for the FCA-designated senior
management function in (2) under SUP TP 12.2.

12.2.3 R (1) A pre-implementation approval is potentially convertible into

approval for an FCA-designated senior management function if a
single row within the applicable part of the mapping table in SUP TP
12.2.5R contains both:

(a) the pre-implementation controlled function for which that

pre-implementation approval was given; and

(b) that FCA-designated senior management function.

(2) An approval for a pre-implementation controlled function

excluded from SUP TP 12 by SUP TP 12.4.2R is not potentially
convertible into approval for any FCA-designated senior
management function.

(3) An approval for a pre-implementation controlled function is not

potentially convertible into approval for an FCA-designated senior
management function in relation to a firm if either that pre-

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implementation controlled function or that FCA-designated senior

management function does not apply to the firm.

12.2.4 R (1) Part One of the table in SUP TP 12.2.5R applies to a core SMCR
firm and a limited scope SMCR firm.

(2) Part Two of the table in SUP TP 12.2.5R applies to an enhanced

scope SMCR firm.

12.2.5 R Mapping table: Potential conversion of approval for existing controlled

functions into approval for designated senior management functions

Part One (core SMCR firms and limited scope SMCR firms)

(1) (2) (3)

Pre-Implementation New FCA-designated Is notification required?
Controlled Function senior management
function

Executive functions

Director function Executive director No

function

Chief executive function (1) Chief executive No

function
(2) Head of third country
branch function
(3) Executive director
function (See Note 2)

Partner function (1) Partner function No

(2) Executive director
function

Director of Executive director No

unincorporated function
association function

Small friendly society Executive director No

function function

Oversight functions

Non-executive director Chair of the governing Yes

function body function

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Required functions

Apportionment and Limited scope function No

oversight function

Compliance oversight Compliance oversight No

function function

Money laundering Money laundering No

reporting function reporting function

Significant management function

Significant management EEA branch senior No

function manager function

Part Two (enhanced scope SMCR firms)

(1) (2)
Pre-Implementation Controlled New FCA-designated senior
Function management function

Executive functions

Director function (1) Executive director function

(2) Chief finance officer function
(3) Chief risk officer function
(4) Head of internal audit function
(5) Group entity senior manager
function
(6) Chief operations function

Chief executive function (1) Chief executive function

(2) Chief finance officer function
(3) Chief risk officer function
(4) Head of internal audit function

Partner function (1) Partner function

(2) Chief finance officer function
(3) Chief risk officer function
(4) Head of internal audit function

Director of unincorporated association (1) Executive director function

function (2) Chief finance officer function

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(3) Chief risk officer function

(4) Head of internal audit function

Small friendly society function (1) Executive director function

(2) Chief finance officer function
(3) Chief risk officer function
(4) Head of internal audit function

Oversight functions

Non-executive director function (1) Chair of the governing body

function
(2) Chair of the risk committee function
(3) Chair of the audit committee
function
(4) Chair of the remuneration
committee function
(5) Chair of the nomination committee
function
(6) Senior independent director function
(7) Group entity senior manager
function

Systems and controls

Systems and controls function (1) Chief finance officer function

(2) Chief risk officer function
(3) Head of internal audit function

Required functions

Compliance oversight function Compliance oversight function

Money laundering reporting function Money laundering reporting function

CASS operational oversight function Other overall responsibility function

Significant management function

Significant management function (1) Other overall responsibility function

(2) Chief operations function

Notes for Parts One and Two of this table

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(1) All references to a new FCA-designated senior management function are to

FCA-designated senior management functions brought into force for the firm
concerned by the Individual Accountability (FCA-Authorised Firms) Instrument
2018.

(2) The conversion from the chief executive function to the executive director
function only applies to a non-directive friendly society.

12.2.6 G If a pre-implementation controlled function does not apply to a firm

immediately before the commencement date, the applicable row of the
table in SUP TP 12.2.5R does not apply to it either.

12.2.7 G (1) The general principle is that a pre-implementation approval cannot

be converted to approval for an FCA-designated senior management
function if that FCA-designated senior management function will not
apply to the firm or to the particular approved person on the
commencement date.

(2) For example:

(a) If none of the FCA-designated senior management functions

in a row of the table in SUP TP 12.2.5R apply to a firm on
the commencement date, that row does not apply to the firm.

(b) An example of (a) is that the row applying to the limited

scope FCA-designated senior management function only
applies to limited scope SMCR firms.

(c) The convertibility of the partner function to the executive

director function in Part One of the table only applies to a
non-UK SMCR firm that is a partnership.

12.2.8 G Another example of the principle in SUP TP 12.2.7G is that if:

(1) the result of SUP TP 12.2 would be that an approved person is

deemed to be approved to perform the other overall responsibility
function or the other local responsibility function; and

(2) that approved person is deemed by SUP TP 12.2 to be approved to

perform any other FCA-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)
does not apply.

12.2.9 R (1) A notification to the FCA is not to be taken into account for the
purposes of SUP TP 12.2.2R(4) so far as it concerns a particular

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approved person if the firm does not include a statement of

responsibilities about that approved person with the notification
when required to do so by SUP TP 12.11.

(2) A notification to the FCA is not to be taken into account for the
purposes of SUP TP 12.2.2R(4) if the firm does not include a
management responsibilities map with the notification when
required to do so by SUP TP 12.12.

12.2.10 R SUP TP 12.2.2R(1)(a) and SUP TP 12.2.2R(4):

(1) apply to an enhanced scope SMCR firm; and

(2) do not apply to a core SMCR firm or a limited scope SMCR firm
except in relation to a pre-implementation approval for which
there is a notification obligation under SUP TP 12.5 or SUP TP 12.6.

12.2.11 G SUP TP 12.2.2R(4)(a) (together with SUP TP 12.5 and SUP TP 12.6) means
that if a firm is required to submit a Form K:

(1) a failure to submit a Form K before the final notification date is a

breach of the requirements of SUP TP 12; but

(2) despite that breach, the pre-implementation approval can still be

converted into an approval for the applicable FCA-designated senior
management function as long as it is received between the first
notification date and the commencement date.

12.3 Effect of conversion

12.3.1 R (1) Where, immediately before the commencement date, a pre-

implementation approval is subject to a suspension, condition or
limitation imposed under section 66(3) of the Act (Disciplinary
powers), that suspension, condition or limitation is to be treated as if
it were imposed in respect of the converted approval from the
beginning of the commencement date.

(2) This rule applies whether or not the FCA has given a warning notice
or a decision notice under:

(a) section 63 of the Act (Withdrawal of approval); or

(b) section 63B of the Act (Procedure and right to refer to

tribunal); or

(c) section 67 of the Act (Disciplinary measures: procedure and

right to refer to Tribunal).

12.3.2 R Anything done under section 63 of the Act (Withdrawal of approval) in

respect of a pre-implementation approval before the commencement date

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continues to have effect on and after that day in respect of the converted
approval.

12.4 Lapse of existing approvals and special provisions about appointed

representatives

12.4.1 R Subject to SUP TP 12.4.2R, any pre-implementation approval that is in

effect immediately before the commencement date that is not converted
under SUP TP 12.2 ceases to have effect as from the beginning of the
commencement date in relation to the controlled function concerned.

12.4.2 R (1) SUP TP 12 does not apply to a pre-implementation approval that

has effect under SUP 10A.1.15R to SUP 10A.1.16AR (appointed
representatives).

(2) However SUP TP 12 does apply to a pre-implementation approval

in (1) for a firm that will fall under SUP 10C Annex 1 7.1R(4) (an
appointed representative that has a limited permission) when it
comes into force on the commencement date.

(3) (2) does not apply to a pre-implementation approval for the

customer function. SUP TP 12 does not apply to such a pre-
implementation approval.

12.4.3 G An approval excluded from SUP TP 12 by SUP TP 12.4.2R continues in

force and is not affected by SUP TP 12.

12.4.4 G (1) A firm does not have to submit a Form C for an approved person
who had a pre-implementation approval to perform the customer
function but ceases to perform that function because the customer
function is (except in relation to appointed representatives) abolished
after the commencement date.

(2) A firm should however notify the FCA by Form C that a pre-
implementation approval has not been converted into approval for
an FCA-designated senior management function under SUP TP 12.2
because the approved person resigned or otherwise stopped
performing the FCA controlled function before the commencement
date.

12.5 Notification to the FCA: Initial notification

12.5.1 R (1) A firm must notify the FCA of:

(a) each pre-implementation approval that it considers will be

converted into approval for an FCA-designated senior
management function under SUP TP 12.2 (assuming that the

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firm complies with the applicable notification requirements in

SUP TP 12);

(b) the approved person in respect of whom that pre-

implementation approval was given; and

(c) the FCA-designated senior management function referred to

in (a).

(2) A firm must make the notification in (1) between the first
notification date and the final notification date.

(3) This rule applies to:

(a) an enhanced scope SMCR firm; and

(b) a core SMCR firm and a limited scope SMCR firm in

relation to a pre-implementation approval to which column
(3) of Part One of the table in SUP TP 12.2.5R applies the
notification requirement in this rule.

12.5.2 G SUP TP 12.10 explains how the firm should make the notification.

12.5.3 G (1) This paragraph (SUP TP 12.5.3G) gives examples of things that a
firm should not include in a notification under SUP TP 12.5.1R.

(2) A firm should not include a pre-implementation approval for the

customer function. This is because there is no need to notify a pre-
implementation approval if it is not potentially convertible into
any FCA-designated senior management function.

(3) A firm should not include a pre-implementation approval if:

(a) it is potentially convertible into an FCA-designated senior

management function; but

(b) the firm considers that the approved person will not be
performing that FCA-designated senior management function
on the commencement date.

(4) Therefore, a firm should not include an approved person who plans
to resign before the commencement date if it is intended that they
will have left the firm before then.

(5) A firm should not include a pre-implementation approval if SUP

TP 12.4.2R says that SUP TP 12 does not apply to it.

12.5.4 G If the firm considers that some of an approved person’s pre-

implementation approvals will be converted and some will not be, the
firm’s notification should:

(1) include the approved person; but

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(2) exclude the approvals that will not be converted.

12.6 Notification to the FCA: Revision of initial notice

12.6.1 R (1) This rule applies if, before the commencement date:

(a) there is a change relating to information given in or

accompanying a notification that the firm has previously
made under SUP TP 12.5 (or a notification given under SUP
TP 12.6); or

(b) the firm giving the notice discovers that any part of that
information is inaccurate.

(2) Where circumstances described in (1) occur before the final

notification date, the firm must submit a revision of the notice
referred to in (1) to the FCA before the final notification date.

(3) Where circumstances described in (1) occur between the final

notification date and the commencement date, the firm must
submit a revision of the notice referred to in (1) to the FCA before
the commencement date.

12.6.2 G SUP TP 12.10 explains how the firm should make the revised notification.

12.6.3 G (1) This paragraph SUP TP 12.6.3G gives examples of when a firm
should revise its SUP TP 12.5 notice under SUP TP 12.6.

(2) A firm need not include in a notification under SUP TP 12.5 an

approved person who plans to leave the firm before the
commencement date. However that plan may change and as a result
the firm may later conclude that the approved person will carry on
with their job after the commencement date. If so, the firm should
revise the notice.

(3) If, after the notice to the FCA, the FCA grants an approval under
section 59 of the Act (Approval for particular arrangements) to
someone who did not have any such approval for the firm at the time
of the notice, the firm should revise its notice by including that new
approved person and that new pre-implementation approval.

(4) If, after a firm has given the notice to the FCA, the FCA grants a new
approval under section 59 of the Act to someone who already was an
approved person for the firm when the firm gave the notice to the
FCA, the firm should revise its notice by including that new pre-
implementation approval.

(5) If a firm includes an approved person in a notification under SUP TP

12.5 and the firm later concludes that that person’s pre-

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implementation approval will no longer qualify for conversion

because that person will not be performing the relevant FCA-
designated senior management function for the firm on the
commencement date, the firm should revise its notice. Possible
reasons for this include:

(a) the approved person leaves the firm;

(b) the approved person tells the firm they are going to leave the
firm before the commencement date; or

(c) the approved person’s job changes so that it will no longer

involve performing an FCA-designated senior management
function on the commencement date.

(6) There is no need to include information about the matters set out in
SUP TP 12.5.3G.

12.6.4 G If a firm gives a notification to the FCA under SUP TP 12.5 about an
approved person and that approved person later leaves the firm or gives up
performing some of their pre-implementation controlled functions before
the commencement date, the firm should notify the FCA using Form C or
Form E under SUP 10A as well as a Form K under SUP TP 12.10.

12.7 In-flight applications: Conversion

12.7.1 R (1) A pre-implementation application by a firm that has not been

determined or withdrawn by the commencement date is to be
treated, on and after the commencement date, as if it had been made
for the corresponding FCA-designated senior management function
or FCA-designated senior management functions (if there are any).

(2) If a firm is required to notify a pre-implementation application to

the FCA under SUP TP 12.8R, (1) only applies to a corresponding
FCA-designated senior management function if the firm has included
in that notification:

(a) that pre-implementation application; and

(b) that FCA-designated senior management function.

12.7.2 R An FCA-designated senior management function “corresponds” to a pre-

implementation controlled function if approval for the latter is potentially
convertible into approval for the former and “corresponding” must be
interpreted accordingly.

12.7.3 R SUP TP 12.7.1R is subject to any amendment the firm may make to the
application after the first notification date and before the commencement
date to specify that on the commencement date:

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(1) the pre-implementation application is to lapse; or

(2) the pre-implementation application is to be treated as only being

for some of the FCA-designated senior management functions.

12.7.4 G SUP TP 12.8.3G explains what FCA-designated senior management

functions are covered by SUP TP 12.7.1R(2).

12.7.5 G (1) SUP TP 12.7.3R is not the only way a firm may change the effect of
SUP TP 12.7.

(2) After the commencement date a firm is free to amend its application
in accordance with the Act and the FCA Handbook.

(3) Before the commencement date, a firm is free to amend its

application in accordance with the Act and the FCA Handbook by
changing the pre-implementation controlled function for which it
is applying. That will affect the corresponding FCA-designated
senior management function. If the firm amends its application in
this way it should notify the FCA under SUP TP 12.8 as well as
under SUP 10A.

12.7.6 R Subject to SUP TP 12.7.7R, a pre-implementation application lapses on

the commencement date unless it is continued in force by SUP TP 12.7.

12.7.7 R SUP TP 12 does not apply to a pre-implementation application if the pre-

implementation approval that would result if it was granted would be
excluded from SUP TP 12 by SUP TP 12.4.2R.

12.8 In-flight applications: Notification requirements

12.8.1 R A firm must, between the first notification date and the final notification
date, notify the FCA of every pre-implementation application if:

(1) it has not been determined or withdrawn at the time of the

notification;

(2) it is not excluded under SUP TP 12.7.7R; and

(3) the firm would be required to notify the FCA under SUP TP 12.5 if
that application had been granted and the approval was in effect
immediately before the date of the notification in SUP TP 12.8.1R.

12.8.2 R The information about a pre-implementation application that the

notification must contain is the information that the firm would be required
to give the FCA in a notification under SUP TP 12.5 if:

(1) that pre-implementation application had been granted; and

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(2) the resulting approval was in effect immediately before the date of
the notification in SUP TP 12.8.1R.

12.8.3 G SUP TP 12.8.1R and SUP TP 12.8.2R mean:

(1) In general only an enhanced scope SMCR firm needs to make the
notification.

(2) A core SMCR firm and a limited scope firm should not make a
notification except in relation to an application to perform the non-
executive director pre-implementation controlled function.

(3) The information to be notified to the FCA about a particular pre-

implementation application includes each FCA-designated senior
management function that meets the following conditions:

(a) approval for the pre-implementation controlled function

for which the pre-implementation application is being
made is potentially convertible into approval for that FCA-
designated senior management function; and

(b) the firm considers that the approved person concerned will be
performing that FCA-designated senior management function
on the commencement date if the pre-implementation
application is approved before then.

(4) A firm should not notify the FCA about a particular pre-
implementation application if the firm considers that, if the
application were approved before the commencement date, the
approved person will not be performing on the commencement date
any of the FCA-designated senior management functions into which
the applicable pre-implementation approval would be potentially
convertible. This might be because the firm intends that the
candidate will only be in post for a short time.

12.8.4 R (1) This rule applies if, before the commencement date:

(a) a firm makes a pre-implementation application after the

initial notice under SUP TP 12.8.1R; and

(b) the firm would be required to notify the FCA under SUP TP
12.6 if that application had been granted and the approval
was in effect immediately before the date of the notification
under SUP TP 12.8.4R.

(2) This rule also applies if, before the commencement date:

(a) there is any other change relating to information given in or

accompanying the initial notice under SUP TP 12.8.1R (or a
notification given under SUP TP 12.8.4R), or

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(b) the firm discovers that any part of that information is

inaccurate.

(3) Where circumstances described in (1) or (2) occur before the final
notification date, the firm must submit a revision of the notice
referred to in (1) or (2) to the FCA before the final notification date.

(4) Where circumstances described in (1) or (2) occur between the final
notification date and the commencement date, the firm must
submit a revision of the notice referred to in (1) or (2) to the FCA
before the commencement date.

12.8.5 G SUP TP 12.10 explains how the firm should make the notification.

12.8.6 G If a firm notifies the FCA under SUP TP 12.8 of a pre-implementation

application and that application is granted or refused before the
commencement date, the firm should revise its notification under SUP TP
12.8.4R and, if applicable, SUP TP 12.6.

12.9 In-flight applications: Supplemental material

12.9.1 R (1) This rule applies if, in relation to a pre-implementation application

continued in effect after the commencement date under SUP TP
12.7, the FCA has before the commencement date:

(a) imposed a requirement under section 60 of the Act

(Application for approval);

(b) given a warning notice under section 62(2) of the Act

(Applications for approval: procedure and right to refer to
tribunal) or a decision notice under section 62(3) of the Act to
the interested parties referred to in section 62(5); or

(c) taken any step in connection with giving a warning notice or

decision notice under section 62.

(2) The requirement, notice or step in (1) is to be treated, on and after

the commencement date, as having been imposed, given or taken in
relation to the application as affected by SUP TP 12.7.

12.10 Procedure for notification

12.10.1 R A firm must only make a single notification under SUP TP 12.5 and SUP TP
12.8.1R and must do so on the same notification form.

12.10.2 R A firm must make a notification under SUP TP 12.5, SUP TP 12.6 or SUP
TP 12.8 by completing Form K (SUP TP 12.23.1R).

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12.10.3 R A firm must make a notification or submit a document to the FCA under
SUP TP 12 in accordance with SUP 10C.15.11R(1) and (3) (Method of
submission: electronic submission).

12.10.4 R (1) A firm making a notification under SUP TP 12.10.3R in accordance

with SUP 10C.15.11R(1) must use the version of Form K made
available on the electronic system referred to in SUP 10C.15.11R,
which is based on the version in SUP TP 12.23.1R.

(2) A firm making a notification under SUP TP 12.10.3R in accordance

with SUP 10C.15.11R(3) and SUP 10C.15.14R must use the version
of Form K in SUP TP 12.23.1R.

12.10.5 G If a firm discovers after the commencement date that any information it has
given under SUP TP 12 is inaccurate it should notify the FCA as described
in SUP 15.6 (Inaccurate, false or misleading information). If SUP TP
12.17.4R applies, the firm should notify the FCA under that rule instead.

12.11 Statements of responsibilities

12.11.1 R A firm must, in relation to each transitioned SMF manager, prepare a

statement setting out the aspects of the affairs of the firm which it is
intended that they will be responsible for managing in performing their
converted designated senior management function.

12.11.2 R A firm must have prepared the statement in SUP TP 12.11.1R by the
commencement date (unless it must prepare it earlier under SUP TP
12.11.4R).

12.11.3 G A firm should not send that statement to the FCA unless it is required to do
so by SUP TP 12.11.4R or SUP TP 12.11.5R.

12.11.4 R A notification to the FCA under SUP TP 12.5, SUP TP 12.6 or SUP TP 12.8
by an enhanced scope SMCR firm about an approved person or candidate
must be accompanied by a statement of responsibilities about that person.

12.11.5 R A core SMCR firm and a limited scope firm must, within five business
days after the commencement date, give the FCA a statement of
responsibilities for each candidate who is the subject of a pre-
implementation application by the firm that has been converted into an
application for approval for the performance of an FCA-designated senior
management function under SUP TP 12.7.

12.11.6 G A statement of responsibilities should comply with all the rules and
directions in the FCA Handbook that will apply to statements of
responsibilities prepared by the firm (see SUP TP 12.16).

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12.12 Management responsibilities maps

12.12.1 R SUP TP 12.12 applies to an enhanced scope SMCR firm that will be
required under SYSC 25 (Senior managers and certification regime:
Management responsibilities maps and handover procedures and material) to
have a management responsibilities map when that chapter comes into force
on the commencement date.

12.12.2 R A notification to the FCA under SUP TP 12.10.1R must be accompanied by

a management responsibilities map.

12.12.3 G A management responsibilities map should comply with all the rules and
directions in the FCA Handbook that will apply to a management
responsibilities map prepared by the firm (see SUP TP 12.16).

12.13 Supplemental material about statements of responsibilities and management

responsibilities maps

12.13.1 R A statement of responsibilities and a management responsibilities map

must be prepared as of the commencement date.

12.13.2 G (1) If there has been a change relating to a statement of responsibilities

or a management responsibilities map submitted to the FCA under
SUP TP 12, the firm should submit a revised version.

(2) This is the effect of SUP TP 12.6 and SUP TP 12.8.4R.

12.13.3 G A firm should not assume that the FCA has reviewed a statement of
responsibilities or a management responsibilities map submitted to it 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.

12.14 Criminal record checks and employment references

12.14.1 R SUP 10C.10.16R (Criminal record checks) does not apply to any pre-
implementation application continued in effect by SUP TP 12.7.1R after
the commencement date.

12.14.2 G SUP 10C.10.16R (Criminal record checks) applies to any application for
approval made under SUP TP 12.15.

12.14.3 G SYSC TP 7.4.2R (Transitional provisions about regulatory references) has

transitional provisions about regulatory references in relation to a pre-
implementation application continued in effect by SUP TP 12.7.1R and
applications for approval made under SUP TP 12.15.

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12.15 Applications of approved persons to take effect from the commencement date

12.15.1 D (1) A firm may, before the commencement date, apply under section 60
of the Act (Applications for approval) 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 effect (as respects the firm) on the
commencement date.

(2) Any application may only be made after the first notification 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 in accordance with
the other requirements to be in effect on that date.

12.15.2 G The rest of SUP TP 12 will not apply to an application under SUP TP 12.15.
In particular, it is not a pre-implementation application and the application
should not be included in the firm’s Form K.

12.15.3 G Any such application should be accompanied by a statement of

responsibilities and, if SYSC 25 (Senior managers and certification regime:
Management responsibilities maps and handover procedures and material)
will apply, a management responsibilities map.

12.15.4 G A firm does not have to make an application under SUP TP 12.15. It can
make an application for an existing controlled function before the
commencement date under the rules and directions in force at the time of
the application. SUP TP 12 will apply to such applications.

12.16 Application of ongoing requirements to converted approvals and conversion

documents

12.16.1 R (1) The rules of the FCA Handbook apply to a converted approval, as
they do to approvals granted after the commencement date.

(2) The rules of the FCA Handbook apply to a pre-implementation

application that is continued in force under SUP TP 12 after 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 12.

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12.16.2 R (1) The rules of the FCA Handbook apply to a statement of

responsibilities (including one revised under (SUP TP 12.16.4R)) as
they do to a statement of responsibilities.

(2) (2) applies even if the firm is not required to submit the statement of
responsibilities to the FCA under SUP TP 12.12.

12.16.3 R A management responsibilities map submitted to the FCA under SUP TP

12.12 must comply with all the rules and directions in the FCA Handbook
that will apply to the firm’s management responsibilities map as from the
commencement date.

12.16.4 R (1) If, since the commencement date, there has been any significant
change in the aspects of a firm’s affairs which a transitioned SMF
manager is responsible for managing in performing their converted
designated senior management function, the firm must provide the
FCA with a revised statement of responsibilities.

(2) The requirements of the FCA Handbook about an obligation under

section 62A of the Act (Changes in responsibilities of senior
managers) apply to an obligation under (1).

12.16.5 D SUP TP 12.16.1R to SUP TP 12.16.4R apply to directions in SUP 10C in

the same way as they do to rules.

12.16.6 G The table in SUP TP 12.16.7G gives examples of how SUP 10C and other
parts of the FCA Handbook apply to converted approvals.

12.16.7 G Table: Examples of how ongoing requirements apply to converted approvals

Requirement Summary of the How SUP 10C applies

in Handbook requirement in
column (1)

Revised statements of responsibilities

SUP Submission of SUP TP 12.16.4R(1) mirrors section

10C.11.7D revised statement 62A of the Act (Changes in
of responsibilities responsibilities of senior managers).
This means that if after the
commencement date there has been a
significant change in a transitioned
SMF manager’s responsibilities in
relation to their converted designated
senior management functions, the
firm should submit a revised statement
of responsibilities. It should also
submit a Form J unless SUP 10C.11
says that it is not required.

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The question of whether there has been

a significant change should be decided
in the same way as under section 62A
of the Act.

Varying an approval

SUP Statements of The powers and requirements in the

10C.11.10D responsibilities Act and in SUP 10C about variation of
approvals at the request of a firm and at
SUP Ceasing to carry the initiative of the FCA apply to
10C.11.12R on some functions converted approvals.

SUP 10C.13 Other material If a transitioned SMF manager

about variations ceases to perform a designated senior
management function but continues to
perform a converted designated
senior management function, the firm
should submit a revised statement of
responsibilities document under SUP
10C.11.12R.

Single statement of responsibilities document

SUP One statement of Applies to statements of

10C.11.13D responsibilities responsibilities in the same way as it
for each SMF applies to statements of
manager for each responsibilities. For example:
firm

(1) If after the commencement date a

firm applies for the FCA’s approval for
a transitioned SMF manager to
perform another FCA-designated
senior management function, the
statement of responsibilities prepared
for that application should be
combined with the statement of
responsibilities required by SUP TP
11 into a single document.

(2) If:
(a) after the commencement date a
transitioned SMF manager is
approved by the FCA to perform
another FCA-designated senior
management function; and
(b) later there is a significant change in
the transitioned SMF manager’s
responsibilities;

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the firm should notify the FCA and

submit a single revised statement of
responsibilities document, whether the
change relates to the converted
designated senior management
function or to the additional FCA-
designated senior management
function.

Complete set of statements of responsibilities

SUP Complete set of Applies to statements of

10C.11.20R current statements responsibilities in the same way as it
of responsibilities does to statements of responsibilities.

Ceasing to carry on functions

SUP Statements of Applies to ceasing to carry on a

10C.11.12R responsibilities to converted designated senior
be included in management function after the
notification commencement date.

SUP Notification of
10C.14.5R ceasing to
perform the
function

SUP Qualified Form C

10C.14.7R

Form D

SUP Changes to details Applies to a transitioned SMF

10C.14.13R manager and to changes of any details
relating to the converted designated
SUP Changes to senior management function.
10C.14.15R arrangements
SUP 10C.14.15R says that a firm
SUP Fitness should not submit a Form D to the
10C.14.18R FCA if the firm is required to notify the
FCA under section 62A of the Act
(Changes in responsibilities of senior
managers) or SUP 10C.11 (Statements
of responsibilities). This also applies if
the firm is required to notify changes
under SUP TP 12.16.4R.
The Form D requirements also apply to
a candidate whose application is
continued in force by SUP TP 12.

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Before the commencement date, the

existing requirements of SUP 10A
apply to changes in a candidate’s
fitness.

Notifications under the Act

SUP Notifications Applies to notification about a

10C.14.22R under the Act transitioned SMF manager.

General

Requirements Applies to a converted approval.

referring to a
current
approved
person
approval

Requirements These requirements apply to an

referring to a approval for a controlled function
current abolished after the commencement
approved date and to an approval that ceased to
person have effect under SUP TP 12 for some
approval held other reason.
within the last These requirements also apply to an
six months approval given up within the last six
months before the commencement
date even though the controlled
function ceases to exist after the
commencement date.

FCA- Responsibility for Includes compliance with the

prescribed a firm’s requirements about statements of
senior performance of its responsibilities
management obligations under
responsibility the senior
(a) managers regime

SYSC 25 Preparation of A management responsibilities map

management should include a transitioned SMF
responsibilities manager and their converted
maps designated senior management
functions

12.17 Making sure that the Financial Services Register is accurate

Existing notification requirements

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12.17.1 R (1) If before the commencement date a firm is required to notify the
FCA using Form C or Form D or under SUP 10A.14.10R, that
obligation continues to apply after the commencement date if the
firm has not complied with that obligation before then.

(2) (1) applies whether the deadline for reporting expires before or after
the commencement date.

(3) (1) does not apply to the customer function (unless the customer
function continues to apply after the commencement date under
SUP TP 12.4.2R) if the deadline for reporting expires after the
commencement date.

Notifying who will not be converted

12.17.2 R (1) This rule applies to a core SMCR firm and a limited scope firm (F)
in relation to a particular approved person (AP) if:

(a) F has pre-implementation approval for the performance by

AP of a pre-implementation controlled function;

(b) that pre-implementation approval is potentially

convertible into an FCA-designated senior management
function; and

(c) F believes that that pre-implementation approval will not

be converted into approval for the performance of that FCA-
designated senior management function.

(2) If F is not already required to notify the FCA of that fact, it must
notify the FCA of that fact using Form C in accordance with SUP
10A before:

(a) the final notification date; or

(b) (if the situation in (1) first arises after the final notification
date) the commencement date.

12.17.3 G (1) The most likely reason for the situation SUP TP 12.17.2R to arise is
that, before the commencement date, AP resigns or gives up their
controlled function or plans to do so.

(2) In most cases F will already be required to notify the FCA. If so,
SUP TP 12.17.2R will not apply.

(3) An example of circumstances in which SUP TP 12.17.2R will apply

is if:

(a) AP is going to remain in post after the commencement date;

but

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(b) their job does not come within the definition of the FCA-
designated senior management function in SUP TP 12.17.2R
even though their job comes within the pre-implementation
controlled function.

12.17.4 G SUP TP 12.17.2R does not apply to an enhanced scope SMCR firm. The
FCA will rely on its Form K instead.

Checking the Register

12.17.5 R A firm must, in the month beginning five business days after the
commencement date, check whether the Financial Services Register:

(1) correctly records all the firm’s SMF managers; and

(2) correctly records each FCA-designated senior management function

for the performance of which by the SMF manager the firm has
approval;

(3) includes everyone performing an FCA-designated senior

management function for the performance of which the firm should
have obtained approval; and

(4) includes all the FCA-designated senior management functions for

which the firm should have obtained approval in relation to persons
in (3).

12.17.6 R (1) If:

(a) the Financial Services Register does not correctly do all the
things in SUP TP 12.17.5R; and

(b) the firm is not already required to notify the FCA of the facts
giving rise to (1)(a) or to apply for the necessary approvals
under section 59 of the Act (Approval for particular
arrangements)

the firm must (by the end of the one month period in SUP TP
12.17.5R) notify the FCA of that fact using the applicable form in
SUP 10C.

(2) The applicable form in (1) is, in relation to a particular person (AP)
and firm, whichever one or more of the following forms in SUP 10C
applies:

(a) Form A (short form) where AP is not, but should be, included
in the Financial Services Register or where the Financial
Services Register omits some of AP’s FCA-designated senior
management functions for which the firm has approval; or

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(b) Form C where AP is, but should not be, included in the
Financial Services Register or where the Financial Services
Register shows an approval for AP to perform an FCA-
designated senior management function that the firm does not
have; or

(c) Form E where both (1) and (2) apply; or

(d) Form D in any other case.

12.17.7 G The requirement to check the Financial Services Register is particularly

important in a case where the firm is not under a notification obligation in
SUP TP 12.5 and SUP TP 12.6 because:

(1) the FCA will update the Financial Services Register based on the
information it has; but

(2) the FCA may not have sufficient information to tell whether all the
conversion conditions in SUP TP 12.2.2R have been met.

12.17.8 G (1) In practice it is unlikely that SUP TP 12.17.6R will normally apply
because the firm will already be required to notify the FCA of the
matter or apply for approval. For example:

(a) if the Financial Services Register does not include a person

performing an FCA-designated senior management function
because the firm has not yet applied for approval, the firm
should apply for approval using Form A (long or short) or
Form E as soon as possible;

(b) if the Financial Services Register includes a person who left

the firm before the commencement date or who stopped
performing their pre-implementation controlled function
before then, the firm should report that using Form C (see
SUP TP 12.17.1R);

(c) if the pre-implementation controlled function and the

corresponding designated senior management function are so
different that approval for the former is not converted into
approval for the latter, a non-notifying firm should report
that under SUP TP 12.17.2R.

(2) SUP TP 12.17.6R may apply for example if the firm has made all the
notifications (if any) required by SUP TP 12 and other parts of the
FCA Handbook but:

(a) the Financial Services Register does not include one of the
firm’s approved persons even though their pre-
implementation controlled function was converted under
SUP TP 12; or

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(b) the Financial Services Register includes one of the firm’s

approved persons even though none of their pre-
implementation controlled functions were converted under
SUP TP 12.

12.18 The 12-week rule

12.18.1 G (1) SUP 10C.3.13R (The 12-week rule) allows a firm to appoint
someone (P) to perform a function which would normally be an
FCA-designated senior management function without needing to
apply for the FCA’s approval under section 59 of the Act (Approval
for particular arrangements) where P is filling in for someone who is
absent unexpectedly or temporarily. There is a maximum period for
which P’s appointment can last.

(2) When calculating the maximum time period in (1), the firm need not
take into account any time spent by P before the commencement
date performing what will become the FCA-designated senior
management function in (1).

12.18.2 G (1) SUP 10C.3.13R only applies where P (as referred to in SUP TP
12.18.1G) is providing cover for an SMF manager whose absence is
temporary or reasonably unforeseen.

(2) SUP 10C.3.13R may still apply if the absence referred to in (1)
began before the commencement date.

12.18.3 G SUP TP 12.18.1G and SUP TP 12.18.2G may apply even if:

(1) before the commencement date P was taking advantage of SUP

10A.5.6R (the equivalent of SUP 10C.3.13R under SUP 10A); and

(2) approval for the controlled function disapplied by SUP 10A.5.6R is

potentially convertible into approval for the FCA-designated senior
management function in SUP TP 12.18.1G and SUP TP 12.18.2G.

12.19 Application for permission

12.19.1 D (1) This direction applies to a pre-implementation application that is

made by an authorisation applicant:

(a) between the first notification date and the commencement

date; or

(b) before the first notification date if it is still outstanding on

the first notification date.

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(2) A pre-implementation application in (1)(a) must comply with the

requirements (if any) of SUP TP 12 that apply to a pre-
implementation application by a firm:

(a) of the type that the authorisation applicant will be if the

authorisation application is granted or otherwise succeeds;
and

(b) for an approval by the FCA for the performance of the same
pre-implementation controlled function.

(3) An authorisation applicant must, between the first notification

date and the final notification date, revise any of its pre-
implementation applications covered by (1)(b) to the extent
necessary to meet the requirements in (2).

12.19.2 R SUP TP 12.7 and SUP TP 12.9 apply to a pre-implementation application

in SUP TP 12.19.1D.

12.19.3 D SUP TP 12.15 applies to an authorisation applicant.

12.20 Prohibition orders

12.20.1 R The changes to the FCA Handbook made by the Individual Accountability
(FCA-Authorised Firms) Instrument 2018 do not affect:

(1) a warning notice or a decision notice under section 57 of the Act

(Prohibition orders: procedure and right to refer to tribunal); or

(2) a prohibition order;

which is given or made before the commencement date.

12.21 Reporting under SUP 15.11

12.21.1 R The first notification period under SUP 15.11.13R (Timing and form of
notifications: conduct rules staff other than SMF managers):

(1) starts on the commencement date; and

(2) ends on the last day of:

(a) (in the case of a firm falling within SYSC 23 Annex 1 5.7R
(credit firms with limited permission)) the first financial
reporting period referred to in SUP 15.11.13R(3)(a)(i) ending
after the commencement date; or

(b) (for any other firm) the following August.

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12.21.2 G SUP TP 12.21.1R(2)(a) applies however short the resulting reporting period
may be.

12.22 Terms used in SUP TP 12

12.22.1 R The terms in the first column of the table in SUP TP 12.22.2R, where they
appear in bold in SUP TP 12, have the meanings in the corresponding entry
in column 2 for the purposes of SUP TP 12.

12.22.2 R Table: glossary of bespoke terms used in SUP TP 12

Part One: General

Defined term Meaning

authorisation an applicant for Part 4A permission, or another person

applicant seeking to carry on regulated activities as an authorised
person.

authorisation the application or other process referred to in the definition

application of authorisation applicant.

converted (in relation to a pre-implementation approval) the

approval approval for an FCA-designated senior management
function which that pre-implementation approval
becomes under SUP TP 12.2.1R.

converted (in relation to a transitioned SMF manager) the FCA-

designated senior designated senior management function for which they are
management treated as having approval under SUP TP 12.2.1R
function

core SMCR firm, have the meaning set out in the amendments to the Glossary
enhanced scope to be made by the Individual Accountability (FCA-
SMCR firm, Authorised Firms) Instrument 2018).
limited scope This is subject to SUP TP 12.22.3R.
SMCR firm, non-
UK SMCR firm

corresponding (in relation to an FCA-designated senior management

function and a pre-implementation controlled function)
has the meaning in SUP TP 12.7.2R.

firm specific date the later of the following:

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(1) the date (if any) on which a firm makes the

notification in SUP TP 12.10.1R; or

(2) (if the firm has updated a notification in (1) under

SUP TP 12.6 or SUP TP 12.8.4R) the date that the
most recent such updated notification was made to the
FCA.

management the document required to be produced under SUP TP 12.12,

responsibilities including under SUP TP 12.12 as applied by SUP TP 12.19.
map

potentially has the meaning in SUP TP 12.2.3R.

convertible

pre- an application made under section 60 of the Act

implementation (Applications for approval) if the application is:
application

(1) for approval for the performance of a pre-

implementation controlled function; and

(2) received by the FCA before the commencement date.

pre- a current FCA approved person approval that is given by

implementation the FCA before the commencement date in relation to a
approval pre-implementation controlled function.
If a person is approved to perform more than one pre-
implementation controlled function for a firm, there is a
separate pre-implementation approval in relation to each.

pre- (in relation to a firm) an FCA controlled function that,

implementation before the commencement date:
controlled (a) the FCA has specified for the purposes of section 59 of
function the Act (approval for particular arrangements); and
(b) applies to the firm (even if the firm has no one approved
to perform that function for the time being).

solo-regulated a core SMCR firm, an enhanced scope SMCR firm or a

SMCR firm limited scope SMCR firm

statement of the document required to be produced under SUP TP 12.11,

responsibilities including under SUP TP 12.11 as applied by SUP TP 12.19.

transitioned SMF AP as defined in SUP TP 12.2.1R

manager

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Part Two: Fixed dates

Defined term Meaning

first notification date [ ] 20[ ] [about three months before main commencement
date for solo-regulated firms]

final notification [ ] 20[ ] [about one week before main commencement

date date for solo-regulated firms]

commencement date [ ] 20[ ] [main commencement date for solo-regulated

firms]

Form O start date [ ] 20[ ] [about six months before main commencement
date for solo-regulated firms]

Note: If a firm becomes a solo-regulated SMCR firm between the final

notification date and the commencement date or changes category within that
period, the final notification date for it is the date it becomes a solo-regulated
SMCR firm or changes category.

12.22.3 R (1) Between the first notification date and the commencement date,
the question of:

(a) whether a firm is a solo-regulated SMCR firm for the

purposes of SUP TP 12; and

(b) (if it is) into which category it falls;

is determined in accordance with SYSC 23 Annex 1 (as set out in the

Individual Accountability (FCA-Authorised Firms) Instrument 2018)
even though the relevant parts of that chapter are not in force for
other purposes.

(2) However Part Nine of SYSC 23 Annex 1 (Definition of SMCR firm

and different types of SMCR firms) is adjusted so that a firm ceases
to be an enhanced scope SMCR firm on the date it ceases to meet
the last qualification condition that it met (as referred to in Part
Nine), not one year after that date.

(3) (1) does not apply to a firm that is already an SMCR firm before the
commencement date. Such an SMCR firm cannot be a solo-
regulated SMCR firm for the purposes of SUP TP 12.

12.22.4 G (1) The effect of SUP TP 12.22.3R is that if a PRA-regulated SMCR firm
changes its permission in a way that would turn it into a solo-

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regulated SMCR firm, the conversion arrangements in SUP TP 12

will not apply to it.

(2) SUP TP 12.15 will however apply and the firm can use this to apply
for the approvals it needs because of its change of category.

12.22.5 G If a firm changes from being an enhanced scope SMCR firm to a core
SMCR firm or a limited scope SMCR firm after it has sent the FCA its
Form K, it should notify the FCA as described in SUP 15.6 (Inaccurate, false
or misleading information).

12.22.5 R (1) This rule modifies the rules for making an election to become a core
SMCR firm or an enhanced scope SMCR firm in accordance with
the procedure set out in SYSC 23 Annex 1(as set out in the Individual
Accountability (FCA-Authorised Firms) Instrument 2018) for the
purposes of SUP TP 12.22.3R.

(2) A firm may make such an election on or after the Form O start
date.

(3) The version of Form O in SUP TP 12.23 replaces the version in

SYSC 23 Annex 2R.

(4) The election takes effect for the purposes of SUP TP 12.22.3R on the
first notification date or, if it is made after that date, immediately.

(5) If the election is made on or after the first notification date the firm
must at the same time make the following notifications and
applications (based on the type of SMCR firm it has elected to
become):

(a) any notification required by SUP TP 12.5, SUP TP 12.6 or

SUP TP 12.8; and

(b) any applications under SUP TP 12.15 if the candidate is to

perform the relevant function on the commencement date.

12.23 Forms

12.23.1 R Form K

[Insert here the form titled “Conversion Notification Form – FCA Solo Regulated
Firms (Form K)”. The text of this form is contained in Part One of Annex Q of
this instrument]

12.23.2 R Form O

[Insert here the form titled “Notification of change to firm classification under the
Senior Managers & Certification Regime (Pre-Commencement version) (Form
O)”. The text of this form is contained in Part One of Annex Q of this instrument]

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Part 2: Comes into force [ ] 20[ ] [main commencement date for solo-regulated firms]

6 Applications to vary and cancel Part 4A permission and to impose, vary

or cancel requirements

6.3 Applications for variation of permission and/or imposition, variation or

cancellation of requirements

How a variation of permission may affect the firm’s approved persons

6.3.8 G (1) Where a firm is submitting an application for variation of Part

4A permission which would lead to a change in the controlled
functions of its approved persons, it should, at the same time
and as appropriate:

(a) make an application for an internal transfer of an

approved person, Form E (Internal transfer of a person
performing a controlled function), or make an
application for an individual to perform additional
controlled functions, the relevant Form A (Application
to perform controlled senior management functions);
see:

(i) SUP 10A.13.3D to SUP 10A.13.5G (for a firm

that is not an SMCR firm); [deleted]

(ii) SUP 10C.10 (for an SMCR firm); or

(iii) the corresponding PRA requirements;

(b) notify the FCA or PRA of any approved person who has
ceased to perform a controlled function specified by that
regulator, Form C (Notice of ceasing to perform
controlled functions (including senior management
functions)); see:

(i) SUP 10A.14 (for a firm that is not an SMCR

firm); [deleted]

(ii) SUP 10C.14 (for an SMCR firm); or

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(iii) the corresponding PRA requirements;

(2) If the firm intends to recruit new individuals to perform

controlled functions, it should apply for approval of the
individuals as approved persons as soon as possible using Form
A (Application to perform controlled senior management
functions); see:

(a) SUP 10A.13 (for a firm that is not an SMCR firm);

[deleted]

(b) SUP 10C.10 (for an SMCR firm); or

(c) the corresponding PRA requirements.

SMCR firm status

6.3.9 G A variation of a firm’s Part 4A permission may mean that it becomes

an SMCR firm or that it changes from one type of SMCR firm to
another. This would have a number of significant consequences, which
include:

(1) the application of the special powers in relation to misconduct

by approved persons (see DEPP 6.2.9-AG);

(2) the approved persons senior managers regime switches from

SUP 10A to in SUP 10C applies;

(3) COCON applies in place of APER to its staff; and

(4) the other elements of the regime for SMCR firms described in
SYSC 23.4 (Overview of the senior managers and certification
regime) apply (which differ depending on the type of SMCR
firm).

6.3.25 G Information which may be required. See SUP 6.3.24G

Type of Information which may be required

business

All …

3. Organisation charts and details of individuals

transferring or being recruited to perform new controlled
functions (see SUP 10A and SUP 10C, and the
corresponding PRA requirements for details of the
application or transfer procedures under the approved
persons or senior managers regime).

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… …

6.4 Applications for cancellation of permission

Approved persons

6.4.18 G (1) A firm which is applying for cancellation of Part 4A permission

and which is not otherwise authorised by, or under, the Act
should, at the same time:

(a) comply with:

(i) SUP 10A.14.8R (for a firm that is not an SMCR

firm); [deleted]

(ii) SUP 10C.14.5R (for an SMCR firm); or

(iii) the corresponding PRA requirements; and

10A FCA Approved Persons in Appointed Representatives

10A.1 Application

10A.1.1 R This chapter applies to every : (1) firm that is not an SMCR firm that
has an appointed representative.

; and

(2) SMCR firm, but only to the extent required by SUP 10A.1.16BR
(Appointed representatives).

10A.1.2 G This chapter is also relevant to every FCA-approved person:

(1) of a firm that is not an SMCR firm FCA-approved person of an

appointed representative of an SMCR firm; and

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(2) of any appointed representative, including of an appointed

representative of an SMCR firm.

Overseas firms appointed representatives: UK services

10A.1.5 R (1) This chapter does not apply in relation to an overseas firm
overseas appointed representative in relation to regulated
activities which are carried on in the United Kingdom other than
from an establishment maintained by it or its that appointed
representative in the United Kingdom.

(2) An overseas appointed representative means an appointed

representative which has its registered office (or, if it has no
registered office, its head office) outside the United Kingdom.

Overseas firms appointed representatives: UK establishments

10A.1.6 R - (1) Only the following FCA controlled governing functions (as
modified by this rule) apply in relation to an overseas firm
overseas appointed representative which maintains an
establishment in the United Kingdom from which regulated
activities are carried on:

(a) the director function;

(b) the non-executive director function; and

(c) the chief executive function.

(1) the The director function where only applies to the extent that
the person performing that function:

(a) has responsibility for the regulated activities of a the

UK branch establishment which are likely to enable him
them to exercise significant influence over that branch
establishment; or

(b) is someone whose decisions or actions are regularly

taken into account by the governing body of that
branch; establishment.

(2) the The non-executive director function where only applies to

the extent that the person performing one of those functions that
function:

(a) has responsibility for the regulated activities of a the

UK branch establishment which is likely to enable him
them to exercise significant influence over that branch
establishment; or

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(b) is someone whose decisions or actions are regularly

taken into account by the governing body of that
branch; establishment.

(3) the chief executive function; [deleted]

(4) the FCA required functions; [deleted]

(5) the systems and controls function; [deleted]

(6) the significant management function in so far as the function

relates to:

(a) designated investment business other than dealing in

investments as principal, disregarding article 15 of the
Regulated Activities Order; or

(b) processing confirmations, payments, settlements,

insurance claims, client money and similar matters in so
far as this relates to designated investment business; and
[deleted]

(7) the customer function. [deleted]

(8) An overseas appointed representative means an appointed

representative which has its registered office (or, if it has no
registered office, its head office) outside the United Kingdom.

Incoming EEA firms, and incoming Treaty firms and UCITS qualifiers

10A.1.7 R This chapter does not apply in relation to the appointed representative
of:

(1) an incoming EEA firm; or

(2) an incoming Treaty firm; or

(3) a UCITS qualifier; [deleted]

if and in so far as the question of whether a person is fit and proper to

perform a particular function in relation to that firm is reserved, under
any of the Single Market Directives, the Treaty, the UCITS Directive,
the auction regulation or the benchmarks regulation, to an authority in
a country or territory outside the United Kingdom.

10A.1.8 G SUP 10A.1.7R reflects the provisions of section 59(8) of the Act and, in
relation to an incoming Treaty firm and a UCITS qualifier, the Treaty
and the UCITS Directive. It preserves the principle of Home State
prudential regulation. In relation to an incoming EEA firm exercising an
EEA right, or an incoming Treaty firm exercising a Treaty right, the
effect is to reserve to the Home State regulator the assessment of the
fitness and propriety of a person performing a function in the exercise

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of that right. A member of the governing body, or the notified UK

branch manager, of an incoming EEA firm, acting in that capacity, will
not therefore have to be approved by the FCA under the Act.

10A.1.9 G Notwithstanding SUP 10A.1.8G, an incoming EEA firm or incoming

Treaty firm will have had to consider the impact of the Host State rules
with which it is required to comply when carrying on a passported
activity or Treaty activity through a branch in the United Kingdom. An
incoming EEA firm will have been notified of those provisions under
Part II of Schedule 3 to the Act in the course of satisfying the conditions
for authorisation in the United Kingdom. [deleted]

10A.1.10 G An incoming EEA firm will have to consider, for example, the position
of a branch manager based in the United Kingdom who may also be
performing a function in relation to the carrying on of a regulated
activity not covered by the EEA right of the firm. In so far as the
function is within the description of an FCA controlled function, the
firm will need to seek approval for that person to perform that FCA
controlled function. [deleted]

Incoming EEA firms: passported activities from a branch

10A.1.11 R Only the following FCA controlled functions apply to an incoming EEA
firm with respect to its passported activities carried on from a branch in
the United Kingdom:

(1) the money laundering reporting function;

(2) the significant management function, in so far as the function

relates to:

(a) designated investment business other than dealing in

investments as principal, disregarding article 15 of the
Regulated Activities Order; or

(b) processing confirmations, payments, settlements,

insurance claims, client money and similar matters, in so
far as this relates to designated investment business; and

(c) [deleted]

(3) the customer function other than where this relates to the
function in SUP 10A.10.7R(4) and (7). [deleted]

Incoming EEA firms etc with top-up permission activities from a UK branch

10A.1.13 R In relation to the activities of a firm for which it has a top-up

permission, only the following FCA controlled functions apply:

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 FCA 2018/XX

(1) the FCA required functions, other than the apportionment and
oversight function and the compliance oversight function;

(2) the significant management function, in so far as it relates to:

(a) designated investment business other than dealing in

investments as principal, disregarding article 15 of the
Regulated Activities Order; or

(b) processing confirmations, payments, settlements,

insurance claims, client money and similar matters, in so
far as this relates to designated investment business; and

(c) [deleted]

(3) the customer function. [deleted]

10A.1.14 R A person does not perform the significant management function for a
firm under SUP 10A.1.11R or SUP 10A.1.13R if that person would not
have been treated as performing any FCA controlled function for that
firm if that firm had been a UK firm. [deleted]

Appointed representatives Exclusions and modifications

10A.1.15 R The descriptions of the following FCA controlled functions apply to an

appointed representative of a firm, except This chapter does not apply
in relation to CBTL business or to an introducer appointed
representative, as they apply to an FCA-authorised person: .

(1) the FCA governing functions, subject to SUP 10A.1.16R and

except for a tied agent of an EEA MiFID investment firm; and

(2) the customer function other than in relation to acting in the

capacity of an investment manager (see SUP 10A.10.7R(6)).

10.1.15A R The FCA governing functions do not apply to a tied agent of an EEA
MiFID investment firm.

10A.1.16 R (1) SUP 10A.1.15R This chapter is modified in relation to an

appointed representative meeting the conditions in (2) so that
only one of the following FCA governing functions:

(a) director function; or

(b) chief executive function; or

(c) partner function; or

(d) director of unincorporated association function;

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 FCA 2018/XX

applies, as appropriate, to an individual within that appointed

representative who will be required to be an FCA-approved
person.

(2) The conditions are that:

(a) the scope of appointment of the appointed

representative includes insurance distribution activity in
relation to non-investment insurance contracts or credit-
related regulated activity, but no other regulated
activity; and

(b) the principal purpose of the appointed representative is

to carry on activities other than regulated activities.

10A.1.16A R This The customer function is the only controlled function in this
chapter that applies to an appointed representative that is an SMCR
firm and has a limited permission to carry on a regulated activity
prescribed for the purposes of section 39(1E)(a) of the Act as follows: .

(1) FCA controlled functions apply to the appointed representative

as set out in SUP 10A.1.15R and SUP 10A.1.16R in relation to
the carrying on of the regulated activity, for which it does not
have permission, comprised in the business for which its
principal has accepted responsibility;

(2) (a) unless it is a not-for-profit debt advice body, the

apportionment and oversight function applies in relation
to the carrying on of the regulated activity for which it
has limited permission;

(b) if it is a not-for-profit debt advice body and a CASS

large debt management firm, the CASS operational
oversight function applies in relation to the carrying on
of debt management activity.

10A.1.16B R SUP 10A.1.15R and SUP 10A.1.16R apply to the appointed

representative of an SMCR firm. [deleted]

10A.1.16C G (1) References in this chapter to a firm include an SMCR firm, but
only to the extent required by SUP 10A.1.16BR Certain
additional controlled functions apply to a firm in SUP
10A.1.16AR under SUP 10C (FCA senior managers regime for
approved persons in SMCR firms).

(2) References in SUP 10A.1.15R and SUP 10A.1.16R to FCA

governing functions and other controlled functions are to
controlled functions in this chapter, not in SUP 10C (FCA
senior managers regime for approved persons in SMCR firms).

Senior management functions

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 FCA 2018/XX

10A.1.16D G …

(2) Generally, the FCA does not think that a person performing a
function in SUP 10A.1.16BR this chapter will have sufficient
responsibility for managing the affairs of the appointed
representative’s principal (as opposed to managing the affairs
of the appointed representative itself) to perform a senior
management function.

(3) Therefore:

(a) the FCA has not designated any of the functions in SUP
10A.1.16BR this chapter as a senior management
function; and

(b) none of the functions in SUP 10A.1.16BR this chapter

are designated senior management functions.

Members of a profession

10A.1.17 R (1) This chapter, except in respect of the FCA required functions,
does not apply to an authorised professional firm in respect of
its non-mainstream regulated activities, subject to (2).

(2) Where the authorised professional firm has appointed FCA-

approved persons to perform the FCA governing functions with
equivalent responsibilities for the firm’s non-mainstream
regulated activities and other regulated activities, for the firm’s
non-mainstream regulated activities this chapter applies with
respect to the FCA governing functions and the FCA required
functions (other than the apportionment and oversight function)
only. [deleted]

Oil market participants, service companies, energy market participants,

subsidiaries of local authorities or registered social landlords and insurance
intermediaries

10A.1.18 R The descriptions of FCA significant-influence functions, other than the

FCA required functions, and, if the firm is a MiFID investment firm, the
FCA governing functions do not extend to activities carried on by a firm
whose principal purpose is to carry on activities other than regulated
activities and which is:

(1) an oil market participant; or

(2) a service company; or

(3) an energy market participant; or

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(4) a wholly owned subsidiary of:

(a) a local authority; or

(b) a registered social landlord; or

(5) a firm with permission to carry on insurance distribution

activity in relation to non-investment insurance contracts but no
other regulated activity (except advising on P2P agreements).
[deleted]

10A.1.19 G It will be a matter of fact in each case whether, having regard to all the
circumstances, including in particular where the balance of the business
lies, a firm’s principal purpose is to carry on activities other than
regulated activities. If a firm wishes to rely on SUP 10A.1.18R, it
should be in a position to demonstrate that its principal purpose is to
carry on activities other than regulated activities. [deleted]

Bidders in emissions auctions

10A.1.21 G For a firm that is exempt from MiFID under article 2(1)(j) and whose
only permission is bidding in emissions auctions, the only FCA
controlled functions that apply to it are:

(1) the FCA governing functions;

(2) the money laundering reporting function; and

(3) the customer function.

This is because the FCA-approved person regime specifies a number of

functions by incorporation of requirements in SYSC; however, a firm
carrying on auction regulation bidding is only subject to SYSC to a
limited extent in relation to that activity. This means that the FCA
required functions do not apply to auction regulation bidding, except
for the money laundering reporting function. Similarly, the significant
management function does not apply in relation to auction regulation
bidding because, in carrying on that activity, a firm is not subject to
SYSC 4.1.1R and is not undertaking proprietary trading. [deleted]

Benchmark activities

10A.1.21A G (1) For a firm which only has a permission for administering a
benchmark, the following FCA controlled functions do not
apply:

(a) the apportionment and oversight function;

(b) the compliance oversight function;

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(c) the money laundering reporting function; and

(d) the systems and controls function.

(2) That is because:

(a) the FCA controlled functions in (a) to (c) above do not

apply because those functions are specified by
incorporation of requirements in SYSC and the relevant
parts of SYSC do not apply in relation to benchmark
activities (which includes administering a benchmark);

(b) the FCA controlled function in (d) above does not apply
in relation to benchmark activities (see SUP 10A.8.2R).

(3) The functions in (a) to (d) still apply to a firm which

administers a benchmark as well as carrying on other regulated
activities. However, they do not apply in respect of its activities
as a regulated benchmark administrator.

(4) Various other FCA controlled functions are only relevant to

firms which carry on particular types of activity and will not be
relevant to a firm (F) which does not carry on any regulated
activities other than administering a benchmark. For instance:

(a) the CASS operational oversight function will not be

relevant to F because that function is only relevant to
CASS medium firms CASS large firms and CASS large
debt management firms; F will not hold client money
and will therefore not be a CASS medium firm, a CASS
large firm or a CASS large debt management firm;

(b) the customer function involves performing various types

of activity none of which would be performed by a firm
which does not carry on any regulated activities other
than administering a benchmark;

(c) the small friendly society function will only be relevant

to certain firms.

(5) The functions in SUP 10A.1.21AG(1)(a) to (d) do not apply to a

benchmark contributor in relation to its contribution of input
data to a BMR benchmark administrator.

(6) That is because:

(a) the functions in SUP 10A.1.21AG(1)(a) to (c) are

specified by incorporation of requirements in SYSC and
the relevant parts of SYSC do not apply in relation to
benchmark activities (which includes contributing input
data to a BMR benchmark administrator); and

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(b) the FCA controlled function in SUP 10A.1.21AG(1)(d)

above does not apply in relation to benchmark activities
(see SUP 10A.8.2R).

Internally managed corporate AIFs

10A.1.24 G In accordance with section 59(7C) of the Act this chapter does not
apply to an internally managed AIF which is a body corporate and not
a collective investment scheme. [deleted]

Credit firms with limited permission

10A.1.25 R (1) Subject to (2) and (3), this chapter, except in respect of the
apportionment and oversight function, does not apply to a firm
that has limited permission in relation to the carrying on of the
relevant credit activity (as defined in paragraph 2G of Schedule
6 to the Act) for which it has limited permission.

(2) Subject to (3), this chapter does not apply to a not-for-profit

debt advice body.

(3) This chapter applies to a not-for-profit debt advice body that is a

CASS large debt management firm with respect to the CASS
operational oversight function only. [deleted]

Obligations on firms

10A.1.28 G (1) The requirements in this chapter about notifications and

applications are addressed to firms. This means the appointed
representative’s principal.

(2) If an appointed representative has more than one principal, the

requirements in (1) are addressed to the authorised approved
person employer of the approved person in question.

10A.2 Purpose

10A.2.1 G The immediate purpose of SUP 10A.3 to SUP 10A.11 is to specify,

under section 59 of the Act, descriptions of the FCA controlled function
which are listed in SUP 10A.4.4R. The underlying purpose is to
establish, and mark the boundaries of, the “FCA-approved persons
regime” for appointed representatives.

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10A.3 Provisions related to the Act

10A.3.3 G Arrangement is defined in section 59(10) of the Act as any kind of

arrangement for the performance of a function which is entered into by
a firm or any of its contractors with another person and includes the
appointment of a person to an office, his their becoming a partner, or
his their employment (whether under a contract of service or
otherwise). For the provisions in this chapter relating to outsourcing,
see SUP 10A.13.5G and SUP 10A.13.6G.

10.3.4 G If, however, a firm is a member of a group, and the arrangements for
the performance of an FCA controlled function of the firm are made by,
for instance, the holding company, the person performing the function
will only require approval if there is an arrangement (under section
59(1)) or a contract (under section 59(2)) between the firm and holding
company permitting this. This need not be a written contract but could
arise, for example, by conduct, custom and practice. [deleted]

10A.4 Specification of functions

10A.4.2 R The table of FCA controlled functions applies in relation to an FCA-

authorised person. It also applies in relation to an appointed
representative for the purposes of SUP 10A.1.15R to SUP 10A.1.16BR
(Appointed representatives) whether its principal is an FCA-authorised
person or a PRA-authorised person. [deleted]

10A.4.4 R FCA controlled functions

(FCA controlled functions for FCA-authorised persons and appointed

representatives)

Type CF Description of FCA controlled function

FCA 1 Director function

governing
functions*

2 Non-executive director function

3 Chief executive function

4 Partner function

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5 Director of unincorporated association function

6 Small friendly society function

FCA 8 Apportionment and oversight function

required
functions*

10 Compliance oversight function

10A CASS operational oversight function

11 Money laundering reporting function

Systems 28 Systems and controls function

and
controls
function*

Significant 29 Significant management function

manageme
nt
function*

Customer- 30 Customer function

dealing
function

*FCA significant-influence functions

10A.5 Significant-influence functions

What are the FCA significant-influence functions?

10A.5.1 G The FCA significant-influence functions, which are specified in SUP

10A.4.1R, comprise the FCA governing functions (SUP 10A.6), the
FCA required functions (SUP 10A.7), the systems and controls function
(SUP 10A.8) and the significant management function (SUP 10A.9).
SUP 10A.5 applies to each of the FCA significant-influence functions.

Periods of less than 12 weeks

10A.5.6 R If:

(1) a firm or its appointed representative appoints an individual to

perform a function which, but for this rule, would be an FCA
significant-influence function;

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10A.5.7 G SUP 10A.5.6R enables cover to be given for, as an example, holidays

and emergencies and avoids the need for the precautionary approval of,
for example, a deputy. However, as soon as it becomes apparent that a
person will be performing an FCA controlled function for more than 12
weeks, the firm authorised approved person employer of the approved
person in question should apply for approval.

10A.6 FCA governing functions

Introduction

10A.6.1 G Every firm appointed representative will have one or more persons
responsible for directing its affairs. These persons will be performing
the FCA governing functions and will be required to be FCA-approved
persons unless the application provisions in SUP 10A.1, or the
particular description of an FCA controlled function, provide otherwise.
For example, each director of a company incorporated under the
Companies Acts will perform an FCA governing function.

What the FCA governing functions include

10A.6.3 R Each of the FCA governing functions includes:

(1) (where apportioned under SYSC 4.3.1R and SYSC 4.4.3R (or,
for a full-scope UK AIFM apportioned under article 60(1) of the
AIFMD level 2 regulation))

(a) the systems and controls function (if it applies to the

firm); and

(b) the significant management function;

(2) (in respect of bidding in emissions auctions) that part of the

customer function specified in SUP 10A.10.7R(7) (bidder’s
representative).

This does not apply to the non-executive director function or the

function described in SUP 10A.6.8R. [deleted]

10A.6.4 G (1) The effect of SUP 10A.6.3R is that a person who is approved to
perform an FCA governing function will not have to be
specifically FCA-approved to perform the systems and controls
function or the significant management function or the part of
the customer function specified in SUP 10A.10.7R(7).
However, a person who is approved to perform an FCA

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governing function will have to be additionally FCA-approved

before he can perform any of the FCA required functions or the
customer function (except the part specified in SUP
10A.10.7R(7)).

(2) SUP 10A.6.3R does not apply to the non-executive director

function. It does not apply to the director function if the only
part of that function that the FCA-approved person is
performing is the function described in SUP 10A.6.8R.
[deleted]

10A.6.5 G See MIPRU 2.2 for how the FCA’s approved persons regime is
adjusted for a firm carrying on insurance distribution activity. [deleted]

Director function (CF1)

10A.6.7 R If a firm an appointed representative is a body corporate (other than a

limited liability partnership), the director function is the function of
acting in the capacity of a director (other than non-executive director)
of that firm appointed representative.

10A.6.8 R (1) If a firm an appointed representative is a body corporate (other

than a limited liability partnership), the director function is also
the function of acting in the capacity of a person:

(a) who is a director, partner, officer, member (if the parent

undertaking or holding company is a limited liability
partnership), senior manager, or employee of a parent
undertaking or holding company of the firm appointed
representative; and

(b) whose decisions or actions are regularly taken into

account by the governing body of the firm appointed
representative.

(2) (1) does not apply if that parent undertaking or holding

company has a Part 4A permission or is regulated by an EEA
regulator.

(3) (1) does not apply to the function falling into SUP 10A.6.13R
(non-executive director of the parent undertaking or holding
company).

10A.6.9 G Examples of where SUP 10A.6.8R might apply include (but are not
limited to):

(1) a chairman of an audit committee of a parent undertaking or

holding company of a UK firm where that audit committee is
working for that UK firm (that is, functioning as the audit
committee for the group); or

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(2) a director (other than a non-executive director) of a parent

undertaking or holding company of a UK firm exercising
significant influence by way of his involvement in taking
decisions for that UK firm; or

(3) an individual (such as a senior manager) of a parent

undertaking or holding company of a UK firm who is
responsible for and/or has significant influence in setting the
objectives for and the remuneration of executive directors of
that UK firm; or

(4) an individual who is a director (other than a non-executive

director) or a senior manager of a parent undertaking or
holding company of a UK firm who is accustomed to
influencing the operations of that UK firm, and acts in a manner
in which it can reasonably be expected that an executive
director or senior manager of that UK firm would act; or

(5) an individual of an overseas firm which maintains an

establishment in the United Kingdom from which regulated
activities are carried on, where that individual has
responsibilities for those regulated activities which are likely to
enable him to exercise significant influence over the UK
branch. [deleted]

Non-executive director function (CF2)

10A.6.12 R If a firm an appointed representative is a body corporate, the non-

executive director function is the function of acting in the capacity of a
non-executive director of that firm appointed representative.

10A.6.13 R (1) If a firm an appointed representative is a body corporate, the

non-executive director function is also the function of acting in
the capacity of a person:

(a) who is a non-executive director of a parent undertaking

or holding company; and

(b) whose decisions or actions are regularly taken into

account by the governing body of the firm appointed
representative.

(2) However, (1) does not apply if that parent undertaking or

holding company has a Part 4A permission or is regulated by an
EEA regulator.

10A.6.14 G Examples of where SUP 10A.6.13R might apply include (but are not
limited to):

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(1) an individual who is a non-executive director of a parent

undertaking or holding company who takes an active role in the
running of the business of a UK firm, for example, as a member
of a board or committee (on audit or remuneration) of that firm;
or

(2) an individual who is a non-executive director of a parent

undertaking or holding company having significant influence in
setting and monitoring the business strategy of the UK firm; or

(3) an individual who is a non-executive director of a parent

undertaking or holding company of a UK firm involved in
carrying out responsibilities such as scrutinising the approach of
executive management, performance, or standards of conduct of
the UK firm; or

(4) an individual who is a non-executive director of a parent

undertaking or holding company of a UK firm who is
accustomed to influence the operations of the UK firm, and acts
in a way in which it can reasonably be expected that a non-
executive director of the UK firm would act; or

(5) an individual who is a non-executive director of an overseas

firm which maintains a branch in the United Kingdom from
which regulated activities are carried on where that individual
has responsibilities for those regulated activities which are
likely to enable him to exercise significant influence over the
UK branch. [deleted]

Guidance on persons in a parent undertaking or holding company exercising

significant influence

10A.6.16 G (1) This paragraph explains The explanation in SUP 10C.5B.2G of

the basis on which the group entity senior manager function is
included as a controlled function for an SMCR firm is also
relevant to the basis on which the director function and the non-
executive director function are applied to persons who have a
position with the firm’s an appointed representative’s parent
undertaking or holding company under SUP 10A.6.8R or SUP
10A.6.13R.

(2) The basic position is set out in SUP 10A.3.4G. As is the case
with all controlled functions, The guidance in SUP 10C.5B.3G
to SUP 10C.5B.5G about when the group entity senior manager
function applies to an SMCR firm is also relevant to when those
who have a position with an appointed representative’s parent
undertaking or holding company may be performing a
controlled function under SUP 10A.6.8R and or SUP
10A.6.13R. are subject to the overriding provisions in SUP

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10A.3.1R, which sets out the requirements of section 59(1) and

(2) of the Act. This means that unless the firm has an
arrangement permitting the performance of these roles by the
persons concerned, these persons will not be performing these
controlled functions. Therefore, the FCA accepts that there will
be cases in which a person performing these roles will not
require approval. However where there is such an arrangement
the function may apply.

Chief executive function (CF3)

10A.6.17 R The chief executive function is the function of acting in the capacity of a
chief executive of a firm an appointed representative.

10A.6.18 G This function is having the responsibility, alone or jointly with one or
more others, under the immediate authority of the governing body:

(1) for the conduct of the whole of the business (or relevant
activities); or

(2) in the case of a branch branch in the United Kingdom of an

overseas firm a non-UK appointed representative, for the
conduct of all of the activities subject to the UK regulatory
system.

10A.6.19 G For a branch branch in the United Kingdom of an overseas firm a non-
UK appointed representative, the FCA would not normally expect the
overseas chief executive of the firm appointed representative as a whole
to be FCA-approved for this function where there is a senior manager
under him them with specific responsibility for those activities of the
branch branch which are subject to the UK regulatory system. In some
circumstances, the person within the firm appointed representative
responsible for UK operations may, if the function is likely to enable
him them to exercise significant influence over the branch branch, also
perform the chief executive function (see SUP 10A.7.4G).

Partner function (CF4)

10A.6.23 R (1) If a firm an appointed representative is a partnership, the

partner function is the function of acting in the capacity of a
partner in that firm appointed representative.

(2) If the principal purpose of the firm appointed representative is

to carry on one or more regulated activities, each partner
performs the partner function.

(3) If the principal purpose of the firm appointed representative is

other than to carry on regulated activities:

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(a) a partner performs the partner function to the extent

only that he has they have responsibility for a regulated
activity; and

(b) a partner in a firm an appointed representative will be

taken to have responsibility for each regulated activity
except where the partnership has apportioned
responsibility to another partner or group of partners.

10A.6.24 G Any apportionment referred to in SUP 10A.6.23R(3)(b) will have taken

place under SYSC 4.3.1R and SYSC 4.4.3R. The FCA may ask to see
details of the apportionment but will not require, as a matter of course,
a copy of the material which records this. [deleted]

10A.6.25 G The effect of SUP 10A.1.17R is that regulated activity in SUP

10A.6.23R (and elsewhere) is to be taken as not including an activity
that is a non-mainstream regulated activity. Therefore, a partner whose
only regulated activities are incidental to his professional services, in a
partnership whose principal purpose is to carry on other than regulated
activities, need not be an FCA-approved person. What amounts to the
principal purpose of the firm is a matter of fact in each case having
regard to all the circumstances, including the activities of the firm as a
whole. Any regulated activities which such a partner carries on are not
within the description of the partner function. [deleted]

10A.6.26 R If a firm an appointed representative is a limited liability partnership,

the partner function extends to the firm appointed representative as if
the firm appointed representative were a partnership and a member of
the firm appointed representative were a partner.

Director of unincorporated association function (CF5)

10A.6.29 R If a firm an appointed representative is an unincorporated association,

the director of unincorporated association function is the function of
acting in the capacity of a director of the unincorporated association.

Small friendly society function (CF6)

10A.6.31 R (1) If a firm is a non-directive friendly society, the small friendly

society function is the function of directing its affairs, either
alone or jointly with others.

(2) If the principal purpose of the firm is to carry on regulated

activities, each person with responsibility for directing its
affairs performs the FCA controlled function.

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(3) If the principal purpose of the firm is other than to carry on

regulated activities, a person performs the small friendly society
function only to the extent that he has responsibility for a
regulated activity. [deleted]

10A.6.32 R (1) Each person on the non-directive friendly society’s governing

body will be taken to have responsibility for its regulated
activities, unless the firm has apportioned this responsibility to
one particular individual to whom it is reasonable to give this
responsibility.

(2) The individual need not be a member of the governing body.

[deleted]

10A.6.33 G Typically a non-directive friendly Society will appoint a “committee of

management” to direct its affairs. However, the governing
arrangements may be informal and flexible. If this is the case, the FCA
would expect the society to resolve to give responsibility for the
carrying on of regulated activities to one individual who is appropriate
in all the circumstances. That individual may, for example, have the
title of chief executive or similar. The individual would have to be an
FCA-approved person under SUP 10A.6.31R. [deleted]

10A.6.34 G In practice, the FCA expects that most non-directive friendly societies
will be PRA-authorised persons. Where that is the case, this chapter
does not apply and so the small friendly society function will not apply.
[deleted]

10A.7 FCA required functions [deleted]

Apportionment and oversight function (CF8)

10A.7.1 R (1) The apportionment and oversight function is the function of

acting in the capacity of a director or senior manager
responsible for the apportionment function and/or the oversight
function set out in SYSC 4.4.5R.

(2) [deleted]

10A.7.2 G In requiring someone to apportion responsibility, a common platform

firm should not apply for that person or persons to be FCA-approved to
perform the apportionment and oversight function (see SUP 10A.7.1R
and SYSC 1 Annex 1).

10A.7.3 G The fact that there is a person performing the apportionment and
oversight function, and who has responsibility for activities subject to
regulation by the FCA, may have a bearing on whether a manager who
is based overseas will be performing an FCA controlled function. It is a

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factor to take into account when assessing the likely influence of the
overseas manager.

10A.7.4 G Generally, in relation to a UK establishment of an overseas firm or a

firm which is part of an overseas group, where an overseas manager’s
responsibilities in relation to the United Kingdom are strategic only,
they will not need to be an FCA-approved person. However, where, in
accordance with SYSC 4 to SYSC 10, they are responsible for
implementing that strategy in the United Kingdom, and have not
delegated that responsibility to a senior manager in the United
Kingdom, they are likely to be performing an FCA controlled function
for example, the chief executive function.

10A.7.5 G A firm carrying on insurance distribution activity, other than a sole

trader, must allocate to a director or senior manager the responsibility
for the firm’s insurance distribution activity (MIPRU 2.2.1R). The firm
may allocate this responsibility to the person performing the
apportionment and oversight function.

10A.7.6 G Where the person performing the apportionment and oversight function
is also responsible for the firm’s insurance distribution activity, the
words “(insurance distribution)” will be inserted after this FCA
controlled function (see MIPRU 2.2.5G).

10A.7.7 G [deleted]

Compliance oversight function (CF10)

10A.7.8 R The compliance oversight function is the function of acting in the

capacity of:

(1) a director or senior manager who is allocated the function set

out in:

(a) [deleted]

(b) SYSC 6.1.4R(2); or

(c) article 22(3) of the MiFID Org Regulation; or

(d) article 22(3) of the MiFID Org Regulation (as applied in

accordance with SYSC 1 Annex 1 2.8AR, SYSC 1 Annex
1 3.2-AR, SYSC 1 Annex 1 3.2-BR, SYSC 1 Annex 1
3.2CR and SYSC 1 Annex 1 3.3R); or

(e) SYSC 6.1.4CR; or

(2) for a full-scope UK AIFM, a person allocated the function in

article 61(3)(b) of the AIFMD level 2 regulation.

CASS operational oversight function (CF10a)

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10A.7.9 R In relation to a CASS medium firm and a CASS large firm (other than a
CASS large debt management firm), the CASS operational oversight
function is the function of acting in the capacity of a person to whom is
allocated the function set out in CASS 1A.3.1AR.

10A.7.9A R In relation to a CASS large debt management firm, the CASS

operational oversight function is the function of acting in the capacity
of a person to whom is allocated the function in CASS 11.3.4R.

Money laundering reporting function (CF11)

10A.7.10 R The money laundering reporting function is the function of acting in the
capacity of the money laundering reporting officer of a firm.

10A.7.11 G A firm's obligations in respect of its money laundering reporting officer

are set out elsewhere in the FCA Handbook (see SYSC 6.3.9R and for
their scope, see the application provisions in SYSC 1 Annex 1).

10A.8 Systems and controls functions [deleted]

10A.8.1 R The systems and controls function is the function of acting in the
capacity of an employee of the firm with responsibility for reporting to
the governing body of a firm, or the audit committee (or its equivalent)
in relation to:

(1) its financial affairs;

(2) setting and controlling its risk exposure (see SYSC 7.1.6R,
article 23(2) of the MiFID Org Regulation and article 23(2) of
the MiFID Org Regulation (as applied in accordance with SYSC
1 Annex 1 2.8AR, SYSC 1 Annex 1 3.2-AR, SYSC 1 Annex 1
3.2-BR, SYSC 1 Annex 1 3.2CR and SYSC 1 Annex 1 3.3R));
and

(3) adherence to internal systems and controls, procedures and

policies (see SYSC 6.2, article 24 of the MiFID Org Regulation
and article 24 of the MiFID Org Regulation (as applied in
accordance with SYSC 1 Annex 1 2.8AR, SYSC 1 Annex 1 3.2-
AR, SYSC 1 Annex 1 3.2-BR, SYSC 1 Annex 1 3.2CR and
SYSC 1 Annex 1 3.3R).

10A.8.2 R The systems and controls function does not apply in relation to:

(1) bidding in emissions auctions carried on by a firm that is

exempt from MiFID under article 2(1)(j); or

(2) benchmark activities.

10A.8.3 G [deleted]

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10A.8.4 G Where an employee performs the systems and controls function the
FCA would expect the firm to ensure that the employee had sufficient
expertise and authority to perform that function effectively. A director
or senior manager would meet this expectation.

Full scope UK AIFM

10A.8.5 G For a full-scope UK AIFM, the requirement to have an employee

responsible for reporting to the governing body of the firm or the audit
committee for matters in SUP 10A.8.1R(2) and SUP 10A.8.1R(3) is
derived from the AIFMD level 2 regulation, which imposes obligations
on such firms to have a permanent risk management function and,
where appropriate and proportionate for their business, an internal audit
function.

10A.9 Significant management functions [deleted]

Application

10A.9.1 R SUP 10A.9 applies only to a firm which:

(1) under SYSC 4.1.1R, apportions a significant responsibility,

within the description of the significant management function,
to a senior manager of a significant business unit; or

(2) undertakes proprietary trading.

10A.9.2 G The FCA anticipates that there will be only a few firms needing to seek
approval for an individual to perform the significant management
function set out in SUP 10A.9.1R(1). In most firms, those approved for
the FCA governing functions, FCA required functions and, where
appropriate, the systems and controls function, are likely to exercise all
the significant influence at senior management level.

10A.9.3 G A proprietary trader undertakes activities with the firm’s money and
has the ability to commit the firm. By virtue of this role, all proprietary
traders have potential to be able to exercise significant influence on the
firm for the purposes of the definition of significant-influence function.
Therefore, it is the FCA’s expectation that all firms will assess all their
proprietary traders to ascertain the ones for whom approval is required.

10A.9.4 G The scale, nature and complexity of the firm’s business may be such
that a firm apportions, under SUP 10A.9.1R(1), a significant
responsibility to an individual who is not approved to perform the FCA
governing functions, FCA required functions or, where appropriate, the
systems and controls function. If so, the firm should consider whether
the functions of that individual fall within the significant management
function. For the purposes of the description of the significant

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management functions, 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 approved
persons (for example, in excess of 100 individuals);

(2) the number of regulated activities carried on, or proposed to be

carried on, by the firm and (if relevant) other members of the
group;

(3) its group structure (if it is a member of a group);

(4) its management structure (for example, matrix management);

and

(5) the size and significance of its international operations, if any.

10A.9.5 G When considering whether a business unit is significant, the firm should
take into account all relevant factors in the light of the firm’s current
circumstances and its plans for the future, including:

(1) the risk profile of the unit; or

(2) its use or commitment of a firm’s capital; or

(3) its contribution to the profit and loss account; or

(4) the number of employees or approved persons in the unit; or

(5) the number of customers of the unit; or

(6) any other factor which makes the unit significant to the conduct
of the firm’s affairs so far as relating to the regulated activity.

10A.9.6 G The question may arise whether a manager who is based overseas will
be performing the significant management function under SUP
10A.9.9R and should, therefore, be an FCA-approved person. This is
especially true where the firm operates matrix management. The fact
there is a person performing the apportionment and oversight function,
and who has responsibility for activities subject to regulation by the
FCA, may have a bearing on this. It is a factor to take into account
when assessing the likely influence of the overseas manager.

10A.9.7 G Generally, in relation to a branch of a firm, or a firm which is part of an

overseas group, where an overseas manager is responsible for strategy,
he will not need to be approved for the significant management
function. However, where he is responsible for implementing that
strategy in the United Kingdom, and has not delegated that

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responsibility to a senior manager in the United Kingdom, he is likely

to be performing that FCA controlled function.

10A.9.8 G See also SUP 10A.7.3G to SUP 10A.7.6G in relation to matrix

management.

Significant management function (CF29)

10A.9.9 R The significant management function is the function of acting as a

senior manager with significant responsibility for a significant business
unit that:

(1) carries on designated investment business or other activities not

falling within (2) to (4);

(2) [deleted]

(2A) carries on credit-related regulated activity;

(3) makes material decisions on the commitment of a firm’s

financial resources, its financial commitments, its assets
acquisitions, its liability management and its overall cash and
capital planning;

(4) processes confirmations, payments, settlements, insurance

claims, client money and similar matters.

10A.9.10 R The significant management function also includes the function of

acting as a proprietary trader.

10A.9.11 R The significant management function does not include any of the
activities described in any other FCA controlled function if that other
controlled function applies to the firm.

10A.9.12 G A senior manager carrying on the significant management function

under SUP 10A.9.9R with significant responsibility for a significant
business unit that carries on activities other than designated investment
business for the purposes of SUP 10A.9.9R(1) could, for example, be
the head of a unit carrying on the activities of: personal lending,
corporate lending, salvage or loan recovery, or proprietary trading, or a
member of a committee (that is, a person who, together with others, has
authority to commit the firm) making decisions in these functions.

10A.9.13 G A proprietary trader also undertakes activities which may have a

significant influence on the firm. Such activities may require approval
for CF29 under SUP 10A.9.10R.

10A.9.14 G A firm carrying on insurance distribution activity, other than a sole

trader, must allocate to a director or senior manager the responsibility
for the firm’s insurance distribution activity (MIPRU 2.2.1R). The firm

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may allocate this responsibility to the person performing the significant

management function.

10A.9.15 G Where the person performing the significant management function is

also responsible for the firm’s insurance distribution activity, the words
“(insurance distribution)” will be inserted after this FCA controlled
function (see MIPRU 2.2.5G).

10A.10 Customer-dealing functions

Introduction

10A.10.1 R SUP 10A.10 applies with respect to activities carried on from an

establishment maintained by the firm (or by its appointed
representative) in the United Kingdom.

The basic rule about the customer function

10A.10.6 G …

10A.10.6A R A function is only part of the customer function if it is:

(1) carried out for an appointed representative of an SMCR firm; or

(2) otherwise performed under an arrangement under section 59(2)

of the Act (Approval for particular arrangements) entered into
by an appointed representative of an SMCR firm.

10A.10.6B G Section 59(2) of the Act covers a controlled function performed under
an arrangement entered into by a contractor of a firm in relation to the
carrying on by the firm of a regulated activity. Section 59(2) is reflected
in SUP 10A.3.1R(2) (Provisions related to the Act).

Customer function (CF 30)

10A.10.7 R The customer function is the function of:

(6) acting in the capacity of an investment manager and carrying on

functions connected to this; [deleted]

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10A.12 Procedures relating to FCA-approved persons

Forms

10A.12.1 G The forms listed in SUP 10A.12.2G are referred to in SUP 10A.12
(Procedures relating to FCA-approved persons) to SUP 10A.17 (Further
questions) SUP 10A.16 (How to apply for approval and give
notifications).

10A.12.2 G Table: FCA-approved persons forms

Form Purpose Handbook

requirement

the The relevant Application to perform SUP 10A.13.3D

relevant online form on controlled functions
Form A the FCA and under the approved
PRA’s online persons regime
notification and
application
system or the
form in SUP
10A Annex 4D
(See Note) SUP
10C Annex 3D

Form E The relevant Internal transfer of an SUP 10A.14.4D

online form on approved person
the FCA and
PRA’s online
notification and
application
system system or
the form in SUP
10A Annex 8D
(See Note) SUP
10C Annex 7D

Note (1): The form in the SUP annex shown is to be used by a firm whose
Part 4A permission covers only credit-related regulated activities, and by
other firms only in the event of a failure of the information technology systems
used by the FCA. See the relevant “Handbook requirement”.

Note (2): Where SUP 10A.1.16BR (appointed representative of an SMCR

firm) applies, the version of the form to be used is the one required by SUP
10C (FCA senior managers regime for approved persons in SMCR firms).

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10A.13 Application for approval and withdrawing an application for approval

How to apply for approval

10A.13.3B D A firm must not use Form A (shortened form) if:

(1) the firm is a MiFID investment firm (except a credit institution);

and

(2) SUP 10A.14.4BD applies to that application. [deleted]

10A.13.4A G When a MiFID investment firm (except a credit institution) notifies the
FCA of a change using Form A or Form E, they must also submit the
MiFID Article 4 APER Information Form. The details can be found in
SUP 10A.14.4BD. [deleted]

Who should make the application?

10A.13.5 G (1) In accordance with section 60 of the Act (Applications for

approval), applications must be submitted by, or on behalf of,
the firm itself, not by:

(a) the FCA candidate; or

(b) (where the FCA candidate works for the firm’s parent
undertaking or holding company) by the firm’s parent
undertaking or holding company the appointed
representative.

(2) Usually this will be the firm that is employing the FCA
candidate to perform the FCA controlled function. Where a firm
has outsourced the performance of an FCA controlled function,
the details of the outsourcing determine where responsibility
lies and whom the FCA anticipates will submit FCA-approved
persons application forms. SUP 10A.13.6G describes some
common situations. The firm which is outsourcing is referred to
as “A” and the person to whom the performance of the FCA
controlled function has been outsourced, or which makes the
arrangement for the FCA controlled function to be performed, is
referred to as “B”. In each situation, A must take reasonable
care to ensure that, in accordance with section 59(2) of the Act,
no person performs an FCA controlled function under an
arrangement entered into by its contractor in relation to the

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 FCA 2018/XX

carrying on by A of a regulated activity, without approval from

the FCA. See also SYSC 8.1.1R. [deleted]

10A.13.6 G Outsourcing arrangements [deleted]

Outsourcing Submitting form

arrangements

Firm A to firm B The FCA will consider Firm B submits FCA-

A to have taken approved persons forms
reasonable care if it on behalf of firm A
enters into a contract
with B under which B is
responsible for ensuring
that the relevant FCA
controlled functions are
performed by FCA-
approved persons, and
that it is reasonable for
A to rely on this

Outsourcing by A to B See SUP 10A.3.4G See SUP 15.7.8G

(both being a member
of the same United
Kingdom group and
each having its
registered office in the
United Kingdom)

(i) A to B, where B is Responsibility for (as A ensures that an

a non-authorised opposed to the individual approved by
person not part of the performance of) any the FCA under a
same group as A activity outsourced to B controlled function that
will remain with A. See is a significant-influence
(ii) A to B, where A is
SYSC 8 function has
a branch of an
responsibility for the
overseas firm in the
outsourced arrangement
United Kingdom, and
and A submits a form in
B is an overseas
relation to that individual
undertaking of the
same group
(iii) A to B, where A
is a UK authorised
subsidiary of an
overseas firm and B is
an overseas
undertaking of the
same group

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 FCA 2018/XX

10A.14 Changes to an FCA-approved person’s details

Moving within a firm

10A.14.4 D (1) A firm must use Form E where an approved person is both
ceasing to perform one or more controlled functions and needs
to be approved in relation to one or more FCA controlled
functions within in relation to the same firm or in relation to a
firm in the same group.

(2) A firm must not use Form E if:

(c) any of the following apply (where applicable):

(ii) …

in relation to any:

(iii) …

… (iv) controlled function that they are continuing to

perform for in relation to that firm or a firm in
the same group.

10A.14.4A G (1) The MiFID authorisation and management body change

notification ITS requires that MiFID investment firms (except
credit institutions) submit the Annex III information on the
ESMA template available at
https://www.fca.org.uk/publication/forms/mifid-changes-
management-body-form.docx (‘Annex III template’) where
there is a change to a member of the management body or a
person who effectively directs the business.

(2) MiFID investment firms (except credit institutions) need to

submit this Annex III template within ten business days of the
change in the online notification and application system (also
known as Connect).

(3) SUP 10A.14.4BD explains how this requirement fits in with the
requirement to submit a Form A or Form E. [deleted]

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10C.14.4AA G (1) The MiFID authorisation and management body change

notification ITS requires that a person applying to be a MiFID
investment firm (except a credit institution) notify the
appropriate regulator of information about members of its
management body by filling in the template set out in Annex II
of the MiFID authorisation and management body change
notification ITS.

(2) This applies whether:

(a) the person is applying for authorisation; or

(b) the person is a firm applying for a variation of its

permission that would turn it into a MiFID investment
firm.

(3) The requirement in SUP 10A.14.4BD to fill in the MiFID

Article 4 SMR Information Form along with a Form A or Form
E does not apply. [deleted]

10A.14.4B D Where:

(1) there is a change to a member of the management body or

person who directs the business, of a MiFID investment firms
(except a credit institutions) that the firm must notify to the
appropriate regulator under Annex III of the MiFID
authorisation and management body change notification ITS;

(2) that change also requires the firm to apply for approval for that
member or person to perform an FCA-designated senior
management function;

the firm must submit to the FCA the completed form found in SUP 10A
Annex 10D (MiFID Article 4 SMR Information Form) at the same time
as submitting the Form A and/or or Form E about the candidate.
[deleted]

10A.14.4C G MiFID investment firms (except credit institutions) who submit:

(1) Form A and/or E; and

(2) the MiFID Article 4 SMR Information Form

about a candidate can complete the Annex III template outlined in SUP
10A.14.4AG(1) by cross-referring to any information required by the
template that has been included in the relevant Form A or Form E . The
template should be annexed to the relevant Form A or Form E.
[deleted]

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 FCA 2018/XX

Moving between firms

10A.14.6 G If it is proposed that an FCA-approved person will no longer be

performing an FCA controlled function under an arrangement entered
into by one firm or one of its contractors the appointed representative
of one principal, but will be performing the same or a different FCA
controlled function under an arrangement entered into by a new firm or
one of its contractors the appointed representative of a new principal
(whether or not the new firm principal is in the same group as the old
firm principal and whether or not the appointed representative is the
same), the new firm principal will be required to make a fresh
application for the performance of the FCA controlled function by that
person.

Ceasing to perform an FCA controlled function

10A.14.8 R …

(2) If:

(a) the firm is also making an application for approval for

that approved person to perform a controlled function
within in relation to the same firm or a firm in the same
group; and

10A.14.9A G (1) The MiFID authorisation and management body change

notification ITS requires that a MiFID investment firm (except a
credit institution) submit the information in Annex III of the
MiFID authorisation and management body change notification
ITS on the ESMA template where there is a change to a member
of the management body or a person who effectively directs the
business.

(2) This means that a MiFID investment firm required to notify the
FCA under (1) may also need to submit the Annex III
information along with the Form C or Form E. [deleted]

10A.14.10 R (1) A firm must notify the FCA as soon as practicable after it
becomes aware, or has information which reasonably suggests,
that it will submit a qualified Form C in respect of an FCA-
approved person.

(2) Form C is qualified if the information it contains:

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 FCA 2018/XX

(a) relates to the fact that the firm or the appointed

representative has dismissed, or suspended, the FCA-
approved person from its employment; or

(b) relates to the resignation by the FCA-approved person

while under investigation by the firm, the appointed
representative, the FCA or any other regulatory body; or

(c) otherwise reasonably suggests that it may affect the

FCA’s assessment of the FCA-approved person’s fitness
and propriety.

10A.14.13 G A firm can submit Form C or Form E and the MiFID Article 4 APER
Information Form to the FCA in advance of the cessation date. When a
person ceases the arrangement under which they perform an FCA
controlled function, they will automatically cease to be an FCA-
approved person in relation to that FCA controlled function. A person
can only be an FCA-approved person in relation to a specific FCA
controlled function. Therefore, a person is not an FCA-approved person
during any period between ceasing to perform one FCA controlled
function (when they are performing no other FCA controlled function)
and being approved in respect of another FCA controlled function.

Changes to an approved person’s personal details

10A.14.15 R If an FCA-approved person’s title, name or national insurance number

changes, the firm for which the person performs an FCA controlled
function authorised approved person employer must notify the FCA on
Form D (SUP 10C Annex 6R) of that change within seven business
days of the firm becoming aware of the matter.

10A.14.21 G (1) If, in relation to a firm which has completed the relevant Form
A (SUP 10A Annex 4D) (SUP 10C Annex 3D), any of the
details relating to arrangements and FCA controlled functions
are to change, the firm must notify the FCA on Form D (SUP
10C Annex 6R).

10A.15 References and accurate information

References

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 FCA 2018/XX

10A.15.1 G (1) SYSC 22 (Regulatory references) says that if a firm (A):

(a) is considering appointing a person (P) to perform any

controlled function or certain other functions;

(b) requests a reference from a firm (B) that is P’s current or

former employer; and

(c) indicates to B the purpose of the request;

B should, as soon as reasonably practicable, give a reference to

A.

(2) This applies even if A is a firm to which SUP 10C (FCA senior
managers regime for approved persons in SMCR firms)) applies
rather than this chapter. [deleted]

(4) SYSC 22.8.3R and SYSC 22.8.4R (Appointed representatives)

say that this applies to B’s appointed representatives as well as
to B.

The need for complete and accurate information

10A.15.4 G The obligations to supply information to the FCA under either SUP
10A.14.8R or SUP 10A.14.10R apply notwithstanding any agreement
(for example a ‘COT 3’ Agreement settled by the Advisory,
Conciliation and Arbitration Service (ACAS)) or any other
arrangements entered into by a firm or its appointed representative and
an employee upon termination of the employee’s employment. A firm
should not (and should ensure that its appointed representatives do not)
enter into any such arrangements or agreements that could conflict with
its obligations under this section.

10A.16 How to apply for approval and give notifications

10A.16.1 D (1) This direction applies to an application under Form A or Form

E.

(2) Subject to (2A), an An application by a firm must be made by

submitting the Form online at fca.org.uk using the form
specified on the FCA’s and PRA’s online notification and
application system in accordance with the requirements in SUP
10C.15 (Forms and other documents and how to submit them to
the FCA) about the submission of those Forms.

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 FCA 2018/XX

(2A) An application by a firm whose application for permission or

whose Part 4A permission covers only credit-related regulated
activities must be made using the form in SUP 10A Annex 4 or
SUP 10A Annex 8 and must be submitted in the way set out in
SUP 15.7.4 R to SUP 15.7.9G (Form and method of
notification). [deleted]

(4) Where a firm is obliged to submit an application online under

(2), if the information technology systems used by the FCA fail
and online submission is unavailable for 24 hours or more, until
such time as facilities for online submission are restored a firm
must use the form in SUP 10A Annex 4D or SUP 10A Annex
8D and submit it in the way set out in SUP 15.7.4R to SUP
15.7.9G (Form and method of notification). [deleted]

(5) An application by a firm in relation to a controlled function to

which SUP 10A.1.16BR (appointed representative of an SMCR
firm) applies must be made in accordance with SUP 10C.15
(Forms and other documents and how to submit them to the
FCA) and not this section. [deleted]

10A.16.2 R (1) This rule applies to a notification under Form B, Form C or

Form D.

(2) A notification must be made in accordance with SUP

10A.16.1D, except that the annexes in which the forms are to be
found are SUP 10C Annex 5R or SUP 10C Annex 6R, rather
than the Annexes mentioned in SUP 10A.16.1D the
requirements in SUP 10C.15 (Forms and other documents and
how to submit them to the FCA) about the submission of those
Forms.

(3) A notification by a firm in relation to a controlled function to

which SUP 10A.1.16BR (appointed representative of an SMCR
firm) applies must be made in accordance with SUP 10C.15
(Forms and other documents and how to submit them to the
FCA) and not this section. [deleted]

10A.16.2A R SUP 10A.16.2R(3) rule also applies to Form B in relation to a

controlled function to which SUP 10A.1.16BR (appointed
representative of an SMCR firm) applies. [deleted]

10A.16.3 G If the information technology systems used by the FCA fail and online
submission is unavailable for 24 hours or more, the FCA and PRA will
endeavour to publish a notice on their websites confirming that online
submission is unavailable and that the alternative methods of
submission set out in SUP 10A.16.1D(4) and SUP 15.7.4R to SUP
15.7.9G (Form and method of notification) should be used. [deleted]

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 FCA 2018/XX

10A.16.4 G Where SUP 10A.16.1D(4) or the equivalent situation under SUP

10A.16.2R applies to a firm, GEN 1.3.2R (Emergency) does not apply.
[deleted]

10A.17 Further questions [deleted]

10A.17.1 G A list of frequently asked questions and answers is at SUP 10A Annex
1.

10A.17.2 G If the firm or its advisers have further questions, they should contact the
FCA’s Contact Centre (see SUP 10A.12.6G).

Delete the following Annexes. The deleted text of each Annex is not shown.

10A Annex Frequently asked questions [deleted]

1G

10A Annex Approved persons regime: summary of forms and their use for
2G applications for approval to perform an FCA-controlled function
[deleted]

10A Annex Form A: Application to perform controlled functions under the

4D approved person regime [deleted]

10A Annex Form E: Internal transfer of an approved person [deleted]

8D

Amend the following as shown.

10C FCA senior managers regime for approved persons in SMCR firms

10C.1 Application

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 FCA 2018/XX

Appointed representatives

10C.1.7 R This chapter does not deal with an approved person who is approved
under SUP 10A.1.16BR (Appointed representatives) SUP 10A (FCA
Approved Persons in Appointed Representatives).

10C.1.8 G (1) SUP 10A.1.15R to SUP 10A.1.16DG (Appointed

representatives) deal SUP 10A (FCA Approved Persons in
Appointed Representatives) deals with the approved persons
regime for appointed representatives of SMCR firms.

(5) Both this chapter and SUP 10A deal with an appointed
representative that has a limited permission to carry on a
regulated activity prescribed for the purposes of section
39(1E)(a) of the Act.

10C.3 General material about the definition of controlled functions

Types of controlled function

10C.3.4 G The FCA has (in SUP 10A (FCA Approved Persons in Appointed
Representatives)) specified controlled functions for SMCR firms that
are not designated senior management functions. (See SUP 10C.1.7R to
SUP 10C.1.8G (Appointed representatives)).

10C.4 Specification of functions

10C.4.3 R Table of FCA-designated senior management functions for SMCR

firms

Type SMF Description of FCA controlled

function

FCA governing SMF 1 Chief executive function

functions
SMF 3 …

SMF 7 Group entity senior manager function

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 FCA 2018/XX

SMF 9 Chair of the governing body function

SMF 10 Chair of the risk committee function

SMF 11 Chair of the audit committee function

SMF 12 Chair of the remuneration committee

function

SMF 13 …

SMF 14 Senior independent director function

SMF 15 …

SMF 19 Head of third country branch function

SMF 27 …

FCA required … …
functions
SMF 23b …

SMF 29 Limited scope function

Other high-level SMF 21 …

management
functions

Systems and SMF 2 Chief finance officer function

controls
functions SMF 4 Chief risk officer function

SMF 5 Head of internal audit function

SMF 24 Chief operations function

10C.4.4 G As described in SUP 10C.1.7R to SUP 10C.1.8G (Appointed

representatives), SUP 10A (FCA Approved Persons in Appointed
Representatives) specifies certain other controlled functions for SMCR
firms.

10C.4A FCA governing functions: General

10C.4A.1 G …

Sole traders

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 FCA 2018/XX

10C.4A.2 G (1) An individual sole trader themselves will not need approval to
perform any of the governing functions. Therefore the
governing functions do not apply to a sole trader with no
employees.

(2) It is possible, although perhaps not likely in practice, that the

governing functions could apply to staff working for the sole
trader.

(3) In particular, it is possible for the sole trader to give sufficient

authority to a staff member that the staff member meets the
Glossary definition of a director.

(4) This might happen, for example, if the sole trader’s business is
so large that the sole trader sets up a governing body to run it.

10C.5 FCA governing functions: Executive

Executive director function: Adjustment of definition for non-directive

friendly societies

10C.5.9 R …

(3) The term director also includes:

(a) each person on the firm’s governing body; and

(b) (in the case of an FCA-authorised firm) the chief

executive.

10.5.10 G …

(3) The individual in (2) may, for example, have the title of chief
executive or similar. The individual would (subject to SUP
10C.5.11G) have to be an FCA-approved person under SUP
10C.5.9R.

10C.5.11 G (1) In practice, the FCA expects that most non-directive friendly
societies will be PRA-authorised persons.

(2) Where that is the case, the executive director function will often
not apply (see SUP 10C.4A.1G).

...

10C.5.18 G …

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 FCA 2018/XX

Partner function: When partners and members do not require approval

10C.5.19 R (1) This rule applies to an SMCR firm that is an FCA-authorised

person to which the partner function applies.

(2) If the principal purpose of the firm is to carry on one or more

regulated activities, each person in SUP 10C.5.14R to SUP
10C.5.16R (a “partner”) performs the partner function.

(3) If the principal purpose of the firm is other than to carry on

regulated activities:

(a) a partner performs the partner function to the extent

only that they have responsibility for a regulated
activity; and

(b) a partner in a firm will be taken to have responsibility

for each regulated activity except where the firm has
apportioned responsibility to another partner or group of
partners.

10C.5.20 G (1) This paragraph SUP 10C.5.20G describes some of the

combined effects of SUP 10C Annex 1 2.1R and SUP
10C.5.19R.

(2) A partner whose only regulated activities are incidental to their

professional services, in a firm whose principal purpose is to
carry on other than regulated activities, need not be an FCA-
approved person.

(3) What amounts to the principal purpose of the firm is a matter of

fact in each case having regard to all the circumstances,
including the activities of the firm as a whole.

(4) Any regulated activities which such a partner carries on are not
within the description of the partner function.

Chief executive function (SMF1)

10C.5.21 R (1) The chief executive function is the function of acting in the
capacity of a chief executive of a firm.

(2) This function does not apply to a non-directive friendly society.

10C.5.22 G This function is having the responsibility, alone or jointly with one or
more others, under the immediate authority of the governing body for
the conduct of the whole of the business (or relevant activities) of the
firm.

10C.5.23 G (1) A person performing the chief executive function may be a

member of the governing body but need not be.

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 FCA 2018/XX

(2) If the chairman of the governing body is also the chief

executive, they will be discharging this function.

(3) If the responsibility is divided between more than one person

but not shared, there is no person exercising the chief executive
function.

(4) But if that responsibility is discharged jointly by more than one

person, each of those persons will be performing the chief
executive function.

Head of third country branch function (SMF 19)

10C.5.24 R (1) This rule applies to an overseas SMCR firm.

(2) The head of third country branch function is the function of

having responsibility alone or jointly with others, for the
conduct of all activities of the United Kingdom branch of the
firm which are subject to the UK regulatory system.

10C.5A FCA governing functions: Oversight

10C.5A.6 R …

Chair of the governing body function (SMF9)

10C.5A.7 R The chair of the governing body function is the function of having
responsibility for chairing, and overseeing the performance of the role
of, the governing body of the firm.

Chair of the risk committee function (SMF10)

10C.5A.8 R The chair of the risk committee function is the function of having
responsibility for chairing, and overseeing the performance of, any
committee responsible for the oversight of the risk management
systems, policies and procedures of the firm, including where
applicable to the firm, a committee established in accordance with the
risk control requirements for SMCR firms.

Chair of the audit committee function (SMF11)

10C.5A.9 R The chair of the audit committee function is the function of having
responsibility for chairing, and overseeing the performance of, any
committee responsible for the oversight of the internal audit system of
the firm including where applicable to the firm, a committee established
in accordance with the internal audit requirements for SMCR firms.

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 FCA 2018/XX

Chair of the remuneration committee function (SMF12)

10C.5A.10 R The chair of the remuneration committee function is the function of

having responsibility for chairing, and overseeing the performance of,
any committee responsible for the oversight of the design and the
implementation of the remuneration policies of a firm, including where
applicable to the firm, a committee established in accordance with:

(1) SYSC 19A.3.12R (Remuneration Principle 4: Governance);

(2) SYSC 19B.1.9R (AIFM Remuneration Principle 3:

Governance);

(3) SYSC 19C.3.12 R (Remuneration Principle 4: Governance);

(4) SYSC 19D.3.12R (Remuneration Principle 4: Governance);

(5) SYSC 19E.2.9R (UCITS Remuneration Principle 3:

Governance).

Senior independent director function (SMF14)

10C.5A.11 R The senior independent director function is the function of performing

the role of a senior independent director, and having particular
responsibility for leading the assessment of the performance of the
person performing the chair of the governing body function.

10C.5B FCA governing functions: Group entities

Group entity senior manager function (SMF7)

10C.5B.1 R (1) The group entity senior manager function is the function of
having a significant influence on the management or conduct of
one or more aspects of the affairs of a firm in relation to its
regulated activities.

(2) This controlled function does not include having such influence
in the course of performance of another designated senior
management function for that firm.

(3) This controlled function only applies if it is performed by:

(a) a person employed by; or

(b) an officer of:

any of the following:

(c) a parent undertaking or holding company of the firm; or

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 FCA 2018/XX

(d) another undertaking which is a member of the firm’s

group.

Basis on which group entity senior manager function is included

10C.5B.2 G (1) This provision explains the basis on which the group entity
senior manager function is included as a controlled function.

(2) The basic position is set out in SUP 10C.3.9G. As is the case
with all controlled functions in this chapter, the definition of the
group entity senior manager function is subject to the
overriding provisions in SUP 10C.3.6R, which sets out the
requirements of section 59(1) and (2) of the Act.

(3) This means that unless the firm has an arrangement permitting
the performance of these roles by the persons concerned, these
persons will not be performing the group entity senior manager
function.

(4) Therefore, the FCA accepts that there will be cases in which a
person performing the role described in SUP 10C.5B.1R will
not require approval.

(5) However where there is such an arrangement the function may

apply.

When the group entity senior manager function applies

10C.5B.3 G (1) Individuals in the management of a group in which a firm is a

subsidiary do not automatically come within the group entity
senior manager function because their job relates to the firm.

(2) The FCA does not aim or expect to approve individuals to

perform this function for every firm to which the function
potentially applies under SUP 10C Annex 1 (What functions
apply to what type of firm) just because the firm is part of a
group.

(3) The FCA would not consider it to be unusual for there to be no

one performing the group entity senior manager function for a
firm that is a subsidiary in a group.

10C.5B.4 G Whether someone performs the group entity senior manager function
should be assessed on a case-by-case basis. The factors to be taken into
account include:

(1) the organisational structures of the group and the firm;

(2) the split of key responsibilities between the group and firm
boards and senior management; and

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(3) whether SMF managers based in the firm have an appropriate

level of authority within the group to ensure that the firm
complies with the requirements of the regulatory system.

10C.5B.5 G (1) An individual based elsewhere in a group whose responsibilities

in relation to a subsidiary in the group that is a firm are limited
to developing the group’s overall strategy is unlikely to be
performing the group entity senior manager function.

(2) The function is more likely to apply to individuals who are

directly responsible for implementing the group’s strategy in the
firm.

(3) Therefore, if an individual based elsewhere in the group:

(a) is directly responsible for taking decisions about how

the firm should conduct its regulated activities; and

(b) has not delegated this responsibility to an SMF manager

based in the firm;

it is likely that they will require approval to perform the group

entity senior manager function (or, as described in SUP
10C.5B.6G, another designated senior management function).

(4) If however the firm’s governing body has sufficient discretion

in how it applies and responds to proposals coming from group
committees or individuals based in parent entities, approval
would generally not be required. In this case the individual will
be carrying on a group-level function rather than performing a
function on behalf of the firm.

(5) So, where:

(a) a firm has in place the required SMF managers based in

the firm; and

(b) those SMF managers are effective and have sufficient

control over the firm;

the FCA would not routinely expect the firm to have persons
performing the group entity senior manager function in place.

10C.5B.6 G (1) SUP 10C.5B.1R(2) means that an individual who is approved to

perform another designated senior management function for a
firm will often not need to be approved to perform the group
entity senior manager function for that firm as well.

(2) So for example if the individual has responsibility for the firm’s
finances they may be performing the chief finance officer
function. If that is the case the individual will not be performing

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the group entity senior manager function by carrying out the

functions of a chief finance officer.

(3) Similarly an individual who is approved to perform another

designated senior management function for the firm may have
influence that comes from holding that post in matters falling
outside the core duties of that post. For example a chief finance
officer of a firm will have important input into decisions that
fall outside the core financial control function. That influence
does not mean that they are performing the group entity senior
manager function.

10C.5B.7 G The group entity senior manager function is potentially relevant:

(1) whether the individual is located in or outside the United

Kingdom; and

(2) whether the group is headquartered in the United Kingdom or

overseas.

10C.5B.8 G (1) The parent of a subsidiary firm cannot itself perform the group
entity senior manager function.

(2) A shareholder in the parent will also not perform this function
unless the shareholder is also a director, officer or employee of
the parent and is exerting significant influence over the firm
through that role.

10C.6 FCA-required functions

Compliance oversight function (SMF16)

10C.6.1 R The compliance oversight function is the function of acting in the

capacity of a person who is allocated the function in:

(4) SYSC 6.1.4CR; or

(5) SYSC 3.2.8R . ; or

(6) (for a full-scope UK AIFM) article 61(3)(b) of the AIFMD level

2 regulation.

10C.6.4 R …

Limited scope function (SMF29)

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10C.6.5 R The limited scope function is the function of acting in the capacity of a
person responsible for the apportionment function and/or the oversight
function set out in SYSC 4.4.5R.

10C.6.6 G The fact that there is a person performing the limited scope function,
and who has responsibility for activities subject to regulation by the
FCA, may have a bearing on whether a manager who is based overseas
will be performing an FCA controlled function. It is a factor to take into
account when assessing the likely influence of the overseas manager.

10C.6A Systems and controls functions: Finance, risk and internal audit

Introduction

10C.6A.1 G The FCA-designated senior management functions in this section apply

even if the firm:

(1) is not required by the regulatory system to allocate any of these

roles to someone; or

(2) is not subject to any requirements of the regulatory system

dealing with the management of the matters referred to in SUP
10C.6A.3R to SUP 10C.6A.6R.

Seniority

10C.6A.2 G The FCA expects a firm to ensure that a person performing a function in
this section for a firm has sufficient expertise and authority to perform
that function effectively. A director or senior manager would meet this
expectation.

Chief finance officer function (SMF2)

10C.6A.3 R The chief finance officer function is the function of having

responsibility for management of the financial resources of the firm,
including reporting directly to the governing body of the firm in relation
to its financial affairs.

Chief risk officer function (SMF4)

10C.6A.4 R The chief risk officer function is the function of having responsibility
for overall management of the risk controls of a firm, including:

(1) the setting and managing of the firm’s risk exposures; and

(2) reporting directly to the governing body of the firm in relation

to its risk management arrangements.

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10A.6A.5 G (1) Risk controls systems include ones designed to deal with the
kinds of matters in the risk control requirements for SMCR
firms.

(2) However SUP 10C.6A.4R applies even if the provisions in (1)

do not apply to the firm.

Head of internal audit function (SMF5)

10C.6A.6 R The head of internal audit function is the function of having

responsibility for management of the internal audit function of the firm,
including reporting directly to the governing body of the firm on the
internal audit function.

10A.6A.7 G (1) Internal audit covers the kinds of matters in the internal audit
requirements for SMCR firms.

(2) However SUP 10C.6A.6R applies even if the provisions in (1)

do not apply to the firm.

10C.6B Systems and controls functions: Other

Seniority

10C.6B.1 G The FCA expects a firm to ensure that a person performing a function in
this section for a firm has sufficient expertise and authority to perform
that function effectively. A director or senior manager would meet this
expectation.

The chief operations function (SMF24)

10C.6B.2 R (1) The chief operations function is the function of having overall
responsibility for managing all or substantially all the internal
operations or technology of the firm or of a part of the firm.

(2) A person has overall responsibility for managing all or

substantially all the matters described in (1) for the purposes of
this rule even if one or more other persons have responsibility
for:

(a) the matters to which the internal audit requirements for

SMCR firms, the compliance requirements for SMCR
firms or the risk control requirements for SMCR firms
relate; or

(b) the matters to which any of the required functions

relate; or

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(c) any part of the firm responsible for advising other parts
of the firm.

(3) (2) applies to a firm whether or not the requirements in (2)(a) or

the functions in (2)(b) apply to it.

(4) The chief operations function does not include the function of
acting in the capacity of a chief executive of a firm.

(5) A person (P) does not perform the chief operations function by
managing the internal operations or technology of a part of a
firm that carries out other functions (such as a part of the firm
that carries on regulated activities with clients) as part of P’s
function of managing that part of the firm.

10C.6B.3 G (1) In SUP 10C.6B.2R technology refers principally to the firm’s

information and communications technology (ICT) systems and
services.

(2) Those services include but may not be necessarily limited to the
mechanisms and networks that support the operations of a firm,
including data entry, data storage, data processing and reporting
services, but also monitoring, business and decision support
services.

10C.6B.4 G The chief operations function may include but not necessarily be
limited to areas such as:

(1) business continuity (including responsibility for compliance

with SYSC 4.1.6R and SYSC 4.1.7R (Business continuity), if
those rules apply to the firm);

(2) cybersecurity;

(3) information technology;

(4) internal operations;

(5) operational continuity, resilience and strategy;

(6) outsourcing, procurement and vendor management; and

(7) management of services shared with other group members.

10C.6B.5 G If:

(1) a firm does not have anyone who performs the chief operations
function; but

(2) SYSC 26 (Senior managers and certification regime: Overall and

local responsibility) applies to the firm;

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the firm should allocate responsibility for the functions in SUP

10C.6B.4G among its SMF managers under SYSC 26.

10C.6B.6 G If a firm is required to have a management responsibilities map, the

map should include the functions in SUP 10C.6B.4G, whether or not
the firm has someone who performs the chief operations function.

10C.6B.7 G The table in SUP 10C.6B.8G gives examples of how the chief
operations function applies.

10C.6B.8 G Table: Examples of how the chief operations function applies

Example Comments

(1) Firm A has the following The COO is the only person
three individuals. performing the chief operations
function.
- Chief Operating Officer
(COO);
- Chief Information &
Technology Officer (CITO);
- Head of Human Resources
(Head of HR).
The Head of HR and the
CITO report to the COO.

(2) Firm A has the following Both individuals perform the chief
two individuals: operations function.
- Chief Operating Officer
(COO);
- Chief Information and
Technology Officer (CITO).
The COO and CITO are
equally senior. Both have
separate reporting lines to
the Board and the CEO.
Overall responsibility for
information technology is
shared between the COO and
CITO.
The COO has overall
responsibility for all other
internal operations.

(3) Firm A has two business B, C and D perform the chief

lines (broking and advice). It operations function.

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has the following

individuals:
- a Chief Operating Officer
responsible for the internal
operations of the broking
business (other than
technology) (B)
- a Chief Information and
Technology Officer for the
broking business (C)
- an individual who
combines the roles of Chief
Operating Officer and Chief
Information and Technology
Officer for the advice
business (D).
B, C and D are equally
senior. They all have
separate reporting lines to
the Board and the CEO.

(4) Firm A splits overall The CITO performs the chief

responsibility for its internal operations function.
operations between various None of the others perform the chief
individuals. A separate operations function. This is because
individual is responsible for none of them has responsibility for
human resources, business the firm’s internal operations as a
continuity, procurement and whole or for all the internal
outsourcing, buildings and operations of a part of the business.
the remaining parts of
Firm A has divided the responsibility
internal operations. Firm A based on function rather than business
also has a Chief Information line.
& Technology Officer
(CITO) with responsibility However those others may be
for all the firm’s technology. performing the other overall
responsibility function.
Each individual is equally
senior.

(5) Firm A has a Chief B performs the chief operations

Operating Officer (B) function.
responsible for its internal C does not.
operations. However Firm A
separates its internal The same answer would apply if C’s
advisory functions (such as functions were split between several
economic and market others.
analysis) and allocates them
to C.

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(6) Firm A has a Chief B does not perform the chief

Operating Officer (B). B operations function. B does not have
does not report to the firm’s overall responsibility for internal
governing body. B reports to operations as B does not have direct
several directors about responsibility to the governing body.
different aspects of B’s job, SYSC 26.7 (Meaning of local and
who in turn report to the overall responsibility: Reporting to
governing body. the governing body) is relevant to the
meaning of overall responsibility in
this context.
The directors to whom B reports do
not perform the chief operations
function either, for the reasons in
Example (4).

(7) Firm A has two business SUP 10C.6B.2R(5) means that neither
lines (broking and advice). B B nor C performs the chief operations
is chief executive of the function.
broking division and C is
chief executive of the
advisory division. Each chief
executive is responsible for
the internal operations and
IT of their division. Both B
and C report to the Board.

10C.7 Other overall responsibility function (SMF18)

Application

10C.7.1-1 G The effect of SUP 10C.7.1-2R is that this section only applies to one of
the following types of UK SMCR firm:

(1) an SMCR banking firm; and

(2) a Solvency II firm (including a large non-directive insurer) but

excluding an insurance special purpose vehicle and certain
firms in run-off; and

(3) an enhanced scope SMCR firm.

Definition

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10C.7.1 R A person performs the other overall responsibility function in relation

to a firm if that person:

(1) is performing:

(a) a function allocated to that person under SYSC 26.3.1R

(Main rules) in relation to the firm; or

(b) FCA-prescribed senior management responsibility (z) in

the table in SYSC 24.2.5R (functions in relation to
CASS) allocated to that person under SYSC 24.2
(Allocation of FCA-prescribed senior management
responsibilities: Main allocation rules); and or

(c) (if the firm has allocated such a function to someone)

the function of having overall responsibility for any of
the activities, business areas and management functions
of the firm excluded from SYSC 26.3 (Main rules) by
SYSC 26.4.11R (Exclusion for AIFMD); and

(2) does not have an approval to perform any other designated

senior management function in relation to the firm.

10C.7.3 G Table: Examples of how the other overall responsibility function

applies

Example Comments

… …

(7) ‘A’ is appointed to take On A’s first appointment, A will need

on some functions that come to be approved to perform the other
within the other overall overall responsibility function.
responsibility function. On being appointed as chief risk
Later, A is appointed as officer, A will stop performing the
chief risk officer. other overall responsibility function.
The firm is one of those for
which being chief risk
officer is a PRA-designated
senior management function
or an FCA-designated senior
management function.

… …

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10C.8 The other local responsibility function (SMF22) and EEA branch senior
manager functions (SMF21)

Other local responsibility function (SMF22)

10C.8.3 G Table: Examples of how the other local responsibility function applies

Example Comments

(1) ‘A’ is allocated local A only needs approval to perform the

responsibility for one of a PRA-designated senior management
branch’s main business function.
lines. A is also appointed to
perform a PRA-designated
senior management function
for the same branch. The
firm is a PRA-authorised
person.

(3) A small branch A only needs approval to perform the

undertakes two business executive director function. B needs
lines (wholesale lending and approval to perform the other local
corporate investments). ‘A’ responsibility function.
is head of wholesale lending
and is also an executive
director of the branch. ‘B’ is
head of corporate
investments and does not sit
on the branch management
committee but reports to it
on corporate investments.
The branch allocates local
responsibility for these
functions to A and B.
Neither A nor B performs
any other FCA-designated
senior management function
or (if the firm is a PRA-
authorised person) PRA-
designated senior
management function.

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(4) A branch does not have a P needs approval to perform the other
Head of Internal Audit. ‘P’ is local responsibility function.
allocated local responsibility However, if P has already been
for internal audit in relation approved to perform another FCA-
to that branch. designated senior management
function or (if the firm is a PRA-
authorised person) PRA-designated
senior management function, then P
will not be performing the other local
responsibility function.

(8) ‘A’ is appointed to take …

on some functions that come
within the other local
responsibility function.
Later, A is appointed as
chief risk officer. A is a type
of firm for which being chief
risk officer is a PRA
designated senior
management function or an
FCA-designated senior
management function.

10C.9 Minimising overlap with the PRA approved persons regime

Application

10C.9.1 -1 G This section only applies to a PRA-authorised person.

10C.10 Application for approval and withdrawing an application for approval

How to apply for approval

10C.10.9 D …

(4) A firm must not use Form E if:

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(a) a notification has been made or should be made:

(i) …

(ii) (if the firm is a PRA-authorised person) to the

PRA under any equivalent PRA rule; or

(b) a notification has been made or should be made to the

FCA or (if the firm is a PRA-authorised person) PRA
under any of the following:

(c) (if the firm is a PRA-authorised person) a notification

has been made or should be made to the PRA under any
provision of the PRA Rulebook corresponding to the
requirements in (b); or

Criminal records checks and verifying fitness and properness

10C.10.16 R (1) This rule applies to an application by a firm 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.

(2) A firm must (as part of its assessment of whether a candidate is

a fit and proper person to perform an FCA-designated senior
management function and to verify the information contained in
the application to carry out the FCA-designated senior
management function) obtain the fullest information that it is
lawfully able to obtain about the candidate under Part V of the
Police Act 1997 (Certificates of Criminal records, etc) and
related subordinated legislation of the UK or any part of the UK
before making the application.

(3) This rule does not apply to a firm that is a sole trader if the
candidate is the sole trader themselves.

10C.11 Statements of responsibilities

What this section covers

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10C.11.2 G (1) …

(2) However, in the case of a PRA-authorised person, where

applications and notifications relate both to FCA-designated
senior management functions and to PRA ones, the regulators’
requirements are consistent with each other.

Revised statements of responsibilities: Meaning of significant change

10C.11.6 G (1) …

(2) A variation of the FCA-approved SMF manager’s approval,

either at the firm’s request or at the FCA’s or (in the case of a
PRA-authorised person), PRA’s initiative, resulting in the
imposition, variation or removal of a condition or time limit,
may involve a significant change.

(3) …

(4) The addition, re-allocation or removal of any of the following

(or part of one):

(a) an FCA-prescribed senior management responsibility;

(b) (in the case of a PRA-authorised person), a PRA-

prescribed senior management responsibility; or

(5) The sharing or dividing of an FCA-prescribed senior

management responsibility or, in the case of a PRA-authorised
person, a PRA-prescribed senior management responsibility,
that was originally performed by one person between two or
more persons may involve a significant change.

(6) Ceasing to share an FCA-prescribed senior management

responsibility or, in the case of a PRA-authorised person, a
PRA-prescribed senior management responsibility, that was
originally shared with another, or others, may involve a
significant change.

Revised statements of responsibilities: Procedure

10C.11.7 D (1)

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(3) Where In the case of a PRA-authorised person, where the

change to be notified to the FCA under section 62A of the Act is
part of an arrangement under which:

One document for each SMF manager for each firm

10C.11.14 G …

(2) The (In the case of a PRA-authorised person), the document in

(1) should cover PRA-designated senior management functions
as well as FCA-designated senior management functions.

(4) The FCA and the PRA have coordinated their arrangements so
that a firm PRA-authorised person can prepare a single
document that will meet the requirements of both regulators
about statements of responsibilities.

Submitting statements of responsibilities: examples of how the requirements

work

10C.11.18 G The table in SUP 10C.11.19G gives examples of how the requirements
in this section for submitting statements of responsibilities (combined,
in the case of a PRA-authorised person, with the corresponding PRA
requirements) work in different cases.

10C.11.19 G Table: Examples of how the requirements for submitting statements of

responsibilities work

Example Comments

(3) A firm applies for approval for A to …

perform an FCA-designated senior
management function and a PRA-designated
senior management function.

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Example Comments
The arrangements in SUP 10C.9 for FCA
functions to be absorbed into PRA ones do
not apply and so there are separate
applications to the FCA and PRA.
The firm is a PRA-authorised person.

(5) A has approval to perform the executive …

director function. Later, A is to be appointed
to perform the PRA’s chief risk officer
designated senior management function for
the same firm. This will also result in
substantial changes to A’s duties as an
executive director.
The firm is a PRA-authorised person.

(8) A has approval to perform the executive …

director function and the PRA’s chief risk
officer designated senior management
function for the same firm. The
arrangements in SUP 10C.9 for FCA
functions to be absorbed into PRA ones do
not apply and so there are separate FCA and
PRA approvals.
The approval to perform the PRA’s chief
risk officer designated senior management
function is subject to a condition. The firm is
applying to vary that condition. As part of
the same arrangements, there are to be
substantial changes to A’s job as an
executive director.
The firm is a PRA-authorised person.

(9) A has approval to perform the executive …

director function and the money laundering
function for the same firm.
Sometime later, A is to give up the money
laundering function and take up the PRA’s
chief risk officer designated senior
management function. This will involve
major changes to A’s role as executive
director.
The firm is a PRA-authorised person.

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Example Comments

(11) A has approval to perform the executive …

director function and the PRA’s chief risk
officer designated senior management
function for the same firm. Later, A gives up
his role as chief risk officer.
The firm is a PRA-authorised person.

(14) A has approval to perform the executive …

director function. Later, A’s business unit
grows in size and so the firm needs to apply
for A to be approved to perform the PRA’s
Head of Key Business Area designated
senior management function. However, A’s
responsibilities do not change.
The firm is a PRA-authorised person.

Need for a complete set of current statements of responsibilities

10C.11.21 G (1) A complete set of current statement of responsibilities means all

statements of responsibilities that the firm has provided to the
FCA or (in the case of a PRA-authorised person), PRA as
revised under section 62A of the Act and this chapter.

What statements of responsibilities should contain: General

10C.11.24 G (1) A statement of responsibilities (including its attachment sheet

for additional information) should:

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(c) only contain material about the matters that this chapter,
the corresponding PRA requirements (in the case of a
PRA-authorised person), and the Act say should be
included in it.

10C.11.26 G …

(2) For instance, these include:

(a) the responsibilities that go with the FCA required

functions; and

(b) the FCA-prescribed senior management responsibilities

and (in the case of a PRA-authorised person) the PRA-
prescribed senior management responsibilities.

10C.11.28 G (1) A statement of responsibilities of an SMF manager should

include details about any:

(a) FCA-prescribed senior management responsibilities and

(in the case of a PRA-authorised person) PRA-
prescribed senior management responsibilities allocated
to the SMF manager;

(b) (in the case of a PRA-authorised person) functions that

are included in a PRA controlled function under the
arrangements described in SUP 10C.9 (Minimising
overlap with the PRA approved persons regime);

10C.12 Conditional and time-limited approvals

Purpose

10C.12.1 G …

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(3) The (In the case of a PRA-authorised person) the policies

described in SUP 10C.12 also apply when the FCA is
considering whether to give its consent to an application made
to the PRA for approval.

10C.12.2 G …

(3) The FCA has (in SUP 10A (FCA Approved Persons in
Appointed Representatives)) specified controlled functions for
SMCR firms that are not designated senior management
functions. See SUP 10C.1.7R to SUP 10C.1.8G (Appointed
representatives) for more about this.

10C.13 Variation of conditional and time-limited approvals

Variation of a conditional approval at the request of the firm: general

description

10C.13.4 G (1) There are requirements about whether If the firm applying for a
change described in SUP 10C.13.3G is a PRA-authorised
person, there are requirements about whether it should apply to
the FCA or the PRA. Paragraphs (2) to (3) summarise these
requirements.

10C.14 Changes to an FCA-approved person’s details

Moving within a firm

10C.14.1 G …

(4) Similarly (in the case of a PRA-authorised person), a firm must

get the FCA’s approval if an individual is to start performing an
FCA-designated senior management function in relation to that
firm when they already have the PRA’s approval to perform a
PRA-designated senior management function in relation to that
firm.

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Notifications about fitness, disciplinary action and breaches of COCON

10C.14.22 R …

(5A) (in the case of a PRA-authorised person) under the PRA’s

requirements corresponding to (4) or (5), if those requirements
apply; or

10C.15 Forms and other documents and how to submit them to the FCA

How to make applications and give notifications

10C.15.7 D (1) A firm other than a credit union firm in (2) must submit a
document in column 1 of the table in SUP 10C.15.10R, in
accordance with the corresponding requirement in column two
of that table.

(2) A:

(a) credit union; or

(b) a firm whose Part 4A permission covers only credit-

related regulated activities;

must submit a document in column 1 of the table in SUP

10C.15.10R, in accordance with the corresponding requirement
in column three of that table.

(3) …

10C.15.8 R …

10C.15.9 G It is up to the credit union firm referred to in SUP 10C.15.7D(2)

concerned to decide which of the methods of submission available to it
under SUP 10C.15.10R it is going to use.

10C.15.10 R Table: Method of submission

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Form or other Firms that are not Credit unions and

document credit unions or consumer credit firms
consumer credit firms (SUP 10C.15.7D(2))
(SUP 10C.15.7D(1))

10C.16 References and accurate information

References

10C.16.1 R (1) SYSC 22 (Regulatory references) says that if a firm (A):

(a) is considering appointing a person (P) to perform any

controlled function or certain other functions;

(b) requests a reference from a firm (B) that is P’s current

or former employer; and

(c) indicates to B the purpose of the request;

B should, as soon as reasonably practicable, give a reference to

A.

(2) This applies even if A is a firm to which SUP 10A (FCA

Approved Persons) applies rather than this chapter.

10C What functions apply to what type of firm

Annex 1

Part One: Introduction

1.3 G …

(3) Another reason would be if the rules defining the FCA controlled
function refer to a rule elsewhere in the Handbook and the latter only
applies to certain types of firm. For example, SYSC 1 Annex 1
(Detailed application of SYSC) and SYSC 4.4 (Apportionment of
responsibilities) cut back the application of the limited scope
function.

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 FCA 2018/XX

(4) The exclusions in Part Two of this Annex and in SUP 10C.1 are also
relevant.

1.4 R In the tables in this annex:

(1) ✓ means that the FCA controlled function applies;

(2) × means that the FCA controlled function does not apply;

Part Two: General exclusions

2.1 R (1) [This part has been left blank deliberately] This chapter, except in
respect of the FCA required functions, does not apply to an
authorised professional firm that is an FCA-authorised person in
respect of its non-mainstream regulated activities, subject to (2).

(2) Where the authorised professional firm has appointed FCA-approved

persons to perform the FCA governing functions with equivalent
responsibilities for the firm’s non-mainstream regulated activities
and other regulated activities, for the firm’s non-mainstream
regulated activities this chapter applies with respect to the FCA
governing functions and the FCA required functions only.

Insert the following new Parts in SUP 10C Annex 1 where indicated. The text is not underlined.

4.4 R …

Part Five: Functions applying to core firms

5.1 R (1) The table in SUP 10C Annex 1 5.2R sets out which FCA controlled
function applies to which type of core SMCR firm.

(2) Firms in (1) are divided into the following categories for the purposes
of this rule:

(a) a UK SMCR firm not falling into (d);

(b) an EEA SMCR firm;

(c) an overseas SMCR firm not falling into (b); and

(d) a UK SMCR firm falling into SYSC 23 Annex 1 6.4R (a firm

exempt under MiFID whose only permission is bidding in
emissions auctions).

5.2 R Table: Controlled functions applying to core SMCR firms

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(1) (2) (3) (4) (5) (6)

Brief description of function Function UK firm EEA Other Emission
number firm overseas auction
firm bidder

Governing functions

Chief executive function SMF 1 ✓ × × ✓

Executive director function SMF 3 ✓ × ✓ ✓

Chair of the governing body SMF 9 ✓ × × ✓

function

Head of third country branch SMF 19 × × ✓ ×

function

Partner function SMF 27 ✓ × × ✓

Required functions

Compliance oversight function SMF 16 ✓ × ✓ ×

Money laundering reporting SMF 17 ✓ ✓ ✓ ✓

function

Other high-level management functions

EEA branch senior manager SMF 21 × ✓ × ×

function

Note: The categories of firm in the column headings of this table are to be interpreted in
accordance with the classification of firms at SUP 10C Annex 1 5.1R. Therefore:
(a) column three (UK firm) refers to SUP 10C Annex 1 5.1R(2)(a);
(b) column four (EEA firm) refers to SUP 10C Annex 1 5.1R(2)(b);
(c) column five (Other overseas firm) refers to SUP 10C Annex 1 5.1R(2)(c); and
(d) column six (Emission auction bidders) refers to SUP 10C Annex 1 5.1R(2)(d).

Part Six: Functions applying to enhanced scope firms

6.1 R The table in SUP 10C Annex 1 6.2R sets out which FCA controlled functions
apply to an enhanced scope SMCR firm.

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6.2 R Table: Controlled functions applying to enhanced scope SMCR firms

Brief description of function Function number Enhanced scope firms

Governing functions

Chief executive function SMF 1 ✓

Executive director function SMF 3 ✓

Group entity senior manager SMF 7 ✓

function

Chair of the governing body SMF 9 ✓

function

Chair of the risk committee SMF 10 ✓

function

Chair of the audit committee SMF 11 ✓

function

Chair of the remuneration SMF 12 ✓

committee function

Chair of the nomination committee SMF 13 ✓

function

Senior independent director SMF 14 ✓

function

Partner function SMF 27 ✓

Required functions

Compliance oversight function SMF 16 ✓

Money laundering reporting SMF 17 ✓

function

Other overall responsibility SMF 18 ✓

function

Systems and controls functions

Chief finance officer function SMF 2 ✓

Chief risk officer function SMF 4 ✓

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 FCA 2018/XX

Head of internal audit function SMF 5 ✓

Chief operations function SMF 24 ✓

Part Seven: Functions applying to limited scope firms

7.1 R Limited scope SMCR firms are divided into the following categories for the
purposes of SUP 10C Annex 1:

(1) a firm falling within the table in SYSC 23 Annex 1 5.4R that does not
come within (2) to (4);

(2) a firm falling within row (5) of the table in SYSC 23 Annex 1 5.4R
(distribution of non-investment insurance contracts);

(3) a firm falling within SYSC 23 Annex 1 5.7R (credit firms with limited
permission) except for one falling within (4);

(4) a firm falling within SYSC 23 Annex 1 5.7R that is an appointed

representative;

(5) a sole trader who does not come within (1) to (4);

(6) an authorised professional firm that does not come within (1) to (4);

(7) a firm in the table in SUP 10C Annex 1 7.10R.

7.2 R A firm in SUP 10C Annex 1 7.1R(7) does not fall into any other paragraph of
SUP 10C Annex 1 7.1R.

7.3 R (1) The table in SUP 10C Annex 1 7.4R sets out which FCA controlled
functions apply to a limited scope SMCR firm covered by SUP 10C
Annex 1 7.1R(1), (2), (3) or (4).

(2) Part Two of that table applies to EEA SMCR firms.

(3) Part One of that table applies to other limited scope SMCR firms in
(1).

7.4 R Table: Controlled functions applying to limited scope SMCR firms except
sole traders and authorised professional firms

Part One (UK and non-EEA)

(1) (2) (3) (4) (5)

Brief description of function General

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Function Insurance Consumer

number distribution credit
and credit appointed
firms representatives

Governing functions

The governing functions that Various × × ✓

apply to core SMCR firms

Required functions

Compliance oversight function SMF 16 ✓ × ×

Money laundering reporting SMF 17 ✓ × ×

function

Limited scope function SMF 29 ✓ ✓ ✓

Part Two (EEA firms)

(1) (2) (3) (4) (5)

Brief description of function Function General Insurance Consumer
number distribution credit
and credit appointed
firms representatives

Required functions

Money laundering reporting SMF 17 ✓ Note (3) Note (3)

function

Notes to the table

Note (1): The categories of firm in the column headings of this table are to be interpreted in
accordance with the classification of firms at SUP 10C Annex 1 7.1R. Therefore:
(1) column three (General) refers to SUP 10C Annex 1 7.1R(1);
(2) column four (Insurance distribution and credit firms) refers to SUP 10C Annex 1 7.1R(2)
and SUP 10C Annex 1 7.1R(3); and
(3) column five (Consumer credit appointed representatives) refers to SUP 10C Annex 1
7.1R(4).

Note (2): SUP 10C Annex 1 7.3R sets out which part of the table applies to which firm.

Note (3): Not applicable to these firms because SUP 10C Annex 1 7.2R means that the table
does not apply to firms in this category.

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7.5 R (1) This rule applies to a firm in SUP 10C Annex 1 7.1R(4) (an
appointed representative that has a limited permission).

(2) The required functions apply in relation to the carrying on of the

regulated activity for which it has limited permission.

(3) The governing functions apply in relation to the carrying on of the

regulated activity, for which it does not have permission, comprised
in the business for which its principal has accepted responsibility.

(4) If the appointed representative meets the conditions in SUP

10A.1.16R(2), only one of the governing functions applies under (3),
as appropriate, to an individual within that appointed representative
who will be required to be an FCA-approved person.

7.6 G The customer function also applies to a firm in SUP 10C Annex 1 7.1R(4)
under SUP 10A (FCA Approved Persons in Appointed Representatives).
Such a firm will need to read SUP 10A as well as this annex to find the
complete list of controlled functions that apply to them.

7.7 R (1) The table in SUP 10C Annex 1 7.8R sets out which FCA controlled
functions apply to a limited scope SMCR firm that is covered by SUP
10C Annex 1 7.1R(5) or (6) (a sole trader or an authorised
professional firm).

(2) Firms in (1) are divided into the following categories for the purposes
of this rule:

(a) a UK SMCR firm;

(b) an EEA SMCR firm; and

(c) an overseas SMCR firm not falling into (b).

7.8 R Table: Controlled functions applying to limited scope SMCR firms that are
sole traders or authorised professional firms

(1) (2) (3) (4) (5)

Brief description of function Function UK firm EEA firm Other
number overseas
firm

Governing functions

Chief executive function SMF 1 ✓ × ×

Executive director function SMF 3 ✓ × ✓

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 FCA 2018/XX

Chair of the governing body function SMF 9 ✓ × ×

Head of third country branch function SMF 19 × × ✓

Partner function SMF 27 ✓ × ×

Required functions

Compliance oversight function SMF 16 ✓ × ✓

Money laundering reporting function SMF 17 ✓ ✓ ✓

Limited scope function SMF 29 ✓ × ✓

Other high-level management functions

EEA branch senior manager function SMF 21 × ✓ ×

Note: The categories of firm in the column headings of this table are to be interpreted in
accordance with the classification of firms at SUP 10C Annex 1 7.2R. Therefore:
(a) column three (UK firm) refers to SUP 10C Annex 1 7.7R(2)(a);
(b) column four (EEA firm) refers to SUP 10C Annex 1 7.7R(2)(b); and
(c) column five (Other overseas firm) refers to SUP 10C Annex 1 7.7R(2)(c).

7.9 R None of the FCA controlled functions apply to a limited scope SMCR firm in
the table in SYSC 23 Annex 1 7.10R.

7.10 R Table: Limited scope SMCR firms to which no controlled functions apply

Function Comments

A firm in SYSC 23 Annex 1 5.8R (not-for-

profit debt advice body)

A firm in SYSC 23 Annex 1 5.10R (internally

managed AIF)

An EEA SMCR firm falling within row (5) of

the table in SYSC 23 Annex 1 5.4R
(distribution of non-investment insurance
contracts)

An EEA SMCR firm falling within SYSC 23 This applies whether or not it is an appointed
Annex 1 5.7R (credit firm with limited representative
permission)

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 FCA 2018/XX

7.11 G As explained in SUP 10C Annex 1 1.3G, the full range of FCA controlled
functions that are applied to a class of firm by this Annex may not apply to
every firm in that class. For example, in the case of a limited scope SMCR
firm that is a sole trader:

(1) In practice it is unlikely that the governing functions will apply to a

sole trader (see SUP 10C.4A.2G).

(2) The money laundering reporting function does not apply to a sole
trader with no employees (see SYSC 6.3.9R).

Amend the following as shown.

10C Summary of forms and their use in the senior managers regime
Annex
2G

Function Form Submission

(10) Person remaining with the same firm E Submitted by firm to the FCA
PRA-authorised person but giving up a PRA before changes take place.
controlled function and taking up an FCA-
designated senior management function.

(11) Person remaining with the same firm E Submitted by firm to the PRA
PRA-authorised person but giving up an before changes take place (see
FCA-designated senior management the PRA’s requirements).
function and taking up a PRA-designated
senior management function.

(12) Person remaining with the same firm E Submitted by firm to the FCA in
PRA-authorised person in the circumstances advance of giving up the PRA
described in example 9 in the table in SUP controlled function.
10C.7.3G (ceasing to perform a PRA
controlled function triggering need for FCA
approval to perform the other overall
responsibility function).

(13) Person with approval to perform the E Submitted by firm to:

other overall responsibility function (a) the PRA (if the new function
remaining with the same firm but ceasing to is a PRA controlled function and
require approval to perform that function
because of being approved to perform

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 FCA 2018/XX

another controlled function (see the table in the firm is a PRA-authorised

SUP 10C.7.3G for examples). person); or
(b) the FCA (if the new function
is an FCA controlled function).

(14) Person remaining with the same firm E Submitted by firm to the FCA in
PRA-authorised person in the circumstances advance of giving up the PRA
described in example 8 in the table in SUP controlled function.
10C.9.9G (giving up a PRA controlled
function triggering need for FCA approval).

Insert the following annexes in the appropriate position. The text (which consists of forms) is
included in Part Two of Annex Q of this instrument.

10C Annex Form A: Application to perform senior management functions

3D

Long Form A – Solo regulated firms (including EEA and third country)

Short Form A – Solo regulated firms (including EEA and third country)

(The first form is to be inserted under the heading “Long Form A” and the second form is to
be inserted under the heading “Short Form A”)

10C Annex Form E: Internal transfer of a person performing a controlled function

7D

Form E – Internal transfer of a person performing a controlled function for solo-regulated

firms (including EEA and third country)

10C Annex Statement of responsibilities

10D

Statement of responsibilities for solo-regulated SMCR firms

Amend the following as shown.

12 Appointed representatives

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 FCA 2018/XX

12.6 Continuing obligations of firms with appointed representatives or EEA tied

agents

Obligations of firms under the approved persons and senior managers regime

12.6.8 G (1) Some of the controlled functions, as set out in SUP 10A.4.1R SUP
10A, apply to an appointed representative of a firm, other than an
introducer appointed representative, just as they apply to a firm (see
SUP 10A.1.15R). These are the governing functions and the
customer function. In the case of an appointed representative that
also has a limited permission, an FCA required designated senior
management function may apply to it and SUP 10C may apply in
addition to SUP 10A. As explained in SUP 10A.1.16R and SUP
10A.3.2G respectively:

(a) the effect of SUP 10A.1.15R is that the directors (or their
equivalent) and senior managers (or their equivalent) of an
appointed representative, other than an introducer appointed
representative, must also be approved under section 59 of the
Act for the performance of certain controlled functions;

(b) although the customer function applies to an appointed

representative, the descriptions of the functions themselves
do not extend to home finance mediation activity, insurance
distribution activity or credit-related regulated activity;

(ba) if an appointed representative also has a limited permission:

(i) the apportionment and oversight function applies to it

in relation to the carrying on of the regulated activity
for which it has limited permission, unless it is a not-
for-profit debt advice body;

(ii) if it is a not-for-profit debt advice body and a CASS

large debt management firm, the CASS operational
oversight function applies in relation to the carrying
on of debt management activity; and

(c) sections 59(1) and 59(2) of the Act (Approval for particular
arrangements) provide that approval is necessary in respect of
a controlled function which is performed under an
arrangement entered into by a firm, or its contractors
(typically an appointed representative), in relation to a
regulated activity.

(2) The approved persons regime applies differently to an appointed

representative whose scope of appointment includes insurance
distribution activity in relation to non-investment insurance contracts
or credit-related regulated activity but no other regulated activity

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and whose principal purpose is to carry on activities other than

regulated activities. These appointed representatives need only one
person performing one of the governing functions. This means that
only one director (or equivalent) of these appointed representatives
must be approved under section 59 of the Act for the performance of
the director function, the chief executive function, the partner
function or the director of unincorporated association function,
whichever is the most appropriate (see SUP 10A.1.16R). [deleted]

(3) The approved persons regime does not apply in relation to CBTL
business carried on by CBTL firms. [deleted]

(4) The approved persons regime for SMCR firms is in SUP 10C (FCA
senior managers regime for approved persons in SMCR firms),
rather than SUP 10A. However, SUP 10A still applies to approved
persons of appointed representatives of SMCR firms (see SUP
10A.1.16BR to SUP 10A.1.16DG and SUP 10C.1.8G for more about
this). [deleted]

13A Qualifying for authorisation under the Act

13A Application of the Handbook to Incoming EEA Firms

Annex 1G

(1) Module of (2) Potential application to an (3) Potential application

Handbook incoming EEA firm with to an incoming EEA
respect to activities carried on firm with respect to
from an establishment of a activities carried on
firm (or its appointed other than from an
representative) in the United establishment of the
Kingdom firm (or its appointed
representative) in the
United Kingdom

… … …

APER APER applies to approved Not relevant because

persons of appointed SUP 10A does not apply
representatives of firms other
than SMCR firms. See below
under SUP 10A as to whether
controlled functions are

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 FCA 2018/XX

performed, and approval

therefore required.

… … …

SUP … …

SUP 10A (Approved persons) SUP 10A (Approved

persons)
Applies to an EEA firm that has
appointed representatives and is Does not apply (SUP
not an SMCR firm, but the 10A.1.6R).
applicable controlled functions
are limited. See SUP 10A.1
(Application) for more detailed
guidance.

… …

… … …

15 Notifications to the FCA

15.11 Notification of COCON breaches and disciplinary action

Timing and form of notifications: conduct rules staff other than SMF managers

15.11.13 R …

(3) Each notification must:

(a) cover:

(i) (in the case of a firm falling within SYSC 23 Annex 1

5.7R (credit firms with limited permission)) its annual
financial reporting period ending on its accounting
reference date; or

(ii) (for any other firm) the 12 month period ending on the
last day of August; and

(b) be submitted to the FCA:

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 FCA 2018/XX

(i) within two months of the end of the reporting period

in (a)(i) or (a)(ii); or

(ii) (if the end of the submission period in (b)(i) falls on a

day which is not a business day) so as to be received
no later than the first business day after the end of that
submission period.

TP 10 Benchmarks Regulation Transitional Provisions

(1) (2) Material (3) (4) Transitional (5) (6)

to which the provision Transitio Handboo
transitional nal k
provision provision provision
applies : dates in : coming
force into force

..

2 SUP R The rules in column 2, From 29 Already in

10A.4.4R and as they were on 28 June 2018 force
SUP June 2018, continue to
10A.7.1.13R apply to a benchmark
administrator in
[deleted]
relation to a specified
benchmark until that
administrator becomes
authorised or
registered under the
benchmark regulation,
or ceases to be
authorised for
administering a
specified benchmark.

3 SUP R The rule in column 2, From 29 Already in

10A.8.2R as it was on 28 June June 2018 force
2018 continues to
apply to a benchmark
administrator in
relation to a specified
benchmark until that
administrator becomes

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authorised or
registered under the
benchmark regulation,
or ceases to be
authorised for
administering a
specified benchmark.

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 FCA 2018/XX

Annex K

Amendments to the Dispute Resolution: Complaints sourcebook (DISP)

In this Annex, underlining indicates new text and striking through indicates deleted text.

1 Treating complainants fairly

1.3 Complaints handling rules

1.3.7 R …

(4) A person approved to perform the apportionment and oversight

function limited scope function for the firm or for a firm in the same
group as the firm satisfies the condition in (3).

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Annex L

Amendments to the Credit Unions sourcebook (CREDS)

In this Annex, underlining indicates new text and striking through indicates deleted text.

2 Senior management arrangements, systems and controls

2.2 General provisions

Governance and senior management arrangements: allocation of senior

management responsibilities

2.2.69 G (1) The list of FCA-prescribed senior management responsibilities that a

credit union should allocate is simpler than for most other SMCR
firms who are PRA-authorised persons.

8 Supervision

8.3 Approved persons

8.3.4 G (1) The regime for approved persons differs between applies to SMCR
firms and other types of firm.

(2) A credit union is a type of SMCR firm.

(3) SUP 10C deals with the approved persons requirements for credit
unions and other SMCR firms.

8.3.8 G …

(3) Designated senior management functions only apply to SMCR firms,

including credit unions. [deleted]

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 FCA 2018/XX

Annex M

Amendments to the Energy Market Participants guide (EMPS)

In this Annex, underlining indicates new text and striking through indicates deleted text.

1 Special guide for energy market participants

1.2 Parts of the Handbook applicable to energy market participants

1.2.3 G Applicability of parts of Handbook to energy market participants

This table belongs to EMPS 1.2.1G

Part of Applicability to energy market

Handbook participants

High Level … …
Standards
Code of This does not apply applies.
Conduct
(COCON)

… …

Statements of This applies to an approved person who

Principle and performs a controlled function for If an
Code of energy market participant has an
Practice for appointed representative, APER applies
Approved to approved persons in relation to that
Persons appointed representative.
(APER)

… …

… … …

Regulatory … …
processes
Supervision This applies, with the following
manual (SUP) qualifications:

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…
(b) in SUP 10 (Approved persons), if an
oil market participant’s principal purpose
is to carry on activities other than
regulated activities, then the scope of the
significant influence functions is
restricted to the required functions: see
SUP 10A.1.18R - SUP 10A.1.19G
…

… …

… … …

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 FCA 2018/XX

Annex N

Amendments to the Oil Market Participants guide (OMPS)

In this Annex, underlining indicates new text and striking through indicates deleted text.

1 Special guide for oil market participants

1.2 Parts of the Handbook applicable to oil market participants

1.2.2 G Parts of the Handbook applicable to oil market participants

This table belongs to OMPS 1.2.1G

Part of Applicability to energy market

Handbook participants

High Level … …
Standards
Code of This does not apply applies.
Conduct
(COCON)

… …

Statements of This applies to an approved person who

Principle and performs a controlled function for If an
Code of oil market participant has an appointed
Practice for representative, APER applies to approved
Approved persons in relation to that appointed
Persons representative.
(APER)

… …

… … …

Regulatory … …
processes
Supervision This applies, with the following
manual (SUP) qualifications:
…

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 FCA 2018/XX

(b) in SUP 10 (Approved persons), if an

oil market participant’s principal purpose
is to carry on activities other than
regulated activities, then the scope of the
significant influence functions is
restricted to the required functions: see
SUP 10A.1.18R - SUP 10A.1.19G
…

… …

… … …

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 FCA 2018/XX

Annex O

Amendments to the Service companies guide (SERV)

In this Annex, underlining indicates new text and striking through indicates deleted text.

1 Handbook requirements for service companies

1.2 Parts of the Handbook applicable to service companies

1.2.2 G Parts of the Handbook applicable to service companies

This table belongs to SERV 1.2.1G

Part of Applicability to energy market

Handbook participants

High Level … …
Standards
Code of This does not apply applies.
Conduct
(COCON)

… …

Statements of This applies to an approved person who

Principle and performs a controlled function for If an
Code of service company has an appointed
Practice for representative, APER applies to approved
Approved persons in relation to that appointed
Persons representative.
(APER)

… …

… … …

Regulatory … …
processes
Supervision This applies, with the following
manual (SUP) qualifications:
…
(c) in SUP 10 (Approved persons), if a
service company’s principal purpose is to

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 FCA 2018/XX

carry on activities other than regulated

activities, then the scope of the
significant influence functions is
restricted to the required functions: see
SUP 10A.1.18R - SUP 10A.1.19G;
…

… …

… … …

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 FCA 2018/XX

Annex P

Amendments to General guidance on Benchmark Administration, Contribution and

Use (BENCH)

In this Annex, underlining indicates new text and striking through indicates deleted text.

1 Handbook requirements in relation to benchmark contribution activity and

benchmark administration activity

1.1 Application and purpose

Benchmarks Regulation and transitional arrangements

1.1.3 G …

(4)

(a) SYSC TP 6 and SYSC TP 7;

2 Parts of the Handbook applicable to regulated benchmark administrators

and benchmark contributors

2.1 Parts of the Handbook applicable to regulated benchmark administrators

2.1.2 G Parts of the Handbook applicable to the regulated activity of administering a

benchmark.

Part of the Applicability to the regulated activity of

Handbook administering a benchmark

High Level …
Standards
Senior The detailed application of this is set out in
Management SYSC 1 Annex 1. However, in general, only
Arrangements, the following parts of SYSC will be relevant
Systems and to a firm which only has permission to carry

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 FCA 2018/XX

Controls on the regulated activity of administering a

(SYSC) benchmark:
a) SYSC 1;
b) SYSC 18.3.9G;
c) SYSC 22 to SYSC 27.

Statements of This applies to an approved person of an

Principle and appointed representative of a firm that is not
Code of an SMCR firm
Practice for
Approved
Persons
(APER)

Regulatory Supervision This applies subject to the following

Processes Manual (SUP) qualifications:
(a) In general only the following parts of SUP
will be relevant to a firm which only has
permission to carry on the regulated activity
of administering a benchmark: SUP 1-2, SUP
5-8, SUP 9-10A, SUP 10C, SUP 15-15B,
SUP 16.1-16.3 and SUP 16.10.
(b) SUP 10A only applies to a regulated
benchmark administrator which is not an
SMCR firm (but not all controlled functions
apply to a firm which only has permission to
carry on the regulated activity of
administering a benchmark). [deleted]
(c) …

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Annex Q

Handbook forms

All the text in this Annex is new and so it is not underlined. The forms are to be inserted in
the place specified in paragraph F of the cover sheet of this instrument.

Part 1: Comes into force [ ] 20[ ] [about six months before main commencement date for
solo-regulated firms]

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 Application number
(for FCA use only)

Form K - Conversion Notification Form for FCA Solo

Regulated Firms
FCA Handbook Reference: SUP TP 10.23.1R

[Commencement Date]

Name of firm

Firm Reference Number (FRN)

Financial Conduct Authority

12 Endeavour Square
Stratford
London E20 1JN
United Kingdom
Telephone +44 (0) 300 500 0597
E-mail [email protected]
Website http://www.fca.org.uk
Registered as a Limited Company in England and Wales No 1920623. Registered Office as above

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |1

 Contact Details Section 1

Contact for this notification

Title

First name

Surname

Job title

Business address

Postcode

Phone number

Email address

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |2

Conversion Notification Section 2

This section should only be completed by enhanced scope SMCR firms (for CF2 to SMF9 conversion for
core SMCR firms, see 2.02).

2.01 The table below provides a breakdown of possible applicable senior management functions for enhanced
SMCR firms only. Please tick all of the senior management functions which have been allocated in this
conversion notification. Only those senior management functions potentially applicable to enhanced SMCR firms
are listed.

Core SMCR firms should use the table in 2.02 if applying for conversion where auto-conversion has not
occurred.

Function Description of senior management function Allocated?

SMF 1 Chief Executive

SMF 2 Chief Finance

SMF 3 Executive Director

SMF 4 Chief Risk Officer

SMF 5 Head of Internal Audit

SMF 7 Group Entity Senior Manager

SMF 9 Chair of the Governing Body

SMF10 Chair of the Risk Committee

SMF11 Chair of the Audit Committee

SMF12 Chair of the Remuneration Committee

SMF13 Chair of the Nominations Committee

SMF14 Senior Independent Director

SMF16 Compliance Oversight

SMF17 Money Laundering Reporting Officer (MLRO)

SMF18 Other Overall Responsibility

SMF24 Chief Operations

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |3

 Function Description of senior management function Allocated?

SMF27 Partner

2.02 Individuals at core SMCR firms will be automatically converted to new mapped senior management
functions, where applicable. The only exception is in the case of a firm’s Chair (see below).

Under the Approved Persons Regime (APR), we do not specifically approve the firm’s Chair (individuals are
approved under a CF2 – Non-Executive Director function). It is not possible to automatically convert such
individuals to the new senior management function. As such, firms should use this form to notify us that a CF2
will be performing the Chair role under the SMCR. Failure to do so will mean that the individual will not be
approved to perform the SMF9 role at Commencement.

Core SMCR firms should only use this form where an existing CF2 (Non-Executive Director) under APR
will be performing the SMF9 (Chair of the Governing Body) role at the firm.

Function Description of senior management function UK core Effective Date

SMCR firm

SMF 9 Chair of the Governing Body

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |4

2.03 Provide details of each currently approved person who will perform a senior management function
following the commencement date in accordance with the Bank of England and Financial Services Act 2016 and
section [XXXX] of the FCA Handbook, and provide details of which senior management functions are to be
carried out by each such approved person. If this is an update to a previous conversion notification, please
complete Section 3.

Note that individuals may only be mapped from their existing APR controlled function to an appropriate
senior management function (SMF) as set out in Annex [X].

Function Description of senior Name of person to whom Current IRN

management function allocation of senior controlled
management function is function(s)
proposed held

SMF 1 Chief Executive

SMF 2 Chief Finance

SMF 3 Executive Director

SMF 4 Chief Risk

SMF 5 Head of Internal Audit

SMF 7 Group Entity Senior Manager

SMF 9 Chair of the Governing Body

SMF10 Chair of the Risk Committee

SMF11 Chair of the Audit Committee

SMF12 Chair of the Remuneration

Committee

SMF13 Chair of the Nomination

Committee

SMF14 Senior Independent Director

SMF16 Compliance Oversight

SMF17 Money Laundering Reporting

Officer (MLRO)

SMF18 Other Overall Responsibility

SMF24 Chief Operations

SMF27 Partner

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |5

2.04 If you have submitted any applications for approval of individuals to perform one or more significant
influence functions that are currently subject to determination by the FCA and any of these individuals will
perform a senior management function following commencement date in accordance with the Bank of England
and Financial Services Act 2016, and the [XXXX], provide details below of which senior management functions
are to be carried out by each such approved person.

Function Description of senior Name of person to whom Controlled IRN or

management function allocation of senior management functions application
function is proposed applied reference
for

SMF 1 Chief Executive

SMF 2 Chief Finance

SMF 3 Executive Director

SMF 4 Chief Risk

SMF 5 Head of Internal Audit

SMF 7 Group Entity Senior Manager

SMF 9 Chair of the Governing Body

SMF10 Chair of the Risk Committee

SMF11 Chair of the Audit Committee

SMF12 Chair of the Remuneration

Committee

SMF13 Chair of the Nomination

Committee

SMF14 Senior Independent Director

SMF16 Compliance Oversight

SMF17 Money Laundering Reporting

Officer (MLRO)

SMF18 Other Overall Responsibility

SMF24 Chief Operations

SMF27 Partner

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |6

2.05 If there are one or more individuals currently approved to perform significant influence function CF2, who will
remain at the firm in the capacity of a non-executive director following commencement date, and such individuals
are not listed above in Section 2.01, please list them below.

IRN Name of individual

2.06 If you have submitted any applications for approval of individuals to significant influence function CF2 under
the approved persons regime that are currently subject to determination by the FCA, who will remain at the firm in
the capacity of a non-executive director following commencement date, and such individuals are not listed above
in Section 2.02, please list them below.

IRN Name of individual

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |7

 Update Notification Section 3

3.00 If you need to update or correct a previous conversion notification, please provide details of these
amendments below.

IRN Name of individual

Controlled Function Proposed Senior Management Function(s)

Details of change and reasons for such change.

IRN Name of individual

Controlled Function Proposed Senior Management Function(s)

Details of change and reasons for such change.

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |8

Statements of Responsibilities and Management Responsibilities
Map Section 4
3

4.00 If submitting this form as an enhanced scope SMCR firm, please attach a statement of
responsibilities for each individual identified in this form as being converted to perform one or more
senior management functions. Please also attach the firm’s management responsibilities map.

A core SMCR firm which is completing this form to convert a CF2 to the Chair senior management
function does not need to attach the statement of responsibilities for the Chair.

4.01 How many additional sheets are being submitted?

Form K - Conversion Notification Form (FCA Solo Regulated Firms) Page |9

Declarations and signatures Section 5

Declaration
In this declaration, the firm making the notification in relation to each individual is referred to as the “applicant”.

The applicant must ensure that it has the authority of each individual in relation to whom it is making a notification
for conversion to a senior management function to cause the information contained in this form relating to such
individual to be submitted, and that it has made each such individual aware of their prospective regulatory
responsibilities as set out in the FCA’s Code of Conduct (COCON).

It is a criminal offence, knowingly or recklessly, to give the FCA information that is materially false, misleading or
deceptive (see sections 398 and 400 of the Financial Services and Markets Act 2000 – ‘FSMA’).

The applicant must notify the FCA immediately if there is a change to the information in this form and/or if
inaccurate information has been provided.

In addition to other regulatory responsibilities, firms and approved persons have a responsibility to disclose to the
FCA matters of which it would reasonably expect to be notified. Failure to notify the FCA of such information may
lead to the FCA taking disciplinary or other action against the firm and/or individuals.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries
or wish to exercise your rights.

The person signing on behalf of the applicant confirms that:

• they have read this declaration in full;

• they have confirmed that the information supplied is accurate and complete to the best of their knowledge, and
that each statement of responsibility submitted with this form accurately reflects the aspects of the affairs of the
applicant which it is intended that the relevant individual will be responsible for managing in performing their
proposed senior management functions.

Name of the applicant

Name of person signing on behalf of the applicant

Position

Signature

Date

Form K - Conversion Notification Form (FCA Solo Regulated Firms) P a g e | 10

 Notification number
(for FCA use only)

Form O – Notification of change to firm classification

under the Senior Managers & Certification Regime
(Pre-Commencement version)
FCA Handbook Reference: SUP TP 12

Terms defined in the FCA Handbook are italicised and should be construed accordingly.

This form can only be used by solo-regulated SMCR firms. It is not relevant to dual regulated SMCR
firms, appointed representatives or SMCR firms that are defined as an enhanced scope SMCR firm
because they meet the qualification criteria in SYSC 23 Annex 1.

Limited scope SMCR firms and core SMCR firms can use this form to notify the FCA that they agree
to be subject to the rules for enhanced scope SMCR firms, set out in SYSC 23 Annex 1. Limited
scope SMCR firms can use this form to notify the FCA that they agree to be subject to the rules for
core SMCR firms, set out in SYSC 23 Annex 1.

The pre-Commencement version of Form O can be submitted up to six months before the regime
takes effect. If it is submitted three months or less before the regime takes effect, firms will need to
submit the supporting documentation listed in Section 2 at the same time.

The opt-up will take effect at Commencement. To withdraw a notification, firms must write to us before
the opt-up takes effect. Once the opt-up has taken effect, firms can use Form O to revert to the SMCR
classification defined in SYSC 23 Annex 1. This will be effective one year from the date of notification.

Firms opting-up should ensure they understand and are in a position to comply with the relevant rules,
set out in the FCA’s Senior management arrangements, Systems and Controls (SYSC), Supervision
(SUP), Code of Conduct (COCON) sourcebooks. The decision should be made at the appropriate
levels and approved at governing body level. As a result of opting-up, firms will be subject to rules
relating to additional Senior Management Functions and Prescribed Responsibilities. Firms opting-up
to enhanced scope SMCR firm classification will also be subject to requirements on Responsibilities
Maps, Handover Procedures and Overall Responsibilities.

[Commencement Date]

Name of firm

Firm Reference Number (FRN)

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 1
 Financial Conduct Authority
12 Endeavour Square
Stratford
London E20 1JN
United Kingdom
Telephone +44 (0) 300 500 0597
E-mail [email protected]
Website http://www.fca.org.uk
Registered as a Limited Company in England and Wales No 1920623. Registered Office
as above

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 2
 Contact Details Section 1

1.1 Contact for this notification (at the notifying firm)

Title

First name

Surname

Job title

Business address

Postcode

Phone number

Email address

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 3
Notification that the firm is opting-up Section 2
If this notification is being made more than three months before the Regime commences, please proceed to
Section 3.

2.01 Changes to the SMCR classification of the firm

Please indicate the type of notification you are making.

Notification type Firm response

Core SMCR firm agreeing to be subject to the rules for enhanced scope
SMCR firms

Limited scope SMCR firm agreeing to be subject to the rules for core
SMCR firms

Limited scope SMCR firm agreeing to be subject to the rules for enhanced
scope SMCR firms

2.02 Supporting documents

Please tick to confirm that you are submitting the supporting documents listed in the table below with this
notification. These documents must be submitted up to three months and at least one week before
Commencement.

Supporting documents Firms opting-up to Limited Scope SMCR firms opting-

Enhanced scope up to core SMCR firm classification
SMCR firm
classification

Form A applications for new senior management

functions

*
Form K – Conversion notification

*Only required if a CF2 Non-

Executive Director is going to
perform the SMF9 – Chair function

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 4
Declarations and signatures Section 3

In this declaration, the authorised firm making the notification is referred to as the “firm”.

The person signing on behalf of the firm confirms that:

• they have read this declaration in full;

• they have the authority of the firm’s governing body to make this notification;

• the firm’s governing body understands their regulatory responsibilities following the opt-up, as set out in the
FCA’s Senior management arrangements, Systems and Controls (SYSC), Supervision (SUP), Code of
Conduct (COCON) sourcebooks;

• the firm’s governing body understands that, once the opt-up takes effect, the notifying firm will not be able to
revert to its previous SMCR classification (as defined in SYSC 23 Annex 1) for at least one year.

It is a criminal offence, knowingly or recklessly, to give the FCA information that is materially false, misleading or
deceptive (see sections 398 and 400 of the Financial Services and Markets Act 2000). The notifying firm must
notify the FCA immediately if there is a change to the information in this form and/or if inaccurate information has
been provided.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries
or wish to exercise your rights.

Name of the authorised firm

Name of person signing on behalf of the authorised firm

Position

Signature

Date

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 5
 FCA 2018/XX

Part 2: Comes into force [ ] 20[ ] [main commencement date for solo-regulated firms]
 Application number
(for FCA use only)

The FCA has produced notes which will assist both the applicant firm and the candidate in answering the
questions in this form. Please read the notes, which are available on the FCA’s website at:
https://www.handbook.fca.org.uk/handbook/SUP/10C/Annex3D.html

Both the applicant and the candidate will be treated by the FCA as having taken these notes into
consideration when completing this form.

Long Form A – Solo-regulated firms (including EEA and third

country)
Application to perform controlled functions including senior management
functions

FCA Handbook Reference: SUP 10C Annex 3D

[Commencement Date]

Name of candidate
(to be completed by applicant firm)

Name of applicant firm

(as entered in 2.01)

Firm reference number

(as entered in 2.02)

Financial Conduct Authority

12 Endeavour Square
Canary Wharf
London E20 1JN
United Kingdom
Telephone +44 (0) 300 500 0597
E-mail [email protected]
Website http://www.fca.org.uk
Registered as a Limited Company in England and
Wales No 1920623. Registered Office as above

Long Form A – Solo-regulated firms (including EEA and third country) Page | 1
 Personal identification details Section 1

1.01 a Candidate Individual Reference

Number (IRN)

b OR name of previous regulatory

body

c AND previous reference number

(if applicable)

1.02 Title
(e.g. Mr, Mrs, Ms)

1.03 Surname

1.04 ALL forenames

1.05 Name commonly known by

1.06 Date of birth

(dd/mm/yyyy)

1.07 National Insurance number

1.08 Previous name

1.09 Date of name change

1.10 a Nationality

b Passport number
(if National Insurance number not
available)

1.11 Place of birth

1.12 Phone number

1.13 Email address

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 2
 1.14 a Private address

b
Postcode

Dates resident at this address

c From To PRESENT
(dd/mm/yyyy)

(If address has changed in the last three years, please provide addresses for the previous
three years.)

1.15 a Previous address 1

b
Postcode

Dates resident at this address

c From To
(dd/mm/yyyy)

1.15 a Previous address 2

b
Postcode

Dates resident at this address

c From To
(dd/mm/yyyy)

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 3
 Firm identification details Section 2

2.01 Name of firm making the application

2.02 Firm Reference Number (FRN)

2.03 a Who should the FCA contact at the firm in

relation to this application?

B Position

C Phone number

D E-mail

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 4
Arrangement and Senior Management Functions Section 3A

Complete this section if the application is for a senior management function. If you are submitting an
application for a controlled function at an appointed representative, then please complete Section 3B.

3A.01 Nature of the a Employee

arrangement
between the
candidate and the b Group employee
applicant firm.

Name of group

c Contract for services

d Partner

f Other

Give details

Proposed date of appointment

Length of appointment (if applicable)

3A.02 For applications from a single firm, please tick the boxes that correspond to the senior
management functions to be performed. If the senior management functions are to be performed
for more than one firm, please leave the boxes below blank and go to question 3A.04

Long Form A – Solo-regulated firms (including EEA and third country) Page | 5
 Tick (if applicable)

Description of senior Core firms

Function management function Enhanced
scope Effective
Limited EEA Third SMCR Date
UK core
scope core country firms
SMCR
SMCR SMCR branches
firms
firms firms

SMF 1 Chief Executive

SMF 2 Chief Finance

SMF 3 Executive Director

SMF 4 Chief Risk

SMF 5 Head of Internal Audit

SMF 7 Group Entity Senior

Manager

SMF 9 Chair of the Governing

Body

SMF10 Chair of the Risk

Committee

SMF11 Chair of the Audit

Committee

SMF12 Chair of the Remuneration

Committee

SMF13 Chair of the Nomination

Committee

SMF14 Senior Independent

Director

SMF16 Compliance Oversight

SMF17 Money Laundering

Reporting Officer

SMF18 Other overall responsibility

function

SMF19 Head of Third Country

Branch

SMF21 EEA Branch Senior

Manager

SMF24 Chief Operations

SMF27 Partner

SMF29 Limited scope function

(limited scope SMCR firms
only)

3A.03 Job title

Long Form A – Solo-regulated firms (including EEA and third country) Page | 6
Insurance Distribution
Will the candidate be responsible for insurance distribution at the firm? YES NO
(Note: Yes can only be selected if the individual is applying for a governing function (other than a non-executive director
function))

Mortgage Credit Directive

Will the candidate be responsible for Mortgage Credit Directive Intermediation at the firm? YES NO
(Note: Yes can only be selected if the individual is applying for a governing function (other than a non-executive director
function))

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 7
 3A.04 Complete this section only if the application is on behalf of more than one
firm.
List all firms within the group (including the firm entered in 2.01) for which the
candidate requires approval and the requested senior management function for
that firm. †
Firm Senior Responsible Responsible for
Reference Name of Management for insurance MCD credit Effective
Number firm Function Job title distribution? intermediation? date
a

I have supplied further information

 related to this page in Section 6 YES NO
YES

Long Form A – Solo-regulated firms (including EEA and third country) Page | 8
 Arrangements and controlled functions – Appointed Representatives
Section 3B

Complete this section if the application is for a controlled function at an appointed representative (AR). If you are
submitting an application for a senior management function, then please complete Section 3A.

For limited permission consumer credit firms that are also appointed representatives, only the customer function is
relevant in this section. For these firms, relevant senior management functions apply instead of the governing functions
(ie CF1 (AR), CF3 (AR), CF4 (AR) and CF5 (AR)). We do not expect this to apply to many firms.

3B.01 Nature of the

arrangement between
the candidate and the
applicant.

a Appointed representative/tied agent – customer function

AR firm name and reference

number

b Appointed representative/tied agent – governing function

AR firm name and reference

number

c Other

Give details

3B.02 For applications from a single firm, please tick the boxes that correspond to the controlled functions to be
performed. If the controlled functions are to be performed for more than one firm, please go to question
3B.05.
a Significant influence CF 1 (AR) Director function
functions
CF 3 (AR) Chief executive function
CF 4 (AR) Partner function
CF 5 (AR) Director of an unincorporated association function

b Senior Management SMF1 (AR) Chief Executive function

Functions
SMF3 (AR) Executive Director function
(This section is only SMF4 (AR) Partner function
applicable for limited
permission consumer
credit firms that are
ARs for other
businesses)

c Customer function CF 30 (AR) Customer function

3B.03 Effective date of controlled functions indicated

above

3B.04 Job title

Please refer to notes on the requirements for
submitting a CV

 I have supplied further information

related to this page in Section 6† YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 9
 3B.05 Complete this section only if the application is on behalf of more than one firm.
List all firms within the group (including the firm entered in 2.01) for which the candidate requires approval and
the requested controlled function for that firm. †
Firm
Reference Controlled
Number Name of firm function Job title Effective date
a

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 10
 Employment history in the past 5 years Section 4
N.B.: ALL gaps must be accounted for
4.01 Employment details (1)
a Period (dd/mm/yyyy) From To

b Nature of employment a Employed

b Self-employed
c Not employed
d Full-time education

If c or d is ticked,
please give details

c Name of employer

d Nature of business

e Previous / other names of

employer

f Last known address of employer

g Is/was employer regulated by a Name of regulatory body

regulatory body? YES NO

h Is/was employer an appointed If yes, of which firm?

representative/tied agent? YES NO

i Position held

j Responsibilities

k Reason for leaving: a Resignation

b Redundancy
c Retirement
d Termination/dismissal
e End of contract
f Other

Specify

Long Form A – Solo-regulated firms (including EEA and third country) Page | 11
4.02 Employment details (2)
a Period (dd/mm/yyyy) From To

b Nature of employment a Employed

b Self-employed
c Not employed
d Full-time education

If c or d is ticked,
please give details

c Name of employer

d Nature of business

e Previous / other names of

employer

f Last known address of employer

g Is/was employer regulated by a Name of regulatory body

regulatory body? YES NO

h Is/was employer an appointed If yes, of which firm?

representative/tied agent? YES NO

i Position held

j Responsibilities

k Reason for leaving: a Resignation

b Redundancy
c Retirement
d Termination/dismissal
e End of contract
f Other

If ‘other’, please specify

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 12
 Fitness and propriety Section 5

5.01 Criminal Proceedings

When answering the questions in this section the candidate should include matters whether in the UK or overseas. By
virtue of the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975, if the candidate is subject to the law of
England and Wales, candidate must disclose spent convictions and cautions (other than a protected conviction or
caution). By virtue of the Rehabilitation of Offenders Act 1974 (Exclusions and Exceptions) (Scotland) Order 2013 and the
Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) 1979, if the candidate is subject to the law of Scotland or
Northern Ireland, the candidate must disclose spent convictions (other than a protected conviction).

For the avoidance of doubt, references to the legislation above are references to the legislation as amended.

If any question has been answered ‘yes’ in Section 5, further details should be provided in Section 6

If there is any other information the candidate or the firm considers to be relevant to the application, it must be included in
Section 6

5.01.1a Has the candidate ever been convicted of any criminal offence
(whether spent or not and whether or not in the United Kingdom):
i. involving fraud, theft, false accounting, offences against
the administration of public justice (such as perjury,
perverting the course of justice and intimidation of
witnesses or jurors), serious tax offences or other
YES NO
dishonesty or
ii. relating to companies, building societies, industrial and
provident societies, credit unions, friendly societies,
insurance, banking or other financial services,
insolvency, consumer credit or consumer protection,
money laundering, market manipulations or insider
dealing?

Is the candidate currently the subject of any criminal proceedings,

b YES NO
whether in the UK or elsewhere?

c Has the candidate ever been given a caution in relation to any criminal
offence? YES NO

5.01.2 Has the candidate any convictions for any offences other than those in
5.01.1 above (excluding traffic offences that did not result in a ban
from driving or did not involve driving without insurance)? YES NO
5.01.3
Is the candidate the subject of any ongoing criminal investigation?

5.01.4 Has the candidate been ordered to produce documents pursuant to

any ongoing criminal investigation or been the subject of a search (with
or without a warrant) pursuant to any ongoing criminal investigation? YES NO
In answering question 5.01.4, you should include all matters even
where the candidate was not the subject of the investigation.

 I have supplied further information

related to this page in Section 6
YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 13
 5.01.5 Has any firm at which the candidate holds or has held a position of
influence ever:
(Please check the guidance notes for the meaning of ‘position of
influence’ in the context of the questions in this part of the form.)

a Been convicted of any criminal offence? YES NO

b Been summonsed, charged with or otherwise investigated or

prosecuted for any criminal offence? YES NO

c Been the subject of any criminal proceeding which has not resulted in
a conviction? YES NO

d Been ordered to produce documents in relation to any criminal

investigation or been the subject of a search (with or without a warrant) YES NO
in relation to any criminal investigation?

In answering question 5.01.5, you should include all matters even

when the summons, charge, prosecution or investigation did not result
in a conviction, and, in respect of 5.01.5d, even where the firm was not
the subject of the investigation. However, firms are not required to
disclose details of any specific individuals who were subject to historic
(as opposed to ongoing) criminal investigations, prosecutions,
summons or other historic criminal proceedings.

 I have supplied further information

related to this page in Section 6
YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 14
 5.02 Civil Proceedings

5.02.1 Has the candidate, ever been the subject of a judgement debt or
award against the candidate? (whether satisfied or not?) YES NO

Please give a full explanation of the events in questions.

The candidate should include all County Court Judgement(s) (CCJs)

made against the candidate, whether satisfied or not); and
i) the sum and date of all judgements debts, awards or CCJs (whether
satisfied or not); and
ii) the total number of all judgement debts, awards or CCJs ordered.

5.02.2 Has the candidate ever been party to any civil proceedings which
resulted in any order against the candidate (other than a judgement
debt or award referred to in 5.02.1 above)? (the candidate should YES NO
include, for example, injunctions and employment tribunal
proceedings.)

5.02.3 Is the candidate aware of:

a Any proceedings that have begun or anyone’s intention to begin

proceedings against the candidate, for a CCJ or another judgement YES NO
debt?

b More than one set of proceedings, or anyone’s intention to begin more

than one set of proceedings, that may lead to a CCJ or other YES NO
judgement debt?

YES NO

5.02.4 Does the candidate have any current judgement debts (including
CCJs) made under a court order still outstanding, whether in full or in YES NO
part?

5.02.5 Has the candidate ever failed to satisfy any such judgment debts
(including CCJs) made under a court order still outstanding, whether in YES NO
full or part, within one year of the order being made?

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 15
 5.02.6 Has the candidate ever:

a Filed for the candidate’s own bankruptcy or had a bankruptcy petition

served on the candidate? YES NO

b Been adjudged bankrupt? YES NO

c Been the subject of a bankruptcy restrictions order (including an

interim bankruptcy restrictions order) or offered a bankruptcy YES NO
restrictions undertaking?

d Made any arrangements with the candidate’s creditors, for example a

deed of arrangement or an individual voluntary arrangement (or in YES NO
Scotland a trust deed)?

e Had assets sequestrated? YES NO

f Been involved in any proceedings relating to the above matters even if

such proceedings did not result in the making of any kind of order
against the candidate or result in any kind of agreement with the YES NO
candidate?

5.02.7 Does the candidate, or any undertaking under their management, have
any outstanding financial obligations arising from regulated activities,
which have been carried out in the past (whether or not in the UK or YES NO
overseas)?

5.02.8 Has the candidate ever been adjudged by a court or tribunal (whether
criminal, civil or administrative) for any fraud, misfeasance, negligence,
wrongful trading or other misconduct? Or been found by a judge or YES NO
tribunal to have lied on oath and/or that their evidence was to be
disbelieved?

5.02.9 Is the candidate currently:

a Party to any civil proceedings (including those covered in 5.02.7

above)? YES NO

b Aware of anybody’s intention to begin civil proceedings against the

candidate? (Candidate should include any ongoing disputes whether
or not such dispute is likely to result in any order against the YES NO
candidate.)

5.02.10 During the period over which the candidate has held a position of
influence and/or in the 10 years after this, has any firm at which the YES NO
candidate holds or has held a position of influence ever been:

a Adjudged by a court civilly liable for any fraud, misfeasance, wrongful

trading or other misconduct? YES NO

b The subject of a judgement debt or award against the firm? (Candidate

should include all CCJs made against the firm, whether satisfied or YES NO
not.)

c Party to any other civil proceedings which resulted in an order against

the firm other than in relation to matters covered in 5.02.10a and YES NO
5.02.10b above?

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 16
 5.02.11 Is any firm at which the candidate currently holds or has held, within
the last 12 months from the date of the submission of this form, a
position of influence currently:

a a party to civil proceedings; and/or? YES NO

b aware of anyone’s intention to begin civil proceedings against

them? YES NO

5.02.12 Has any company, partnership or unincorporated association of

which the candidate is or has been a controller, director, senior
manager, partner or company secretary, in the UK or elsewhere, at
any time during their involvement, or within one year of such an YES NO
involvement, been put into liquidation, wound up, ceased trading,
had a receiver or administrator appointed or entered into any
voluntary arrangement with its creditors?

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 17
 5.03 Business and Employment Matters

5.03.1 Has the candidate ever been:

a Disqualified from acting as a director or similar position (one where the

candidate acts in a management capacity or conducts the affairs of YES NO
any company, partnership or unincorporated association)?

b The subject of any proceedings of a disciplinary nature (whether or not

the proceedings resulted in any finding against the candidate)? YES NO

c The subject of any investigation which has led or might lead to

disciplinary proceedings? YES NO

d Notified of any potential proceedings of a disciplinary nature against

the candidate? YES NO

e The subject of an investigation into allegations of misconduct or

malpractice in connection with any business activity? (This question
covers internal investigation by an authorised firm, as well as YES NO
investigation by a regulatory body, at any time.)

5.03.2 Has the candidate ever been refused entry to, or been dismissed,
suspended or requested to resign from, any professional, vocation,
office or employment, or from any fiduciary office or position of trust YES NO
whether or not remunerated?

5.03.3 Does the candidate have any material written complaints made against
the candidate by the candidate’s clients or former clients in the last five
years which the candidate has accepted, or which are awaiting YES NO
determination, or have been upheld – by an ombudsman or complaints
scheme?

 I have supplied further information

related to this page in Section 6 YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 18
 5.04 Regulatory Matters

5.04.1 In relation to activities regulated by the FCA or any other regulatory

body (see the guidance notes on Section 5), has:
• the candidate, or
• any company, partnership or unincorporated association of
which the candidate is or has been a controller, director,
senior manager, partner or company secretary, during the
candidate’s association with the entity and for a period of
three years after the candidate ceased to be associated with
it, ever –

a Been refused, had revoked, restricted, been suspended from or

terminated, any licence, authorisations, registration, notification, YES NO
membership or any other permission granted by any such body?

b Been criticised, censured, disciplined, suspended, expelled, fined or

been the subject of any other disciplinary or interventional action by YES NO
any such body?

c Received a warning (whether public or private) that such disciplinary or

interventional action may be taken against the candidate or the firm? YES NO

d Been the subject of an investigation by any regulatory body, whether

or not such an investigation resulted in a finding against the candidate YES NO
or the firm?

e Been required or requested to produce documents or any other

information to any regulatory body in connection with such an YES NO
investigation (whether against the firm or otherwise)?

f Been investigated or been involved in an investigation by an inspector

appointed under companies or any other legislation, or required to
produce documents to the Secretary of State, or any other authority, YES NO
under any such legislation?

g Ceased operating or resigned whilst under investigation by any such

body or been required to cease operating or resign by any regulatory YES NO
body?

h Decided, after making an application for any licence, authorisation,

registration, notification, membership or any permission granted by YES NO
any such body, not to proceed with it?

i Been the subject of any civil action related to any regulated activity
which has resulted in a finding by a court? YES NO

j Provided payment services or distributed or redeemed e-money on

behalf of a regulated firm or itself under any contractual agreement YES NO
where that agreement was terminated by the regulated firm?

k Been convicted of any criminal offence, censured, disciplined or

publicly criticised by any inquiry, by the Takeover Panel or any
governmental or statutory authority or any other regulatory body (other YES NO
than as indicated in this group of questions).

 I have supplied further information

related to this page in Section 6
YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 19
 5.04.2 In relation to activities regulated by the FCA or any other regulatory
body, has the candidate or any firm at which the candidate holds or
has held a position of influence at any time during and within one year
of the candidate’s association with the firm ever:

a Been found to have carried on activities for which authorisation or

registration by the FCA or any other regulatory body is required YES NO
without the requisite authorisations?

b Been investigated for the possible carrying on of activities requiring

authorisation or registration by the FCA or any other regulatory body
without the requisite authorisation whether or not such investigation YES NO
resulted in a finding against the candidate?

c Been found to have performed a senior management function or other

controlled function (or an equivalent function requiring approval by the YES NO
FCA or any other regulatory body) without the requisite approval?

d Been investigated for the possible performance of a senior

management function or other controlled function (or an equivalent
function requiring approval by the FCA or any other regulatory body) YES NO
without the requisite approval, whether or not such investigation
resulted in a finding against the candidate?

e Been found to have failed to comply with an obligation under the

Electronic Money Regulations 2011 or Payment Services Regulations
2009 to notify the FCA of the identity of a person acting in a position of YES NO
influence over its electronic money or payment services business?

f Been the subject of a prohibition order under section 56 FSMA, or

received a warning notice proposing that such a direction or order be YES NO
made, or received a private warning?

 I have supplied further information

related to this page in Section 6
YES NO

Long Form A – Solo-regulated firms (including EEA and third country) Page | 20
 5.05 Other Matters

5.05.1 Is the candidate, in the role to which the application relates, aware of
any business interests, employment obligations, or any other
circumstance which may conflict with the performance of the senior YES NO
management functions for which approval is now being sought?

5.05.2 Is the candidate or the firm aware of any other information relevant to
this notification that the FCA might reasonably expect from the
candidate? YES NO

5.05.3 Has the firm undertaken a criminal records check in accordance with
the requirements of the FCA?

Please note that a firm is required to request the fullest information

that it is lawfully able to obtain about the candidate under Part V of the
Police Act 1997 (Certificates of Criminal records, etc) and related YES NO
subordinated legislation of the UK or any part of the
UK before making the application. (SUP 10C.10)

If yes, please enter date the check was undertaken

Date (dd/mm/yy):

Note: if date is more than 3 months prior to current date or 3 months

prior to date of application submission or the check has not been
undertaken, please provide details why in Section 6.

 I have supplied further information

related to this page in Section 6
YES NO

5.05.4 Has / Have a reference or references been obtained from current or

previous employer(s) in accordance with the requirements of the FCA?
If No, please provide details why the reference or references has/have
not been obtained.
YES NO
Please note that a firm is required to use reasonable steps to obtain an
appropriate reference from any current or previous employer of the
candidate during the last 6 years (see SYSC 22). “Employer” has an
extended meaning for these purposes.

Long Form A – Solo-regulated firms (including EEA and third country) Page | 21
Supplementary information for Senior Management Functions Section 6

6.01 Please provide full details of:

a) why the candidate is competent and capable to carry out the controlled function(s) applied for;
b) why the appointment complements the firm's business strategy, activity and market in which it
operates;
c) how the appointment was agreed including details of any discussions at governing body level
(where applicable);
d) a list of all directorships currently or previously held by the candidate in the past 10 years (where
director has the meaning given in the Glossary); and

If there is any additional information indicated in previous sections or any other information the
6.02 candidate or the firm considers being relevant to this application it must be included here. (Please
also provide full details of any issues that could affect the Fitness and Propriety of the individual that arose
when leaving an employer listed in Section 4 or if any question has been answered ‘yes’ in Section 5)

Question Information

6.03 Firms must also provide the following supporting documents required with this form
(please tick)

Statement of responsibilities

Candidate’s Curriculum Vitae (C.V)

Role(s) description

Organisational chart

A description or copy of the candidate’s Skills Gap Analysis

A description or copy of the candidate’s Induction programme

A description or copy of the candidate's Learning and Development plan (including

the name of the individual responsible for monitoring the candidate's progress
against the development points and the time frame for completion)

A description or documentation setting out how the competency was assessed

(demonstrating competence and suitability mapped to the specific role and
responsibilities of the role).

6.04 In addition, enhanced scope SMCR firms must also provide:-

A copy of the firm’s management responsibilities map (SYSC 25 and SUP 10C.9)

A summary of any handover material (SYSC 25.9 and SUP 10C.10)

Long Form A – Solo-regulated firms (including EEA and third country) Page | 22
 Declarations and signatures Section 7
Declaration of Candidate
It is a criminal offence, knowingly or recklessly, to give the FCA information that is materially false, misleading or
deceptive (see sections 398 and 400 of the Financial Services and Markets Act 2000 – ‘FSMA’). Even if you believe or
know that information has been provided to the FCA before (whether as part of another application or otherwise) or is in
the public domain, you must nonetheless disclose it clearly and fully in this form and as part of this application – you
should not assume that the FCA will itself identify such information during the assessment of this application.

There will be a delay in processing the application if information is inaccurate or incomplete, and it may call into question
the suitability of the candidate and/or lead to the FCA exercising their powers (including but not limited to taking
disciplinary/ Enforcement action). You must notify the FCA immediately if there is a change to the information in this form
and/or if inaccurate information has been provided (insofar as the FCA is reasonably likely to consider the information
material).

The candidate confirms that the information provided in this application is accurate and complete to the best of his/her
knowledge and that he or she has read the notes to this form. The candidate will notify the FCA immediately if there is a
material change to the information provided.

The candidate confirms that the attached statement of responsibilities accurately reflects the aspects of the affairs of the
firm which it is intended that the candidate will be responsible for managing. The candidate confirms that they have
accepted all the responsibilities set out in this statement of responsibilities.

The candidate agrees that the FCA may use the address specified for the candidate in this form as the proper address
for service in the United Kingdom (as defined in the Financial Services and Markets Act 2000 (Service of Notice)
Regulations (SI 2001/1420)) to serve any notices on the candidate.

The candidate confirms that he or she understands the regulatory responsibilities of the proposed role as set out in the
rules of conduct in the FCA’s COCON or APER.

The candidate is aware that, while advice may be sought from a third party (e.g. legal advice), responsibility for the
accuracy of information, as well as the disclosure of relevant information, on the form is ultimately the responsibility of
those who sign the application.

In addition to other regulatory responsibilities, firms, and approved persons have a responsibility to disclose to the FCA
matters of which it would reasonably expect to be notified. Failure to notify the FCA of such information may lead to the
FCA taking disciplinary or other action against the Applicant and/or the candidate.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries or wish
to exercise your rights.

Tick here to confirm you have read and understood this declaration:

7.01 Name of candidate

7.02 Signature

Date

Long Form A – Solo-regulated firms (including EEA and third country) Page | 23
Declaration of Firm
It is a criminal offence, knowingly or recklessly, to give the FCA information that is materially false, misleading or
deceptive (see sections 398 and 400 of the Financial Services and Markets Act – ‘FSMA’). Even if you believe or know
that information has been provided to the FCA before (whether as part of another application or otherwise) or is in the
public domain, you must nonetheless disclose it clearly and fully in this form and as part of this application – you should
not assume that the FCA will itself identify such information during the assessment of this application.

There will be a delay in processing the application if information is inaccurate or incomplete, and it may call into question
the suitability of the candidate and/or lead to the FCA exercising their powers under FSMA (including but not limited to
taking disciplinary/ Enforcement action). You must notify the FCA immediately if there is a change to the information in
this form and/or if inaccurate information has been provided (insofar as the FCA is reasonably likely to consider the
information material).

In addition to other regulatory responsibilities, firms, and approved persons have a responsibility to disclose to the FCA,
matters of which it would reasonably expect to be notified. Failure to notify the FCA of such information may lead to the
FCA taking disciplinary or other action against the Applicant and/or the candidate.

The Applicant confirms that the information provided in this application is accurate and complete to the best of its
knowledge and that it has read the notes to this form. The Applicant will notify the FCA immediately if there is a material
change to the information provided.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries or wish
to exercise your rights.

Where applicable, the Applicant confirms that it has requested the fullest information that it is lawfully able to obtain
about the candidate under Part V of the Police Act 1997 and any related subordinate legislation of the UK or any part of
the UK, and (where available) has given due consideration to that information in determining that candidate to be fit and
proper.

In making this application the Applicant believes on the basis of due and diligent enquiry and, where applicable, by
reference to the criteria in FIT in the FCA Handbook that the candidate is a fit and proper person to perform the
controlled function(s) listed in section 3. The Applicant also believes, on the basis of due and diligent enquiry, that the
candidate is competent to fulfil the duties required in the performance of such function(s). Note: For EEA firms, this
would only apply to those firms undertaking any Non MiFID business.

The Applicant confirms that it has complied with its obligations under Equality and Diversity legislation when selecting the
candidate to perform the function(s) applied for.

The Applicant confirms that it has made the candidate aware of their regulatory responsibilities as set out in the rules of
conduct in the FCA’s COCON or APER.

The Applicant confirms that the statement of responsibilities submitted with this form accurately reflects the aspects of
the affairs of the firm which it is intended that the candidate will be responsible for managing.

The Applicant is aware that, while advice may be sought from a third party (e.g. legal advice), responsibility for the
accuracy of information, as well as the disclosure of relevant information, on the form is ultimately the responsibility of
those who sign the application.

In signing this form on behalf of the Applicant:

I confirm that the information in this form is accurate and complete to the best of my knowledge and belief and
that I have read the notes to this form.

I confirm that I have authority to make this application and provide the declarations given by the Applicant, and sign this
form, on behalf of the firm identified in Section 2.01 and/or each firm identified in Section 3.04. I also confirm that a copy
of this form, as submitted to the FCA, will be sent to each of those firms at the same time as submitting the form to the
FCA.

7.03 Name of the firm submitting the application

7.04 Name of person signing on behalf of the

Applicant

7.05 Job title

7.06 Signature

Date

Long Form A – Solo-regulated firms (including EEA and third country) Page | 24
 Application number
(for FCA use only)

The FCA has produced notes which will assist both the applicant firm and the candidate in answering the
questions in this form. Please read these notes, which are available on the FCA website at:
https://www.handbook.fca.org.uk/handbook/SUP/10C/Annex3D.html

Both the applicant firm and the candidate will be treated by the FCA as having taken these notes into
consideration when completing this form.

Short Form A – Solo-regulated firms (including EEA and third

country)
Application to perform controlled functions including senior management
functions
FCA Handbook Reference: SUP 10C Annex 3D

[Commencement Date]
Name of candidate
(to be completed by applicant firm)

Name of applicant firm

(as entered in 2.01)

Firm reference number

(as entered in 2.02)

Financial Conduct Authority

12 Endeavour Square
Stratford
London E20 1JN
United Kingdom
Telephone +44 (0) 300 500 0597
E-mail [email protected]
Website http://www.fca.org.uk
Registered as a Limited Company in England and
Wales No 1920623. Registered Office as above

Short Form A – Solo-regulated firms (including EEA and third country) Page | 1
 Personal identification details Section 1

1.01 a Candidate Individual Reference

Number (IRN)

b OR name of previous regulatory

body

c AND previous reference number

(if applicable)

1.02 Title
(e.g. Mr, Mrs, Ms)

1.03 Surname

1.04 ALL forenames

1.05 Name commonly known by

1.06 Date of birth

(dd/mm/yyyy)

1.07 National Insurance number

1.08 Previous name

1.09 Date of name change

1.10 a Nationality

b Passport number
(if National Insurance number not
available)

1.11 Place of birth

1.12 Phone number

1.13 Email address

 I have supplied further information

related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 2
 1.14 a Private address

b
Postcode

Dates resident at this address

c From To PRESENT
(dd/mm/yyyy)

(If address has changed in the last three years, please provide addresses for the previous three
years.)

1.15 a Previous address 1

b
Postcode

Dates resident at this address

c From To
(dd/mm/yyyy)

1.16 a Previous address 2

b
Postcode

Dates resident at this address

c From To
(dd/mm/yyyy)

 I have supplied further information

related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 3
 Firm identification details Section 2

2.01 Name of firm making the application

2.02 Firm Reference Number (FRN)

2.03 a Who should the FCA contact at the firm in

relation to this application?

b Position

c Phone number

d E-mail

 I have supplied further information

related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 4
Arrangement and Senior Management Functions Section 3A

Complete this section if the application is for a senior management function. If you are submitting an
application for a controlled function at an appointed representative, then please complete Section 3B.
3A.01 Nature of the a Employee
arrangement
between the
candidate and the b Group employee
applicant firm

Name of group

c Contract for services

d Partner

e Other

Give details

Proposed date of
appointment

Length of
appointment (if
applicable)

3A.02 For applications from a single firm, please tick the boxes that correspond to the senior
management functions to be performed. If the senior management functions are to be performed
for more than one firm, please go to question 3A.04

Short Form A – Solo-regulated firms (including EEA and third country) Page | 5
 Tick (if applicable)

Description of Senior Core firms

Function Management Function Enhanced
scope Effective
Limited EEA Overseas SMCR Date
UK core
scope core core SMCR firms
SMCR
SMCR SMCR firm
firm
firms firms

SMF 1 Chief Executive

SMF 2 Chief Finance

SMF 3 Executive Director

SMF 4 Chief Risk

SMF 5 Head of Internal Audit

SMF 7 Group Entity Senior

Manager

SMF 9 Chair of the Governing

Body

SMF10 Chair of the Risk

Committee

SMF11 Chair of the Audit

Committee

SMF12 Chair of the

Remuneration Committee

SMF13 Chair of the Nomination

Committee

SMF14 Senior Independent

Director

SMF16 Compliance Oversight

SMF17 Money Laundering

Reporting Officer

SMF18 Other overall

responsibility function

SMF19 Head of Third Country

Branch

SMF21 EEA Branch Senior

Manager

SMF24 Chief Operations

SMF27 Partner

SMF29 Limited scope function

(limited scope SMCR
firms only)

3A.03 Job title

Short Form A – Solo-regulated firms (including EEA and third country) Page | 6
Insurance distribution
Will the candidate be responsible for Insurance distribution at the firm? YES NO

(Note: Yes can only be selected if the individual is applying for a governing function (other than a non-executive director
function))

Mortgage Credit Directive

Will the candidate be responsible for Mortgage Credit Directive Intermediation at the firm? YES NO
(Note: Yes can only be selected if the individual is applying for a governing function (other than a non-executive director
function))

 I have supplied further information

related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 7
 3A.04 Complete this section only if the application is on behalf of more than one
firm.
List all firms within the group (including the applicant firm entered in 2.01) for
which the candidate requires approval and the requested senior management
function for that firm. †
Responsible Responsible
Firm Senior for insurance for MCD credit
Reference Management distribution intermediation Effective
Number Name of firm Function Job title ? date
a

 I have supplied further information

related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 8
 Arrangements and controlled functions – Appointed Representatives
Section 3B

Complete this section if the application is for a controlled function at an appointed representative (AR). If you are
submitting an application for a senior management function, then please complete Section 3A.

For limited permission consumer credit firms that are also appointed representatives, only the customer function is
relevant in this section. For these firms, relevant senior management functions apply instead of the governing functions
(ie CF1 (AR), CF3 (AR), CF4 (AR) and CF5 (AR)). We do not expect this to apply to many firms.

3B.01 Nature of the

arrangement between
the candidate and the
applicant.

a Appointed representative/tied agent – customer function

AR firm name and reference

number

b Appointed representative/tied agent – governing function

AR firm name and reference

number

c Other

Give details

3B.02 For applications from a single firm, please tick the boxes that correspond to the controlled functions to be
performed. If the controlled functions are to be performed for more than one firm, please go to question
3B.05.
a Significant influence CF 1 (AR) Director function
functions

CF 3 (AR) Chief executive function

CF 4 (AR) Partner function

CF 5 (AR) Director of an unincorporated association function

b Senior Management SMF1 (AR) Chief Executive function

Functions
SMF3 (AR) Executive Director function
(This section is only SMF4 (AR) Partner function
applicable for Limited
Permission Consumer
Credit Firms that are
ARs for other business)

c Customer function CF 30 (AR) Customer function

3B.03 Effective date of controlled functions indicated

above

3B.04 Job title

Please refer to notes on the requirements for
submitting a CV

Short Form A – Solo-regulated firms (including EEA and third country) Page | 9
  I have supplied further information
related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 10
 3B.05 Complete this section only if the application is on behalf of more than one firm.
List all firms within the group (including the firm entered in 2.01) for which the candidate requires approval and
the requested controlled function for that firm.
Firm
Reference Controlled
Number Name of firm function Job title Effective date
a

 I have supplied further information

related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 11
 Employment History Section 4
If there has been a change to the detail in this section since your last approval, you must submit a Long Form A
as opposed to a Short Form A informing the FCA of the revised detail.

Short Form A – Solo-regulated firms (including EEA and third country) Page | 12
 Fitness and Propriety Section 5

If there has been a change to the detail in this section since your last approval, you must submit a Long Form A
as opposed to a Short Form A informing the FCA of the revised detail.

5.1 Has the firm undertaken a criminal records check in accordance with
the requirements of the FCA?

Please note that a firm is required to request the fullest information

that it is lawfully able to obtain about the candidate under Part V of the
Police Act 1997 (Certificates of Criminal records, etc.) and related YES NO
subordinated legislation of the UK or any part of the
UK before making the application. (SUP 10C.10).1

If yes, please enter date the check was undertaken.

Date (dd/mm/yy):

Note: if date is more than 3 months prior to current date or 3 months

prior to date of application submission or the check has not been
undertaken, please provide details in Section 6.

5.2 Has / Have a reference or references been obtained from current or

previous employer(s) in accordance with the requirements of the FCA?

If no, please provide details why the reference or references has/have

not been obtained.

Please note that a firm is required to use reasonable steps to obtain an YES NO
appropriate reference from any current or previous employer of the
candidate during the last 6 years (see SYSC 22) “Employer” has an
extended meaning for these purposes.

References are not required if the candidate has been employed by

the same firm or group for 6 years or more.

 I have supplied further information

related to this page in Section 6 YES NO

Short Form A – Solo-regulated firms (including EEA and third country) Page | 13
Supplementary Information Section 6

6.01 Please provide full details of:

a) why the candidate is competent and capable to carry out the controlled function(s) applied for;
b) why the appointment complements the firm's business strategy, activity and market in which it
operates;
c) how the appointment was agreed including details of any discussions at governing body level
(where applicable);
6.02 If there is any additional information indicated in previous sections or any other information the
candidate or the firm considers being relevant to this application it must be included here. (Please
also provide full details of any issues that could affect the Fitness and Propriety of the individual that arose
when leaving an employer or if any question has been answered ‘yes’ in Section 5)

Question Information

6.03 For applications for senior management functions, firms must also provide the following supporting
documents with this form (please tick):
Statement of responsibilities

Candidate’s Curriculum Vitae (C.V)

Role(s) description

Organisational chart

A description or copy of the candidate’s Skills Gap Analysis.

A description or copy of the candidate’s Induction programme

A description or copy of the candidate's Learning and Development plan (including

the name of the individual responsible for monitoring the candidate's progress against
the development points and the time frame for completion)
A description or documentation setting out how the competency was assessed
(demonstrating competence and suitability mapped to the specific role and
responsibilities of the role).

6.04 In addition for applications for senior management functions, enhanced scope SMCR firms must also
provide (please tick);-

A copy of the firm’s management responsibilities map (as referred to in SYSC 25.1)

A summary of any handover material (as referred to in SYSC 25.9 and SUP 10C.10)

Short Form A – Solo-regulated firms (including EEA and third country) Page | 14
 Declarations and signatures Section 7
Declaration of Candidate
It is a criminal offence, knowingly or recklessly, to give the FCA information that is materially false, misleading or
deceptive (see sections 398 and 400 of the Financial Services and Markets Act 2000 – ‘FSMA’). Even if you believe or
know that information has been provided to the FCA before (whether as part of another application or otherwise) or is in
the public domain, you must nonetheless disclose it clearly and fully in this form and as part of this application – you
should not assume that the FCA will itself identify such information during the assessment of this application.

There will be a delay in processing the application if information is inaccurate or incomplete, and it may call into question
the suitability of the candidate and/or lead to the FCA exercising their powers (including but not limited to taking
disciplinary/Enforcement action). You must notify the FCA immediately if there is a change to the information in this form
and/or if inaccurate information has been provided (insofar as the FCA is reasonably likely to consider the information
material).

The candidate confirms that the information provided in this application is accurate and complete to the best of their
knowledge and that they have read the notes to this form. The candidate will notify the FCA immediately if there is a
material change to the information provided.

The candidate confirms that the attached statement of responsibilities accurately reflects the aspects of the affairs of the
firm which it is intended that the candidate will be responsible for managing. The candidate confirms that they have
accepted all the responsibilities set out in this statement of responsibilities.

The candidate agrees that the FCA may use the address specified for the candidate in this form as the proper address
for service in the United Kingdom (as defined in the Financial Services and Markets Act 2000 (Service of Notices)
Regulations (SI 2001/1420)) to serve any notices on the candidate.

For the purposes of complying with the Data Protection Act 1998, the personal information provided in this form will be
used by the FCA to discharge their statutory functions under the Financial Services and Markets Act 2000 and other
relevant legislation, and will not be disclosed for any other purpose without the permission of the candidate.

The candidate confirms that they understand the regulatory responsibilities of the proposed role as set out in the rules of
conduct in the FCA’s COCON or APER.

The candidate is aware that, while advice may be sought from a third party (e.g. legal advice), responsibility for the
accuracy of information, as well as the disclosure of relevant information, on the form is ultimately the responsibility of
those who sign the application.

In addition to other regulatory responsibilities, firms, and candidates/approved persons have a responsibility to disclose
to the FCA matters of which it would reasonably expect to be notified. Failure to notify the FCA of such information may
lead to the FCA taking disciplinary or other action against the Applicant and/or the candidate.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries or wish
to exercise your rights.

Tick here to confirm you have read and understood this declaration:

7.01 Name of candidate

7.02 Signature

Date

Short Form A – Solo-regulated firms (including EEA and third country) Page | 15
Declaration of Firm
It is a criminal offence, knowingly or recklessly, to give the FCA information that is materially false, misleading or
deceptive (see sections 398 and 400 of the Financial Services and Markets Act – ‘FSMA’). Even if you believe or know
that information has been provided to the FCA before (whether as part of another application or otherwise) or is in the
public domain, you must nonetheless disclose it clearly and fully in this form and as part of this application – you should
not assume that the FCA will itself identify such information during the assessment of this application. If there is any
doubt about the relevance of information, it should be included.

There will be a delay in processing the application if information is inaccurate or incomplete, and it may call into question
the suitability of the candidate and/or lead to the FCA exercising their powers under FSMA (including but not limited to
taking disciplinary/Enforcement action). You must notify the FCA immediately if there is a change to the information in
this form and/or if inaccurate information has been provided (insofar as the FCA is reasonably likely to consider the
information material).

In addition to other regulatory responsibilities, firms, and candidates/approved persons have a responsibility to disclose
to the FCA matters of which it would reasonably expect to be notified. Failure to notify the FCA of such information may
lead to the FCA taking disciplinary or other action against the Applicant and/or the candidate.

The Applicant confirms that the information provided in this application is accurate and complete to the best of its
knowledge and that it has read the notes to this form. The Applicant will notify the FCA immediately if there is a material
change to the information provided. The Applicant is aware that, while advice may be sought from a third party (e.g. legal
advice), responsibility for the accuracy of information, as well as the disclosure of relevant information, on the form is
ultimately the responsibility of those who sign the application.

Where applicable, the Applicant confirms that it has requested the fullest information that it is lawfully able to obtain
about the candidate under Part V of the Police Act 1997 and any related subordinate legislation of the UK or any part of
the UK, and (where available) has given due consideration to that information in determining that candidate to be fit and
proper.

In making this application the Applicant believes on the basis of due and diligent enquiry and, where applicable, by
reference to the criteria in FIT in the FCA handbook that the candidate is a fit and proper person to perform the controlled
function(s) listed in Section 3.

The Applicant also believes, on the basis of due and diligent enquiry, that the candidate is competent to fulfil the duties
required in the performance of such function(s). Note: For EEA firms, this would only apply to those firms undertaking
any non MiFID business.

The Applicant confirms that it has complied with its obligations under equality and diversity legislation when selecting the
candidate to perform the function(s) applied for.

The Applicant confirms that it has made the candidate aware of their regulatory responsibilities as set out in the rules of
conduct in the FCA’s COCON or APER.

The Applicant confirms that the statement of responsibilities submitted with this form accurately reflects the aspects of
the affairs of the firm which it is intended that the candidate will be responsible for managing.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries or wish
to exercise your rights.

In signing this form on behalf of the Applicant firm:

I confirm that the information in this form is accurate and complete to the best of my knowledge and belief and
that I have read the notes to this form.

I confirm that I have authority to make this application and provide the declarations given by the Applicant, and sign this
form, on behalf of the firm identified in Section 2.01 and/or each firm identified in Section 3.04. I also confirm that a copy
of this form, as submitted to the FCA, will be sent to each of those firms at the same time as submitting the form to the
FCA.

7.03 Name of the firm submitting the application

7.04 Name of person signing on behalf of the

firm

7.05 Job title

7.06 Signature

Date

Short Form A – Solo-regulated firms (including EEA and third country) Page | 16
 Application number
(for FCA use only)

The FCA has produced notes which will assist both the applicant firm and the candidate in answering the
questions in this form. Please read these notes, which are available on the FCA website at
https://www.handbook.fca.org.uk/handbook/SUP/10C/Annex7D.html

Both the applicant firm and the candidate will be treated by the FCA as having taken these notes into
consideration when completing this form.

Form E -
Internal transfer of a person performing a
controlled function for solo-regulated firms
(including EEA and third country)

FCA Handbook Reference: SUP 10C Annex 7D

[Commencement Date]

Name of candidate
(to be completed by applicant firm)

Name of firm
(as entered in 2.01)

Financial Conduct Authority

12 Endeavour Square
Stratford
London E20 1JN
United Kingdom
Telephone +44 (0) 300 500 0597
E-mail [email protected]
Website http://www.fca.org.uk
Registered as a Limited Company in England
and Wales No 1920623. Registered Office as
above

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 1 of 14
 Personal identification details Section 1

1.01 Individual Reference Number (IRN)

1.02 Title
(e.g. Mr, Mrs, Ms)

1.03 Surname

1.04 ALL forenames

1.05 Date of birth

1.06 National Insurance number

1.08 Phone number

1.09 Email address

Firm identification details Section 2

2.01 Name of applicant firm

2.02 Firm Reference Number (FRN)

2.03 a Who should the FCA contact at the applicant firm

in relation to this application?

B Position

C Phone number

D E-mail

 I have supplied further information

related to this page in Section 6 YES NO

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 2 of 14
 Senior management functions to cease Section 3

3.01 List all senior management functions which the approved person is ceasing to perform. The effective date is
the date the person will cease to perform the functions.

Senior Management
FRN Name of firm Function Effective date
a

 I have supplied further information

related to this page in Section 7 YES NO

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 3 of 14
Senior management functions Section 4A

Complete this section if the application is for a senior management function. If you are submitting an application for a
controlled function at an appointed representative, then please complete Section 4B.
4A.01 Nature of the
arrangement a Employee
between the
candidate and the
b Group employee
applicant.

Name of group

c Contract for services

d Partner

e Other

Give details

Proposed date of appointment

Length of appointment (if applicable)

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 4 of 14
 4A.02 For applications from a single firm, please tick the boxes that correspond to the senior management functions
to be performed.
If the senior management functions are to be performed for more than one firm, please go to question 4.04

Function Description of senior management function Tick (if Effective Date

applicable)

SMF 1 Chief Executive

SMF 2 Chief Finance

SMF 3 Executive Director

SMF 4 Chief Risk r

SMF 5 Head of Internal Audit

SMF 7 Group Entity Senior Manager

SMF 9 Chair of the governing body

SMF10 Chair of the Risk Committee

SMF11 Chair of the Audit Committee

SMF12 Chair of the Remuneration Committee

SMF13 Chair of the Nomination Committee

SMF14 Senior Independent Director

SMF16 Compliance Oversight

SMF17 Money Laundering Reporting Officer (MLRO)

SMF18 Other overall responsibility function

SMF19 Head of Overseas Branch

SMF21 EEA Branch Senior Manager

SMF24 Chief Operations

SMF27 Partner

SMF29 Limited scope function (limited scope firms only)

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 5 of 14
 4A.03 Job title

4A.04 Insurance distribution

Will the candidate be responsible for Insurance distribution at the firm? YES NO
(Note: Yes can only be selected if the individual is applying for a governing function)

4A.05 Mortgage Credit Directive

Will the candidate be responsible for Mortgage Credit Directive Intermediation at the firm? YES NO

(Note: Yes can only be selected if the individual is applying for a governing function (other than a non-executive
director function))

 I have supplied further information

related to this page in Section 6 YES NO

4A.06 Has the firm undertaken a criminal records check in accordance with the requirements of the FCA?
Please note that a firm is required under FCA rules, to obtain the fullest information that it is lawfully able to obtain
about the candidate under Part V of the Police Act 1997 (Certificates of Criminal records, etc) and related
subordinated legislation of the UK or any part of the UK before making the application (SUP 10C.10).
If yes, please enter date the criminal records check was undertaken
Date (dd/mm/yy):
Note: if date is more than 3 months prior to current date or 3 months prior to date of application submission
or the check has not been undertaken, please provide details why in section 5.

 I have supplied further information

related to this page in Section 5
YES NO

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 6 of 14
 4A.04 List all firms within the group (including the firm entered in 2.01) for which the applicant requires
approval and the requested senior management function for that firm.
Firm
Reference Senior Management Job title Effective
Number Name of firm Function (mandatory) date
A

4A.05
Has / Have a reference or references been obtained from current or
previous employer(s) in accordance with the requirements of the FCA.
If No, please provide details why the reference or references has/have
not been obtained. YES NO

Please note that a firm is required to use reasonable steps to obtain an

appropriate reference from any current or previous employer of the
candidate during the last 6 years (see SYSC 22). “Employer” has an
extended meaning for these purposes.

 I have supplied further information

related to this page in Section 6 YES NO

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 7 of 14
 Controlled functions – Appointed Representatives Section 4B

Complete this section if the application is for a controlled function at an appointed representative (AR). If you are
submitting an application for a senior management function then please complete Section 4A.

For limited permission consumer credit firms that are also appointed representatives, only the customer function is
relevant in this section. For these firms, relevant senior management functions apply instead of the governing functions
(ie CF1 (AR), CF3 (AR), CF4 (AR) and CF5 (AR)). We do not expect this to apply to many firms.

4B.01 Nature of the

arrangement between
the candidate and the
applicant.

a Appointed representative/tied agent – customer function

AR firm name and reference

number

b Appointed representative/tied agent – governing function

AR firm name and reference

number

c Other

Give details

4B.02 For applications from a single firm, please tick the boxes that correspond to the controlled functions to be
performed. If the controlled functions are to be performed for more than one firm, please go to question
3B.05.
a Significant influence CF 1 (AR) Director function
functions
CF 3 (AR) Chief executive function
CF 4 (AR) Partner function
CF 5 (AR) Director of an unincorporated association function

b Senior Management SMF1 (AR) Chief Executive function

Functions
SMF3 (AR) Executive Director function
(This section is only SMF4 (AR) Partner function
applicable for limited
permission consumer
credit firms that are
ARs for other
businesses)

c Customer function CF 30 (AR) Customer function

4B.03 Effective date of controlled functions indicated

above

4B.04 Job title

Please refer to notes on the requirements for
submitting a CV

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 8 of 14
 4B.05 Complete this section only if the application is on behalf of more than one firm.
List all firms within the group (including the firm entered in 2.01) for which the candidate requires approval and
the requested controlled function for that firm.
Firm
Reference Controlled Job title
Number Name of firm function Effective date
a

 I have supplied further information

related to this page in Section 6 YES NO

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 9 of 14
Supplementary information for Senior Management Functions
Section 5

5.01 Please provide full details of:

a) why the candidate is competent and capable to carry out the controlled function(s) applied for;
b) why the appointment complements the firm's business strategy, activity and market in which it
operates;
c) how the appointment was agreed including details of any discussions at governing body level
(where applicable);

5.02 If there is any additional information indicated in previous sections or any other information the
candidate or the firm considers being relevant to this application it must be included here.

Question Information

5.03 Firms must also provide the following supporting documents required with this form (please tick)

Statement of responsibilities

Candidate’s Curriculum Vitae (C.V)

Role(s) description

Organisational chart

A description or copy of the candidate’s Skills Gap Analysis.

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 10 of 14
 A description or copy of the candidate’s Induction programme

A description or copy of the candidate's Learning and Development plan (including the name
of the individual responsible for monitoring the candidate's progress against the development
points and the time frame for completion)

A description or documentation setting out how the competency was assessed (demonstrating
competence and suitability mapped to the specific role and responsibilities of the role).

5.04 In addition, an enhanced scope SMCR firm must provide:

A copy of the firm’s management responsibilities map (SYSC 25, where applicable.

A summary of any handover material (SYSC 25.9 and SUP 10C.10) This requirement does not
apply to all firms.

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 11 of 14
 Declarations and signatures Section 6
Declaration of Candidate
Knowingly or recklessly giving the FCA information which is false or misleading in a material particular may be a criminal
offence (section 398 and 400 of the Financial Services and Markets Act 2000 – ‘FSMA’). It should not be assumed that
information is known to the FCA merely because it is in the public domain or has previously been disclosed to the FCA or
another regulatory body. If there is any doubt about the relevance of information, it should be included.
In addition to other regulatory responsibilities, firms, senior managers and other approved persons have a responsibility
to disclose to the FCA matters of which it would reasonably expect to be notified. Failure to notify the FCA of such
information may lead to the FCA taking disciplinary or other action against the firm and/or individuals.
The candidate confirms that the attached statement of responsibilities accurately reflects the aspects of the affairs of the
firm which it is intended that the candidate will be responsible for managing. The candidate confirms that they have
accepted all the responsibilities set out in the statement of responsibilities.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries or wish
to exercise your rights.
In signing the form below:
a) I authorise the FCA to make such enquiries and seek such further information as it thinks appropriate in the
course of verifying the information given in this form. Candidates may be required to apply for a criminal
records search to be made as to whether any criminal records are held in relation to them and to obtain a
certificate (where such certificate can be obtained) and to disclose the result of that search to the firm
submitting this application.
b) I confirm that the information in this form is accurate and complete to the best of my knowledge and belief
and that I have read the notes to this form.
c) I confirm that I understand the regulatory responsibilities of my proposed role as set out in the rules of
conduct in the FCA’s COCON or APER.
d) I confirm that the statement of responsibilities submitted with this form accurately reflects the aspects of the
affairs of the firm which it is intended that I will be responsible for managing. I confirm that I have accepted all
the responsibilities set out in this statement of responsibilities.

Tick here to confirm you have read and understood this declaration:
6.01 Candidate's full name

6.02 Signature

Date

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 12 of 14
Declaration of Firm
Knowingly or recklessly giving the FCA information which is false or misleading in a material particular may be a criminal
offence (sections 398 and 400 of the Financial Services and Markets Act 2000 – ‘FSMA’). SUP 15.6 of the FCA
Handbook require a firm to take reasonable steps to ensure the accuracy and completeness of information given to the
FCA and to notify the FCA immediately if materially inaccurate information has been provided.
In addition to other regulatory responsibilities, firms, senior managers and other approved persons have a responsibility
to disclose to the FCA matters of which it would reasonably expect to be notified. Failure to notify the FCA of such
information may lead to the FCA taking disciplinary or other action against the firm and/or individuals.
It should not be assumed that information is known to the FCA merely because it is in the public domain or has
previously been disclosed to the FCA or another regulatory body. If there is any doubt about the relevance of
information, it should be included.
In making this application the firm believes on the basis of due and diligent enquiry and by reference to the criteria in FIT
in the FCA Handbook that the candidate is a fit and proper person to perform the senior management functions(s) listed
in Section 3. The firm also believes, on the basis of due and diligent enquiry, that the candidate is competent to fulfil the
duties required in the performance of such function(s).
IF UNDERTAKING ANY NON MiFID BUSINESS FOR WHICH THE FIRM HAS NOT PREVIOUSLY APPLIED FOR
AUTHORISATION, PLEASE ALSO COMPLETE THE FOLLOWING
The firm also believes, on the basis of due and diligent enquiry, that the candidate is competent to fulfil the
duties required of such function(s). YES NO
If the firm confirms that it has had sight of a criminal records certificate prepared within the past 3 months in relation to
the candidate and has given due consideration to the information contained in that certificate in determining that
candidate to be fit and proper. Alternatively, where a certificate is not obtained the firm has provided an explanation in
Section 5.
For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries or wish
to exercise your rights.

In signing this form on behalf of the firm:

a) I confirm that the information in this form is accurate and complete to the best of my knowledge and belief
and that I have read the notes to this form.
b) I confirm that I have authority to make this application and provide the declarations given by the firm, and
sign this form, on behalf of the firm identified in Section 2.01 and/or each firm identified in Section 4.04. I also
confirm that a copy of this form, as submitted to the FCA, will be sent to each of those firms at the same time as
submitting the form to the FCA.
c) I confirm the candidate has been made aware of the regulatory responsibilities of the proposed role as set out
in the rules of conduct in the FCA’s COCON or APER.
d) I confirm that that the statement of responsibilities submitted with this form accurately reflects the aspects of
the affairs of the firm which it is intended that the candidate will be responsible for managing.

6.03 Name of the firm submitting the application

6.04 Name of person signing on behalf of the firm

6.05 Job title

6.06 Signature

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 13 of 14
Date

Form E - Internal transfer of a person performing a controlled function for solo-regulated firms (including EEA and third
country) Page 14 of 14
 Application number or IRN
(for FCA use only)

Senior Managers Regime:

Statement of Responsibilities for solo-regulated firms
This form applies to solo-regulated firms. It does not apply to dual regulated firms or appointed
representatives.
This is a statement provided under section 60(2A) of the Financial Services and Markets Act 2000
(Applications for approval), including a statement revised under section 62A (Changes in
responsibilities of senior managers).

For candidates for approval, this form must be submitted as an attachment to a Form A application or
a Form E application.

For significant changes to an existing statement of responsibilities, this form must be submitted as an
attachment to a Form J notification or a Form I application or variation.
FCA Handbook Reference: SUP 10C Annex 10D.

[Commencement Date]

Name of individual
(to be completed by firm)

Name of firm
(as entered in 2.01)

Financial Conduct Authority

12 Endeavour Square
Stratford
London E20 1JN
United Kingdom
Telephone +44 (0) 300 500 0597
E-mail [email protected]
Website http://www.fca.org.uk
Registered as a Limited Company in England
and Wales No 1920623. Registered Office as
above

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 1

 Personal identifications details Section 1

1.01 Individual Reference Number (IRN)

1.02 Title
(e.g. Mr, Mrs, Ms)

1.03 Surname

1.04 ALL forenames

1.05 Date of birth (dd/mm/yyyy)

1.06 National Insurance number

Firm identification details Section 2

2.01 Name of firm

2.02 Firm Reference Number (FRN)

2.03 a Who should the FCA contact at the firm in

relation to this statement of responsibilities?

b Position

c Telephone

e E-mail

 I have supplied further information

related to this page in Section 4 YES NO

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 2

 Senior Management Functions Section 3

A statement of responsibilities should be drafted to clearly show the responsibilities that the candidate or senior
manager is to perform as part of their senior management function and how they fit in with the firm’s overall
governance and management arrangements. If the firm is an enhanced scope SM&CR firm, the statement of
responsibilities should also be consistent with the firm’s management responsibilities map.
A statement of responsibilities should be drafted in such a way as to be practical and useable by regulators. The
FCA considers that this would be achieved by succinct, clear descriptions of each responsibility which avoid
unnecessary detail. Firms have the opportunity to provide details of each responsibility allocated to an individual
using the free text boxes in this form, however, FCA would not usually expect the description of each
responsibility to exceed 300 words.
A statement of responsibilities must be a self-contained document. There should be one statement per senior
manager per firm. Where an individual performs a senior management function on behalf of more than one firm
within a group, one statement of responsibilities is required for each firm. Any supplementary information may be
provided in Section 4 (or if submitting electronically, in a single attachment). A statement of responsibilities must
not cross refer to other documents, attachments or links.

If the FCA considers that the statement of responsibilities is not sufficiently clear to be practical and usable, it
could be challenged as part of a candidate’s application for approval, or in ongoing supervision.

Details of the individual’s responsibilities should be set out in Sections 3.2 to 3.4, as appropriate:
• Section 3.2 covers prescribed responsibilities required by regulators to be allocated to one or more
senior managers. This section is not applicable to limited scope SMCR firms or EEA core SMCR
branches.
• Section 3.3 covers having overall responsibility for each of the business areas, activities, and
management functions of the firm. This section applies to enhanced scope SMCR firms only.
• Section 3.4 covers anything else, not otherwise included, for which a candidate or senior manager is to
be responsible as part of their FCA senior management function(s) role. This section applies to all
firms.

3.1 Effective date and relevant Senior Management Functions

3.1.1 Please state the effective date of this statement of responsibilities:

Please note that where this is a revised statement of responsibilities, i.e. since the granting of the application,
there has been a significant change in the aspects of the firm’s affairs which the individual is responsible for
managing in performing the function (for example, a change in allocation of responsibilities within the firm, or the
senior manager is applying for a new or additional senior management function), then this statement of
responsibilities supersedes any previous versions.

3.1.2 List all senior management functions which the candidate or senior manager is to perform and the effective
date the candidate or senior manager commenced or will commence the performance of the functions.

Senior Description of Tick SMF applied for or held

management senior management
function function

Core firms
Enhanced
Effective
Limited EEA Third SMCR
UK core Date
scope core country firms
SMCR
SMCR SMCR branches
firms
firms firms

SMF 1 Chief Executive

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 3

SMF 2 Chief Finance

SMF 3 Executive Director

SMF 4 Chief Risk Officer

SMF 5 Head of Internal

Audit

SMF 7 Group Entity Senior

Manager

SMF 9 Chair of the

Governing Body

SMF10 Chair of the Risk

Committee

SMF11 Chair of the Audit

Committee

SMF12 Chair of the

Remuneration
Committee

SMF13 Chair of the

Nomination
Committee

SMF14 Senior Independent

Director

SMF16 Compliance
Oversight

SMF17 Money Laundering

Reporting Officer

SMF18 Other overall

responsibility
function

SMF19 Head of Overseas

Branch

SMF21 EEA Branch Senior

Manager

SMF24 Chief Operations

SMF27 Partner

SMF29 Limited scope

function (limited
scope SMCR firms
only)

This statement of responsibilities is considered to automatically include the existing legal and regulatory
obligations where they exist for these roles and functions. For example, certain specific responsibilities of a

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 4

director are set out in company law. Such responsibilities do not need to be recorded in this statement, but any
additional responsibilities should be recorded in the sections below.

3.2 Prescribed Responsibilities

This section deals with those prescribed responsibilities to be allocated to one or more senior managers. The
allocation of responsibilities under a statement of responsibilities should not reduce or alter the scope of any
applicable prescribed responsibilities. Limited scope SMCR firms and EEA core SMCR branches are not required
to assign prescribed responsibilities and should leave this section blank.

If the responsibilities that the candidate or senior manager is to carry out as described in the statement of
responsibilities go beyond those set out in this section, those additional responsibilities should not reduce or alter
the scope of the prescribed requirements set out in this section (SUP 10C.11)

3.2.1 Please indicate below which of the responsibilities listed are/will be allocated to the candidate or senior
manager if any, and whether or not they are shared. Different prescribed responsibilities apply to different
types of firm as indicated in the table below.
If the individual has not been allocated a prescribed responsibility, please go to Section 3.3.

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 5

 Ref Prescribed Responsibility (Applicable to UK Core SMCR firms ) Does this Is this prescribed
prescribed responsibility
responsibility shared?
apply?
a Responsibility for the firm’s performance of its obligations under the senior managers regime Yes / No Yes / No

b Responsibility for the firm’s performance of its obligations under the employee certification regime Yes / No Yes / No
b-1 Responsibility for the firm’s obligations in relation to individual conduct rules for: Yes / No Yes / No
(a) training; and
(b) reporting

d Overall responsibility for the firm’s policies and procedures for countering the risk that the firm might be Yes / No Yes / No
used to further financial crime
z Responsibility for the firm’s compliance with CASS Yes / No Yes / No
za Responsibility for an AFM’s value for money assessments, independent director representation and Yes / No Yes / No
acting in investors’ best interests

Ref Prescribed Responsibility (These should be applied by enhanced scope SMCR firms only, in Does this Is this prescribed
addition to the prescribed responsibilities for core SMCR firms) prescribed responsibility
responsibility shared?
apply?
c Compliance with the rules relating to the firm’s management responsibilities map Yes / No Yes / No

j Responsibility for: Yes / No Yes / No

(a) safeguarding the independence of; and
(b) oversight of the performance of;
the internal audit function, in accordance with the internal audit requirements for SMCR firms.
k Responsibility for: Yes / No Yes / No
(a) safeguarding the independence of; and
(b) oversight of the performance of;
the compliance function in accordance with the compliance requirements for SMCR firms.
l Responsibility for: Yes / No Yes / No

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 6

 Ref Prescribed Responsibility (These should be applied by enhanced scope SMCR firms only, in Does this Is this prescribed
addition to the prescribed responsibilities for core SMCR firms) prescribed responsibility
responsibility shared?
apply?
(a) safeguarding the independence of; and
(b) oversight of the performance of;
the risk function, in accordance with the risk control requirements for SMCR firms.
j-3 Responsibility for taking reasonable steps to ensure that every person involved in the performance of Yes / No Yes / No
the firm’s internal audit function is independent from the persons who perform external audit, including:

(a)supervision and management of the work of outsourced internal auditors; and

(b)management of potential conflicts of interest between the provision of external audit and internal
audit services.

t Responsibility for the development and maintenance of the firm’s business model by the governing Yes / No Yes / No
body.
s Responsibility for: Yes / No Yes / No
(a) managing the firm’s internal stress tests; and
(b) ensuring the accuracy and timeliness of information provided to the FCA and other
regulatory bodies for the purposes of stress testing.

Ref Prescribed Responsibility (Applicable to non-EEA branches) Does this Is this prescribed
prescribed responsibility
responsibility shared?
apply?
a Responsibility for the firm’s performance of its obligations under the senior managers regime Yes / No Yes / No
b Responsibility for the firm’s performance of its obligations under the employee certification regime Yes / No Yes / No
b-1 Responsibility for the firm’s obligations in relation to individual conduct rules for: Yes / No Yes / No
(a) training; and
(b) reporting
d Responsibility for the firm’s policies and procedures for countering the risk that the firm might be used Yes / No Yes / No

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 7

 Ref Prescribed Responsibility (Applicable to non-EEA branches) Does this Is this prescribed
prescribed responsibility
responsibility shared?
apply?
to further financial crime
z Responsibility for the firm’s compliance with CASS Yes / No Yes / No
aa Responsibility for the management of the firm’s risk management processes in the UK Yes / No Yes / No
ff Responsibility for the firm’s compliance with the UK regulatory system applicable to the firm Yes / No Yes / No
ee Responsibility for the escalation of correspondence from the PRA, FCA and other regulators in respect Yes / No Yes / No
of the firm to the governing body and/or the management body, or where appropriate, of the parent
undertaking or holding company of the firm’s group.

3.2.2 If necessary, please provide additional information about each prescribed responsibility, including:

• A breakdown of the different components and tasks which the responsibility encompasses; and

• If applicable, details of any sharing arrangements including, if known, the name(s), IRN(s) and/or job title(s) of the individual(s) with whom the candidate or senior manager
is or will be sharing this prescribed responsibility. The responsibility should be recorded in the same way in the statements of responsibilities for each individual.

Additional information must be relevant, succinct and not dilute or undermine the prescribed responsibility.

Ref Prescribed Responsibility Further Relevant Details

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 8

  I have supplied further information
related to this page in Section 4 YES NO

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 9

3.3 Overall Responsibility
This section deals with having overall responsibility for any of the business areas, activities, or management
functions of the firm. This section only applies to enhanced scope SMCR firms. If you are not an enhanced scope
SMCR firm, you should leave this section blank.

3.3.1 Overall Responsibility

By overall responsibility we mean the ultimate responsibility (under the governing body) for managing or
supervising that function, and primary and direct responsibility for briefing and reporting to the governing body
about that function and putting matters for decision about that function to the governing body of the firm.

(SYSC24)

If the individual has overall responsibility for any or part of the business areas, activities, or management
functions of a firm, please provide details of each in the table below.
Where responsibilities are shared (for example, a responsibility may be shared as part of a job share or where
departing and incoming senior managers work together temporarily as part of a handover), please provide details
of any sharing arrangements including, if known, the name(s), IRN(s) and/or job title(s) of the individual(s) you
are sharing this responsibility with. The responsibility should be recorded in the same way in the statement of
responsibilities for each individual.
If the individual does not have overall responsibility for a business area, activity or management function of the
firm, please go to Section 3.4 below.

A firm may wish to refer to SYSC 25 Annex 1G (replicated in Annex A of this statement of responsibilities) to help
it make sure it has not failed to allocate overall responsibility for a particular activity of the firm. Please note that
the FCA does not require firms to organise themselves by the functions in SYSC 4 Annex 1G, and that the Annex
is not comprehensive. It is important that a firm does not fail to allocate overall responsibility for business areas,
activities and management functions, in line with SYSC 4.

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 10

Please provide a title for Please provide further details of this overall responsibility. Is this overall responsibility
this overall responsibility shared?
If ‘Yes’ please provide, the
name(s), IRN(s) and/or job
title(s) of the individual(s) you
are sharing this responsibility
with (where known)
Yes / No

Yes / No

Yes / No

Yes / No

 I have supplied further information

related to this page in Section 4 YES NO

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 11

3.4 Other Responsibilities
3.4.1 Please set out below any additional responsibility not otherwise recorded in this statement, for which a candidate or senior manager is to be responsible as part of
their FCA senior management function(s). For core SMCR firms and limited scope SMCR firms, these may include responsibilities for managing aspects of the
business. For enhanced scope SMCR firms, they could be responsibilities outside the normal course of business such as those linked to high profile projects or
initiatives which are not documented as Overall Responsibilities. This section applies to all firms.
Where responsibilities are shared (for example, a responsibility may be shared as part of a job share or where departing and incoming senior managers work together
temporarily as part of a handover), please provide details of any sharing arrangements including, if known, the name(s), IRN(s) and/or job title(s) of the individual(s)
the candidate or senior manager will be sharing this responsibility with. The responsibility should be recorded in the same way in the statements of responsibilities for
each individual.

Please provide a title for this other Please provide further details of this other responsibility Is this other responsibility
responsibility shared?
If ‘Yes’ please provide ,the
name(s), IRN(s) and/or job title(s)
of the individual(s) you are
sharing this responsibility with
(where known)
Yes / No

Yes / No

Yes / No

Yes / No

I have supplied further information

 YES NO
related to this page in Section 4

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 12

 Supplementary Information Section 4

4.1 Is there any other information the individual or the firm considers to be
YES NO
relevant?
If yes, please provide details below or on a separate sheet of paper and clearly identify the section and question
to which the additional information relates.

Question Information

4.2 How many additional sheets are being submitted?

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 13

ANNEX A

SYSC 25 The main business activities and functions of a SMCR firm.

Annex 1G

Business areas and Explanation

management functions

(1) Payment services This means:

(1) payment services;

(2) issuing and administering other means of payment (for

example, cheques and bankers' drafts);

(3) issuing electronic money; and

(4) current accounts.

(2) Settlement This means clearing and settlement of any transactions

described in rows (3) and (6) to (9) of this annex in relation
to the assets covered by (9).
It also includes clearing and settlement of any transactions
described in row (10).

(3) Investment management This has the same meaning as managing investments with
the following adjustments:

(a) it covers all types of assets; and

(b) the exclusions in the Regulated Activities Order

do not apply.

It also covers fund management.

(4) Financial or investment advice This includes advising on investments.

(5) Mortgage advice This has the same meaning as advising on regulated
mortgage contracts but is expanded to cover land anywhere
in the world and to cover security of any kind over land.

(6) Corporate investments This means acquiring, holding, managing and disposing a
firm’s investments made for its own account.

(7) Wholesale sales This means the selling of any investment to a person other
than a retail customer.
It does not include the activities in (1).

(8) Retail sales This means the selling of any investment to a retail
customer.
It includes savings accounts. It does not include the
activities in (1).

(9) Trading for clients This means dealing in investments as agent and execution
of orders on behalf of clients but the list of products includes
money market instruments and foreign exchange.

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 14

 Business areas and Explanation
management functions

(10) Market making This has the same meaning as it does in MIFID (see the
definition of market maker in article 4.1(8)).

(11) Investment research

(12) Origination/syndication and Origination and syndication include:

underwriting
(1) entering into or acquiring (directly or indirectly) any
commitment or investment with a view to transferring some
or all of it to others, or with a view to others investing in the
same transaction;

(2) sub-participation; and

(3) any transaction described in the Glossary definition of

originator.

Underwriting includes underwriting that is not on a firm

commitment basis.

A commitment or investment includes an economic interest

in some or all of it.

This activity also includes the provision of services relating

to such transactions.

(13) Retail lending decisions Deciding whether, and on what terms, to lend to retail
customers.
Lending includes granting credit, leasing and hire (including
finance leasing).

(14) Wholesale lending decisions Deciding whether, and on what terms, to lend to persons
who are not retail customers.
Lending includes granting credit, leasing and hire (including
finance leasing).

(15) Design and manufacturing of Wholesale customers mean persons who are not retail
products intended for wholesale customers
customers

(16) Design and manufacture of

products intended for retail
customers

(17) Production and distribution of This includes financial promotions

marketing materials and
communications

(18) Customer service This means dealing with clients after the point of sale,
including queries and fulfilment of client requests

(19) Customer complaints This includes the firm’s compliance with DISP.
handling
It also includes:

(1) any similar procedures relating to activities that do not

come under the jurisdiction of the Financial Ombudsman
Service;

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 15

 Business areas and Explanation
management functions

(2) activities that take place outside the UK; and

(3) activities that are not subject to any ombudsman service.

(20) Collection and recovering “Customer” means any person falling into any of the
amounts owed to a firm by its definitions of client in the Glossary so far as they apply to
customers the FCA’s Handbook. The definition is extended to cover all
services provided by the firm and not just those that are
Dealing with customers in arrears provided in the course of carrying on a regulated activity or
an ancillary service.

(21) Middle office This means risk management and controls in relation to,
and accounting for, transactions in securities or derivatives

(22) The firm’s information

technology

(23) Business continuity planning This means the functions described in SYSC 4.1.6R and
SYSC 4.1.7R

(24) Human resources This includes recruitment, training and competence and
performance monitoring

(25) Incentive schemes for the This is not limited to schemes based on sales.
firm’s staff

(26) Providing information in

relation to a specified benchmark

(27) Administering a specified

benchmark

Note (1): The purpose of this Annex is explained in SYSC 25.7 (Guidance about SYSC 25 Annex
1 G) and SYSC 26.11.2G.

Note (2): A firm does not have to use the split of activities in this Annex for the purposes in Note
(1). If a firm does decide to use it, it may adapt it to suit its management arrangements better.
For example, a firm may find the split of activities into retail and wholesale activities unsuitable. If
so, the firm might:
(a) treat retail and wholesale activities together; or
(b) use its own definition of retail and wholesale activities.

Senior Managers Regime: Statement of Responsibilities for solo-regulated firms Page 16

 Notification number
(for FCA use only)

Form O – Notification of change to firm classification

under the Senior Managers & Certification Regime
FCA Handbook Reference: SUP TP 12

Terms defined in the FCA Handbook are italicised and should be construed accordingly.

This form can only be used by solo-regulated SMCR firms. It is not relevant to dual regulated SMCR
firms, appointed representatives or SMCR firms that are defined as an enhanced scope SMCR firm
because they meet the qualification criteria in SYSC 23 Annex 1.

Limited scope SMCR firms and core SMCR firms can use this form to notify the FCA that they agree
to be subject to the rules for enhanced scope SMCR firms, set out in SYSC 23 Annex 1. Limited
scope SMCR firms can also use this form to notify the FCA that they agree to be subject to the rules
for core SMCR firms, set out in SYSC 23 Annex 1.

The opt-up will take effect three months from the date of this notification. If a firm submits this form to
opt-up, that firm will be subject to the rules of the new SMCR classification three calendar months
from the date they submit the notification.

To withdraw a notification, firms must write to us before the opt-up takes effect. Once the opt-up has
taken effect, firms can use this form to revert to the SMCR classification defined in SYSC 23 Annex 1.
This will be effective one year from the date of notification. Firms that are enhanced scope SMCR
firms or core SMCR firms because they meet the qualification criteria in SYSC 23 Annex 1 cannot
opt-down.

Firms opting-up should ensure that they understand and are in a position to comply with the relevant
rules, set out in the FCA’s Senior management arrangements, Systems and Controls (SYSC),
Supervision (SUP), Code of Conduct (COCON) sourcebooks. The decision should be made at the
appropriate levels and approved at governing body level. As a result of opting-up, firms will be subject
to rules relating to additional Senior Management Functions and Prescribed Responsibilities. Firms
opting-up to enhanced scope SMCR firm classification will also be subject to requirements on
Responsibilities Maps, Handover Procedures and Overall Responsibilities.

[Commencement Date]

Name of firm

Firm Reference Number (FRN)

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 1
 Financial Conduct Authority
12 Endeavour Square
Stratford
London E20 1JN
United Kingdom
Telephone +44 (0) 300 500 0597
E-mail [email protected]
Website http://www.fca.org.uk
Registered as a Limited Company in England and Wales No 1920623. Registered Office
as above

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 2
 Contact Details Section 1

1.1 Contact for this notification (at the notifying firm)

Title

First name

Surname

Job title

Business address

Postcode

Phone number

Email address

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 3
Notification Section 2

2.01 Changes to the SMCR classification of the firm

Please indicate the type of notification you are making.

The opt-up will take effect three months from the date of this notification. Firms will not be able to revert to their
previous SMCR classification (as defined in SYSC 23 Annex 1) for at least one year.

If you are revoking a previous opt-up, this will take effect one year from the date of this notification.

Notification type Firm response

Core SMCR firm agreeing to be subject to the rules for enhanced scope
SMCR firms

Limited scope SMCR firm agreeing to be subject to the rules for core
SMCR firms

Limited scope SMCR firm agreeing to be subject to the rules for enhanced
scope SMCR firms

Firm has previously opted-up and intends to revert to core SMCR firm
classification, defined in SYSC 23 Annex 1, one year from the date of this
notification
Firm has previously opted-up and intends to revert to limited scope SMCR
firm classification, defined in SYSC 23 Annex 1, one year from the date of
this notification

2.02 Supporting documents

Please tick to confirm that you are submitting the supporting documents listed in the table below with this
notification. These documents must be submitted at the same time as this notification.

If you are revoking a previous opt-up, you are not required to submit any supporting documents.

Supporting documents Opting-up to Limited scope

enhanced scope SMCR firm opting-
SMCR firm up to core SMCR
classification firm classification

Form A and E applications, as required, for new or

amended senior management functions

Form J applications for senior management

functions that have already been approved, revised
to reflect the impact of the opt-up

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 4
Declarations and signatures Section 3

In this declaration, the authorised firm making the notification is referred to as the “firm”.

The person signing on behalf of the firm confirms that:

• they have read this declaration in full;

• they have the authority of the firm’s governing body to make this notification;

• the firm’s governing body understands their regulatory responsibilities following the opt-up, as set out in the
FCA’s Senior management arrangements, Systems and Controls (SYSC), Supervision (SUP), Code of
Conduct (COCON) sourcebooks;

• the firm’s governing body understands that, once the opt-up takes effect, the notifying firm will not be able to
revert to its previous SMCR classification (as defined in SYSC 23 Annex 1) for at least one year.

It is a criminal offence, knowingly or recklessly, to give the FCA information that is materially false, misleading or
deceptive (see sections 398 and 400 of the Financial Services and Markets Act 2000). The notifying firm must
notify the FCA immediately if there is a change to the information in this form and/or if inaccurate information has
been provided.

For the purposes of complying with data protection legislation, please read the FCA’s privacy notice at
https://www.fca.org.uk/data-protection. This notice will tell you what to expect when the FCA collects personal
information, including how and why we use your personal information and who to contact if you have any queries
or wish to exercise your rights.

Name of the authorised firm

Name of person signing on behalf of the authorised firm

Position

Signature

Date

Form O – Notification of change to firm classification under the Senior Managers & Certification Regime Page 5
Pub ref: 005629

© Financial Conduct Authority 2018

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Telephone: +44 (0)20 7066 1000
Website: www.fca.org.uk
All rights reserved