3 - fitness + propriety

what are the two parts to assessing fitness and propriety

APER - old

SM+CR - new

what does APER stand for

approved persons regime

who does APER apply to

a limited number of individuals (eg. Appointed Representatives)

what is an Appointed Rep

someone who is connected to a firm but doesn’t work directly for them

(eg. someone who advertises for the firm)

another word for an appointed rep

tied agent

what does APER mean

means that FSMA2000 has given the FCA + PRA powers over approved persons doing controlled functions

what are the two types of controlled functions in this case

significant influence functions (leadership roles)

customer dealing functions (client facing ppl)

what does SM+CR stand for

the senior managers + certification regime

what is the first part of that

SMR - the senior managers regime

who is the SMR for

for people performing SMFs (senior management functions)

what is this equivalent to from before

equivalent to significant influence functions from APER

what are the 3 requirements for people performing SMFs, according to the SMR

• pre-approved by the regulator

• certified by firm as fit + proper

• subject to conduct rules (specifically rules - not principles)

how do you get approved by the regulator

complete form A

what is the second part of SM+CR

CR - the certification regime

who is the CR for

for roles posing significant risk of harm (inc. client facing)

what are the 2 requirements for ppl subject to the CR

• certified by firm as fit + proper

• subject to conduct rules

so what is the main difference between APER and SM+CR

SM+CR pushes the blame/responsibility on the firms rather than the regulators

(to avoid ppl blaming the regulators like they did post crisis)

what are the 6 conduct rules that apply to all relevant employees (so basically everyone)

1. act with integrity

2. act with due skill, care + diligence

3. be open + cooperative with the regulators

4. pay due regard to the interests of customers + treat them fairly

5. observe proper standards of market conduct

6. act to deliver good outcomes for retail customers

what are the 4 additional rules, and who do they apply to

4 extras for people doing SMFs:

SC1: make sure the business u r responsible for is controlled effectively

SC2: make sure the business u r responsible complies with regulation

SC3: make sure if you delegate that its to an appropriate person and you oversee that

SC4: disclose appropriately any info that the regulators would expect to know

what is the fit and proper test

for individuals doing SMFS:

they will be assessed on three things

what are the three things

honesty, integrity + reputation

competence + capability

financial soundness

what are the 4 important disciplines that can be issued when there’s a problem

FSMA Section…

…56

…59

…71

FSA Section…

…138D

FSMA S56

FCA can issue a prohibition order against individuals who aren’t fit and proper (bans them)

FSMA S59

must be approved to do a controlled function

FSMA S71

a priv person can sue a firm when S56 or S59 are broken

FSA section 138D

a priv person can sue a firm if they suffer losses bc a firm breaches an FCA rule

what is the T+C Sourcebook

like a rulebook on training and competency

what does it state

that you must pass an appropriate exam to do a specified activity

what are the exceptions to this

if you have 3 years up to date relevant experience outside the UK

if you spend less than 30 days in the UK p/y

under which exemption will a person still have to sit an exam, and which exam

the 3 years up to date one

they still have to sit UK financial reg (this one)

what do firms have to do on a regular basis with regards to their employees

review their competence

what 4 things do they consider when they do this

the individuals technical knowledge + its application

their skills + expertise

changes in the market

changes to products, legislation + regulation