C55 Part V Performance of Regulated Activities
Prohibition orders
C1I1C2C356 Prohibition orders.
F711
The FCA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by—
a
an authorised person,
b
a person who is an exempt person in relation to that activity, or
c
a person to whom, as a result of Part 20, the general prohibition does not apply in relation to that activity.
1A
The PRA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by—
a
a PRA-authorised person, or
b
a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.
2
F77A “prohibition order” is an order prohibiting the individual from performing a specified function, any function falling within a specified description or any function.
3
A prohibition order may relate to—
a
a specified regulated activity, any regulated activity falling within a specified description or all regulated activities;
F78b
all persons falling within subsection (3A) or a particular paragraph of that subsection or all persons within a specified class of person falling within a particular paragraph of that subsection.
F723A
A person falls within this subsection if the person is—
a
an authorised person,
b
an exempt person, or
c
a person to whom, as a result of Part 20, the general prohibition does not apply in relation to a regulated activity.
4
An individual who performs or agrees to perform a function in breach of a prohibition order is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.
5
In proceedings for an offence under subsection (4) it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
6
F79A person falling within subsection (3A) must take reasonable care to ensure that no function of his, in relation to the carrying on of a regulated activity, is performed by a person who is prohibited from performing that function by a prohibition order.
C47
F737A
If—
a
the FCA proposes to vary or revoke a prohibition order, and
b
as a result of the proposed variation or revocation, an individual—
i
will no longer be prohibited from performing a function of interest to the PRA, or
ii
will be prohibited from performing such a function,
the FCA must consult the PRA before varying or revoking the order.
7B
A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by—
a
a PRA-authorised person, or
b
a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.
7C
The PRA must consult the FCA before varying or revoking a prohibition order.
F76C58
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
“Specified” means specified in the prohibition order.
C6I2C757 Prohibition orders: procedure and right to refer to Tribunal.
C81
If F81a regulator proposes to make a prohibition order it must give the individual concerned a warning notice.
2
The warning notice must set out the terms of the prohibition.
3
If F82a regulator decides to make a prohibition order it must give the individual concerned a decision notice.
4
The decision notice must—
a
name the individual to whom the prohibition order applies;
b
set out the terms of the order; and
c
be given to the individual named in the order.
5
A person against whom a decision to make a prohibition order is made may refer the matter to the Tribunal.
F806
If—
a
the FCA proposes to make a prohibition order, and
b
as a result of the proposed order, an individual will be prohibited from performing a function of interest to the PRA,
the FCA must consult the PRA before giving a warning notice under this section.
7
A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by—
a
a PRA-authorised person, or
b
a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.
8
The PRA must consult the FCA before giving a warning notice under this section.
C9I3C1058 Applications relating to prohibitions: procedure and right to refer to Tribunal.
1
This section applies to an application for the variation or revocation of a prohibition order.
2
If the F84appropriate regulator decides to grant the application, it must give the applicant written notice of its decision.
3
If the F84appropriate regulator proposes to refuse the application, it must give the applicant a warning notice.
4
If the F84appropriate regulator decides to refuse the application, it must give the applicant a decision notice.
5
If the F84appropriate regulator gives the applicant a decision notice, he may refer the matter to the Tribunal.
F836
The appropriate regulator” means the regulator to which the application is made.
Approval
C11I4C12C13C1459 Approval for particular arrangements.
C151
An authorised person (“A”) must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless F143that person is acting in accordance with an approval given by the appropriate regulator under this section.
2
An authorised person (“A”) must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by a contractor of A in relation to the carrying on by A of a regulated activity, unless F144that person is acting in accordance with an approval given by the appropriate regulator under this section.
F853
“Controlled function”—
a
in relation to the carrying on of a regulated activity by a PRA-authorised person, means a function of a description specified in rules made by the FCA or the PRA, and
b
in relation to the carrying on of a regulated activity by any other authorised person, means a function of a description specified in rules made by the FCA.
4
“The appropriate regulator”—
a
in relation to a controlled function which is of a description specified in rules made by the FCA, means the FCA, and
b
in relation to a controlled function which is of a description specified in rules made by the PRA, means the PRA with the consent of the FCA.
F1265
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1276
The PRA may specify a description of function under subsection (3)(a) only if, in relation to the carrying on of a regulated activity by a PRA-authorised person, it is satisfied that the function is a senior management function as defined in section 59ZA.
F1286A
If—
a
a function of a description specified in rules made by the FCA under subsection (3)(a) or (b) is a controlled function in relation to the carrying on of a regulated activity by a relevant authorised person, and
b
the FCA is satisfied that, in relation to the carrying on of a regulated activity by a relevant authorised person, the function is a senior management function as defined in section 59ZA,
the FCA must designate the function in the rules as a senior management function.
6B
If a function of a description specified in rules made by the PRA under subsection (3)(a) is a controlled function in relation to the carrying on of a regulated activity by a relevant authorised person, the PRA must designate the function in the rules as a senior management function.
6C
For the meaning of “relevant authorised person”, see section 71A.
F1297
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1297A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1297B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1147C
A regulator may not exercise the power in subsection (3) so as to provide for a function to be a controlled function in relation to the carrying on of the regulated activity of managing an AIF by an AIFM which—
a
is also an AIF;
b
does not manage any AIF other than itself;
c
is a body corporate; and
d
is not a collective investment scheme.
8
Neither subsection (1) nor subsection (2) applies to an arrangement which allows a person to perform a function if the question of whether he is a fit and proper person to perform the function is reserved under any of the single market directives F16or the emission allowance auctioning regulation to an authority in a country or territory outside the United Kingdom.
F869
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
“Arrangement”—
a
means any kind of arrangement for the performance of a function of A which is entered into by A or any contractor of his with another person; and
b
includes, in particular, that other person’s appointment to an office, his becoming a partner or his employment (whether under a contract of service or otherwise).
F13011
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59ZAF115Senior management functions
1
This section has effect for determining whether a function is for the purposes of section 59(6) or (6A) a senior management function.
2
A function is a “senior management function”, in relation to the carrying on of a regulated activity by an authorised person, if—
a
the function will require the person performing it to be responsible for managing one or more aspects of the authorised person's affairs, so far as relating to the activity, and
b
those aspects involve, or might involve, a risk of serious consequences—
i
for the authorised person, or
ii
for business or other interests in the United Kingdom.
3
In subsection (2)(a) the reference to managing one or more aspects of an authorised person's affairs includes a reference to taking decisions, or participating in the taking of decisions, about how one or more aspects of those affairs should be carried on.
59AF17Specifying functions as controlled functions: supplementary
1
The FCA must—
a
keep under review the exercise of its power under section 59(3)(a) to specify any F137senior management function as a controlled function, and
b
exercise that power in a way that it considers will minimise the likelihood that approvals fall to be given by both the FCA and the PRA in respect of the performance by a person of F137senior management functions in relation to the carrying on of a regulated activity by the same PRA-authorised person.
2
The FCA and the PRA must each consult the other before exercising any power under section 59(3)(a).
3
Any reference in this section to the exercise of a power includes its exercise by way of amendment or revocation of provision previously made in the exercise of the power.
F1383A
“Senior management function” has the meaning given by section 59ZA.
4
“Approval” means an approval under section 59.
5
Any expression which is used both in this section and section 59 has the same meaning in this section as in that section.
59BRole of FCA in relation to PRA decisions
1
The FCA may arrange with the PRA that in such cases as may be described in the arrangements the PRA may give approval under section 59 without obtaining the consent of the FCA.
2
Arrangements under this section must be in writing, and must specify the date on which they come into force.
3
The regulators must publish any arrangements under this section in such manner as they think fit.
4
Section 59(4)(b) has effect subject to any arrangements in force under this section.
C16I5C17C18C1960 Applications for approval.
1
An application for the F18appropriate regulator's approval under section 59 may be made by the authorised person concerned.
2
The application must—
a
be made in such manner as the F18appropriate regulator may direct; and
b
contain, or be accompanied by, such information as the F18appropriate regulator may reasonably require.
F1312A
If—
a
the application is for the approval of a person to perform a designated senior management function, and
b
the authorised person concerned is a relevant authorised person (see section 71A),
the appropriate regulator must require the application to contain, or be accompanied by, a statement setting out the aspects of the affairs of the authorised person concerned which it is intended that the person will be responsible for managing in performing the function.
2B
A statement provided under subsection (2A) is known as a “statement of responsibilities”.
2C
In subsection (2A) “designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).
C20F193
At any time after the application is received and before it is determined, the appropriate regulator may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application or, as the case requires, to decide whether to give consent.
4
5
Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.
6
“The authorised person concerned” includes a person who has applied for permission under F20Part 4A and will be the authorised person concerned if permission is given.
F1326A
Subsection (6) applies to references to a relevant authorised person as it applies to references to the authorised person concerned.
F217
The PRA must consult the FCA before—
a
giving a direction under subsection (2)(a) in relation to a class of applicants, or
b
imposing a requirement under subsection (2)(b) on a class of applicants.
8
The PRA must as soon as practicable notify the FCA of the receipt or withdrawal of an application to the PRA, unless the case is one in which by virtue of arrangements under section 59B the consent of the FCA is not required.
9
“The appropriate regulator”—
a
in relation to a controlled function which is of a description specified in rules made by the FCA, means the FCA;
b
in relation to a controlled function which is of a description specified in rules made by the PRA, means the PRA, and for the purposes of subsection (3) also includes the FCA in cases where the consent of the FCA is required.
60AF139Vetting of candidates by relevant authorised persons
1
Before a relevant authorised person may make an application for a regulator's approval under section 59, the authorised person must be satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates.
2
In deciding that question, the authorised person must have regard, in particular, to whether the candidate, or any person who may perform a function on the candidate's behalf—
a
has obtained a qualification,
b
has undergone, or is undergoing, training,
c
possesses a level of competence, or
d
has the personal characteristics,
required by general rules made by the regulator in relation to persons performing functions of the kind to which the application relates.
3
For the meaning of “relevant authorised person”, see section 71A.
I6C21C2261 Determination of applications.
F1481
The regulator to which an application for approval is made under section 60 may grant the application only if—
a
it is satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates, or
b
in a case where the application is for approval to perform a designated senior management function in relation to the carrying on of a regulated activity by a relevant authorised person (a “relevant senior management application”), it is satisfied that the condition in paragraph (a) will be met if the application is granted subject to one or more conditions (as to which, see subsection (2B)).
2
In F150determining the application, F90the regulator may have regard (among other things) to whether the candidate, or any person who may perform a function on his behalf—
a
has obtained a qualification,
b
has undergone, or is undergoing, training, F151...
c
possesses a level of competence, F149or
d
has the personal characteristics,
required by general rules F91made by that regulator in relation to persons performing functions of the kind to which the application relates.
F872A
Subsections (1) and (2) apply in relation to the giving by the FCA of any required consent as they apply in relation to the grant of the application.
F1452B
The regulator to which a relevant senior management application is made under section 60 may in particular—
a
grant the application subject to any conditions that the regulator considers appropriate, and
b
grant the application so as to give approval only for a limited period.
2C
A regulator may exercise the power under paragraph (a) or (b) of subsection (2B) only if—
a
where the regulator is the FCA, it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives, and
b
where the regulator is the PRA, it appears to the PRA that it is desirable to do so in order to advance any of its objectives.
2D
Consent given by the FCA for the granting of the application may be conditional on the manner in which the PRA exercises its power under subsection (2B).
C23C24C253
F89The regulator to which an application is made under section 60 must, before the end of the period for consideration, determine whether—
a
to grant the application; or
b
to give a warning notice under section 62(2).
F1463ZA
In the case of a relevant senior management application, the reference in subsection (3)(a) to granting the application is a reference to granting it without imposing conditions or limiting the period for which the approval has effect.
F883A
The period for consideration”—
a
in any case where the application under section 60 is made by a person applying for permission under Part 4A (see section 60(6)), means whichever ends last of—
i
the period within which the application for that permission must be determined under section 55V(1) or (2), and
ii
the period of 3 months beginning with the date on which the regulator receives the application under section 60, and
b
in any other case, means the period of 3 months beginning with the date on which the regulator receives the application under section 60.
4
If F92a regulator imposes a requirement under section 60(3), the period for consideration stops running on the day on which the requirement is imposed but starts running again—
a
on the day on which the required information is received by F92a regulator; or
b
if the information is not provided on a single day, on the last of the days on which it is received by F92a regulator.
5
A person who makes an application under section 60 may withdraw his application by giving written notice to the F93regulator to which the application was made at any time before the F94regulator determines it, but only with the consent of—
a
the candidate; and
b
the person by whom the candidate is to be retained to perform the function concerned, if not the applicant.
F1476
In this section—
a
“designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B);
b
any reference to a relevant authorised person includes a reference to a person who has applied for permission under Part 4A and will be a relevant authorised person if permission is given.
7
For the meaning of “relevant authorised person”, see section 71A.
I7C26C2762 Applications for approval: procedure and right to refer to Tribunal.
1
F95If the regulator to which an application is made under section 60 (“an application”) decides to grant the application, it must give written notice of its decision to each of the interested parties.
2
3
4
5
“The interested parties”, in relation to an application, are—
a
the applicant;
b
the person in respect of whom the application is made (“A”); and
c
the person by whom A’s services are to be retained, if not the applicant.
62AF140Changes in responsibilities of senior managers
1
This section applies where—
a
an authorised person has made an application to the appropriate regulator for approval under section 59 for a person to perform a designated senior management function,
b
the application contained, or was accompanied by, a statement of responsibilities under section 60(2A), and
c
the application has been granted.
2
If, since the granting of the application, there has been any significant change in the aspects of the authorised person's affairs which the person is responsible for managing in performing the function, the authorised person must provide the appropriate regulator with a revised statement of responsibilities.
3
The appropriate regulator may require the authorised person—
a
to provide information which the person is required to give under this section in such form as the appropriate regulator may direct, or
b
to verify such information in such a way as the appropriate regulator may direct.
4
In this section—
“the appropriate regulator” has the same meaning as in section 60;
“designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).
I8C28C29C3063 Withdrawal of approval.
C31F981
The FCA may withdraw an approval under section 59 given by the FCA or the PRA in relation to the performance by a person of a function if the FCA considers that the person is not a fit and proper person to perform the function.
1A
The PRA may withdraw an approval under section 59 in relation to the performance by a person (“A”) of a function if—
a
the PRA gave the approval, or the FCA gave the approval and the function is a F156relevant senior management function performed in relation to the carrying on by a PRA-authorised person of a regulated activity, and
b
the PRA considers that A is not a fit and proper person to perform the function.
F1571B
In subsection (1A) “relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).
1C
Before one regulator withdraws an approval given by the other regulator, it must consult the other regulator.
2
When considering whether to withdraw F99an approval, the FCA or the PRA may take into account any matter which could be taken into account in considering an application made under section 60 in respect of the performance of the function to which the approval relates F100(on the assumption, if it is not the case, that the application was one falling to be considered by it).
F1552A
At least once a year each relevant authorised person must, in relation to every person in relation to whom an approval has been given on the application of the authorised person—
a
consider whether there are any grounds on which a regulator could withdraw the approval under this section, and
b
if the authorised person is of the opinion that there are such grounds, notify the regulator of those grounds.
(For the meaning of “relevant authorised person”, see section 71A.)
C31C323
C33C314
C315
C316
“The interested parties”, in relation to an approval, are—
a
the person on whose application it was given (“A”);
b
the person in respect of whom it was given (“B”); and
c
the person by whom B’s services are retained, if not A.
63ZAF141Variation of senior manager's approval at request of relevant authorised person
1
Where an application for approval under section 59 is granted subject to conditions, the authorised person concerned may apply to the appropriate regulator to vary the approval by—
a
varying a condition,
b
removing a condition, or
c
imposing a new condition.
2
“The appropriate regulator”—
a
in the case of an application for variation of an approval in a way described in subsection (1)(a) or (b), means whichever of the FCA or the PRA imposed the condition concerned;
b
in the case of an application for variation of an approval in the way described in subsection (1)(c), means the regulator who gave the approval.
3
The PRA must consult the FCA before determining an application under this section, unless the application relates to the variation or removal of a condition which was imposed by the PRA in exercise of its power under section 63ZB.
4
The regulator to which an application is made under this section must, before the end of the period for consideration, determine whether—
a
to grant the application; or
b
to give a warning notice under section 62(2).
5
“The period for consideration” means the period of 3 months beginning with the date on which the regulator receives the application.
6
The FCA may refuse an application under this section if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
7
The PRA may refuse an application under this section if it appears to the PRA that it is desirable to do so in order to advance any of its objectives.
8
The following provisions apply to an application made under this section for variation of an approval as they apply to an application for approval made under section 60—
section 60(2) to (8),
section 61(4) and (5),
section 62.
63ZBVariation of senior manager's approval on initiative of regulator
1
The FCA may vary an approval under section 59 given by the FCA or the PRA for the performance of a designated senior management function in relation to the carrying on of a regulated activity by a relevant authorised person if the FCA considers that it is desirable to do so in order to advance one or more of its operational objectives.
2
The PRA may vary an approval under section 59 for the performance of a designated senior management function in relation to the carrying on of a regulated activity by a relevant authorised person if—
a
either—
i
the PRA gave the approval, or
ii
the FCA gave the approval and the relevant authorised person is a PRA-authorised person, and
b
the PRA considers that it is desirable to do so in order to advance any of its objectives.
3
A regulator may vary an approval by—
a
imposing a condition,
b
varying a condition,
c
removing a condition, or
d
limiting the period for which the approval is to have effect.
4
Before one regulator varies an approval given by the other regulator, it must consult the other regulator.
5
In this section “designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).
6
For the meaning of “relevant authorised person”, see section 71A.
63ZCExercise of power under section 63ZB: procedure
1
This section applies to an exercise, by either regulator, of the power to vary an approval under section 63ZB.
2
A variation takes effect—
a
immediately, if the notice given under subsection (4) states that that is the case,
b
on such date as is specified in the notice, or
c
if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
3
A variation may be expressed to take effect immediately (or on a specified date) only if the regulator concerned, having regard to the ground on which it is exercising the power to vary, reasonably considers that it is necessary for the variation to take effect immediately (or on that date).
4
If either regulator proposes to vary an approval or varies an approval with immediate effect, it must give each of the interested parties written notice.
5
The notice must—
a
give details of the variation,
b
state the regulator's reasons for the variation,
c
inform the interested parties that each of them may make representations to the regulator within such period as may be specified in the notice (whether or not any of the interested parties has referred the matter to the Tribunal),
d
inform the interested parties of when the variation takes effect, and
e
inform the interested parties of the right of each of them to refer the matter to the Tribunal.
6
“The interested parties”, in relation to an approval, are—
a
the person on whose application it was given (“A”),
b
the person in respect of whom it was given (“B”), and
c
the person by whom B's services are retained, if not A.
7
The regulator giving the notice may extend the period allowed under the notice for making representations.
8
If having considered the representations made by the interested parties, the regulator decides—
a
to vary the approval, or
b
if the variation has taken effect, not to rescind it,
it must give each of the interested parties written notice.
9
If having considered the representations made by the interested parties, the regulator decides—
a
not to vary the approval,
b
to vary the approval in a different way, or
c
if the variation has taken effect, to rescind it,
it must give each of the interested parties written notice.
10
A notice under subsection (8) must inform the interested parties of the right of each of them to refer the matter to the Tribunal.
11
A notice under subsection (9)(b) must comply with subsection (5).
12
If a notice informs the interested parties of the right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
13
For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
14
“Approval” means an approval under section 59.
63ZDF116Statement of policy relating to conditional approval and variation
1
Each regulator must prepare and issue a statement of its policy with respect to—
a
its giving of approval under section 59 subject to conditions or for a limited period only, and
b
its variation under section 63ZA or 63ZB of an approval given under section 59.
2
A regulator may at any time alter or replace a statement issued by it under this section.
3
If a statement issued under this section is altered or replaced by a regulator, the regulator must issue the altered or replacement statement.
4
A statement issued under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
5
A regulator may charge a reasonable fee for providing a person with a copy of a statement published under this section.
6
A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
63ZEStatement of policy: procedure
1
Before issuing a statement of policy under section 63ZD, a regulator (“the issuing regulator”) must—
a
consult the other regulator, and
b
publish a draft of the proposed statement in the way appearing to the issuing regulator to be best calculated to bring it to the attention of the public.
2
The duty of the FCA to consult the PRA under subsection (1)(a) applies only in so far as the statement of policy applies to persons whose approval under section 59 relates to the performance of a function designated by the FCA as a senior management function under section 59(6A) in relation to the carrying on by PRA-authorised persons of regulated activities.
3
The draft must be accompanied by notice that representations about the proposal may be made to the issuing regulator within a specified time.
4
Before issuing the proposed statement, the issuing regulator must have regard to any representations made to it in accordance with subsection (3).
5
If the issuing regulator issues the proposed statement it must publish an account, in general terms, of—
a
the representations made to it in accordance with subsection (3), and
b
its response to them.
6
If the statement differs from the draft published under subsection (1) in a way which is in the opinion of the issuing regulator significant, the issuing regulator—
a
must before issuing it carry out any consultation required by subsection (1)(a), and
b
must (in addition to complying with subsection (5)) publish details of the difference.
7
The issuing regulator may charge a reasonable fee for providing a person with a draft published under subsection (1)(b).
8
This section also applies to a proposal to alter or replace a statement.
F15Performance of controlled functions without approval
Ss. 63A-63D and preceding cross-heading inserted (8.6.2010) by Financial Services Act 2010 (c. 28), ss. 11, 26(2)(b)
C5663APower to impose penalties
1
If the F103appropriate regulator is satisfied that—
a
a person (“P”) has at any time performed a controlled function without approval, and
b
at that time P knew, or could reasonably be expected to have known, that P was performing a controlled function without approval,
it may impose a penalty on P of such amount as it considers appropriate.
2
For the purposes of this section P performs a controlled function without approval at any time if at that time—
a
P performs a controlled function under an arrangement entered into by an authorised person (“A”), or by a contractor of A, in relation to the carrying on by A of a regulated activity; and
F158b
P, when performing the function, is not acting in accordance with an approval given under section 59.
3
The F103appropriate regulator may not impose a penalty under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person concerned under section 63B(1).
C574
C585
For this purpose the F103appropriate regulator is to be treated as knowing that a person has performed a controlled function without approval if it has information from which that can reasonably be inferred.
F1045A
The appropriate regulator”—
a
in relation to a controlled function which is of a description specified in rules made by the FCA, means the FCA, and
b
in relation to a controlled function which is of a description specified in rules made by the PRA, means the PRA.
F1185B
The relevant period” is—
a
in relation to the performance of a controlled function without approval before the day on which this subsection comes into force, the period of 3 years, and
b
in relation to the performance of a controlled function without approval on or after that day, the period of 6 years.
6
Any F105other expression which is used both in this section and section 59 has the same meaning in this section as in that section.
C5663BProcedure and right to refer to Tribunal
1
If F106a regulator proposes to impose a penalty on a person under section 63A, it must give the person a warning notice.
2
A warning notice must state the amount of the penalty.
3
If F106a regulator decides to impose a penalty on a person under section 63A, it must give the person a decision notice.
4
A decision notice must state the amount of the penalty.
5
If F106a regulator decides to impose a penalty on a person under section 63A, the person may refer the matter to the Tribunal.
C5663CStatement of policy
1
F22Each regulator must prepare and issue a statement of its policy with respect to—
a
the imposition of penalties under section 63A; and
b
the amount of penalties under that section.
2
F23Each regulator's policy in determining whether a penalty should be imposed, and what the amount of a penalty should be, must include having regard to—
a
the conduct of the person on whom the penalty is to be imposed;
b
the extent to which the person could reasonably be expected to have known that a controlled function was performed without approval;
c
the length of the period during which the person performed a controlled function without approval; and
d
whether the person on whom the penalty is to be imposed is an individual.
3
F24Each regulator's policy in determining whether a penalty should be imposed on a person must also include having regard to the appropriateness of taking action against the person instead of, or in addition to, taking action against an authorised person.
4
A statement issued under this section must include an indication of the circumstances in which F25the regulator that has issued the statement would expect to be satisfied that a person could reasonably be expected to have known that the person was performing a controlled function without approval.
5
6
If a statement issued under this section is altered or F28replaced by a regulator, the regulator must issue the altered or replaced statement.
7
F29A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
8
9
The F32regulator may charge a reasonable fee for providing a person with a copy of the statement.
C5910
In exercising, or deciding whether to exercise, its power under section 63A in the case of any particular person, F33a regulator must have regard to any statement of policy published F34by it under this section and in force at a time when the person concerned performed a controlled function without approval.
C61C6963DStatement of policy: procedure
1
2
The draft must be accompanied by notice that representations about the proposal may be made to the F37regulator within a specified time.
3
Before issuing the proposed statement, the F38regulator must have regard to any representations made to it in accordance with subsection (2).
4
If the F39regulator issues the proposed statement it must publish an account, in general terms, of—
a
the representations made to it in accordance with subsection (2); and
b
its response to them.
5
6
7
This section also applies to a proposal to alter or replace a statement.
F133Certification of employees
Ss. 63E, 63F inserted (25.7.2014 for specified purposes, 7.3.2016 for the insertion of s. 63F otherwise, 7.3.2017 in so far as not already in force) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 29, 148(5); S.I. 2014/1819, art. 2(2)(b); S.I. 2015/490, art. 2(1)(a)(2) (with savings and transitional provisions in S.I. 2015/492 (as amended by S.I. 2015/1660))
63ECertification of employees by relevant authorised persons
1
A relevant authorised person (“A”) must take reasonable care to ensure that no employee of A performs a specified function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless the employee has a valid certificate issued by A under section 63F.
2
“Specified function”—
a
in relation to the carrying on of a regulated activity by a PRA-authorised person, means a function of a description specified in rules made by the FCA or the PRA, and
b
in relation to the carrying on of a regulated activity by any other authorised person, means a function of a description specified in rules made by the FCA.
3
The FCA may specify a description of function under subsection (2)(a) or (b) only if, in relation to the carrying on of a regulated activity by a relevant authorised person of a particular description—
a
the function is not a controlled function in relation to the carrying on of that activity by a relevant authorised person of that description, but
b
the FCA is satisfied that the function is nevertheless a significant-harm function.
4
The PRA may specify a description of function under subsection (2)(a) only if, in relation to the carrying on of a regulated activity by a relevant PRA-authorised person of a particular description—
a
the function is not a controlled function in relation to the carrying on of that activity by a relevant PRA-authorised person of that description, but
b
the PRA is satisfied that the function is nevertheless a significant-harm function.
5
A function is a “significant-harm function”, in relation to the carrying on of a regulated activity by an authorised person, if—
a
the function will require the person performing it to be involved in one or more aspects of the authorised person's affairs, so far as relating to the activity, and
b
those aspects involve, or might involve, a risk of significant harm to the authorised person or any of its customers.
6
Each regulator must—
a
keep under review the exercise of its power under subsection (2) to specify any significant-harm function as a specified function, and
b
exercise that power in a way that it considers will minimise the risk of employees of relevant authorised persons performing significant-harm functions which they are not fit and proper persons to perform.
7
Subsection (1) does not apply to an arrangement which allows an employee to perform a function if the question of whether the employee is a fit and proper person to perform the function is reserved under any of the single market directives or the emission allowance auctioning regulation to an authority in a country or territory outside the United Kingdom.
8
In this section—
“controlled function” has the meaning given by section 59(3);
“customer”, in relation to an authorised person, means a person who is using, or who is or may be contemplating using, any of the services provided by the authorised person;
“relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person.
9
In this section any reference to an employee of a person (“A”) includes a reference to a person who—
a
personally provides, or is under an obligation personally to provide, services to A under an arrangement made between A 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 as to the manner in which those services are provided.
10
For the meaning of “relevant authorised person”, see section 71A.
63FIssuing of certificates
1
A relevant authorised person may issue a certificate to a person under this section only if the authorised person is satisfied that the person is a fit and proper person to perform the function to which the certificate relates.
2
In deciding whether the person is a fit and proper person to perform the function, the relevant authorised person must have regard, in particular, to whether the person—
a
has obtained a qualification,
b
has undergone, or is undergoing, training,
c
possesses a level of competence, or
d
has the personal characteristics,
required by general rules made by the appropriate regulator in relation to employees performing functions of that kind.
3
In subsection (2) “the appropriate regulator” means—
a
in relation to employees of PRA-authorised persons, the FCA or the PRA, and
b
in relation to employees of any other authorised person, the FCA.
4
A certificate issued by a relevant authorised person to a person under this section must—
a
state that the authorised person is satisfied that the person is a fit and proper person to perform the function to which the certificate relates, and
b
set out the aspects of the affairs of the authorised person in which the person will be involved in performing the function.
5
A certificate issued under this section is valid for a period of 12 months beginning with the day on which it is issued.
6
If, after having considered whether a person is a fit and proper person to perform a specified function, a relevant authorised person decides not to issue a certificate to the person under this section, the authorised person must give the person a notice in writing stating—
a
what steps (if any) the authorised person proposes to take in relation to the person as a result of the decision, and
b
the reasons for proposing to take those steps.
7
A relevant authorised person must maintain a record of every employee who has a valid certificate issued by it under this section.
8
Expressions used in this section and in section 63E have the same meaning in this section as they have in that section.
F134...
Ss. 64, 65 and cross-heading omitted (25.7.2014 for specified purposes, 7.3.2016 in so far as not already in force) by virtue of Financial Services (Banking Reform) Act 2013 (c. 33), ss. 30(2), 148(5); S.I. 2014/1819, art. 2(2)(c); S.I. 2015/490, art. 2(1)(b) (as amended by S.I. 2015/2055, art. 2(2) and with savings and transitional provisions in S.I. 2015/492 (as amended by S.I. 2015/1660))
F13464 Conduct: statements and codes.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F13465 Statements and codes: procedure.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F135Conduct of approved persons and others
Ss. 64A, 64B and cross-heading inserted (25.7.2014 for specified purposes, 7.3.2016 for specified purposes) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 30(3), 148(5); S.I. 2014/1819, art. 2(2)(c); S.I. 2015/490, art. 2(1)(d) (as inserted by S.I. 2015/2055, art. 2(4) and with savings and transitional provisions in S.I. 2015/492 (as amended by S.I. 2015/1660))
64ARules of conduct
1
If it appears to the FCA to be necessary or expedient for the purpose of advancing one or more of its operational objectives, the FCA may make rules about the conduct of the following persons—
a
persons in relation to whom either regulator has given its approval under section 59;
b
persons who are employees of relevant authorised persons (see section 71A).
2
If it appears to the PRA to be necessary or expedient for the purpose of advancing any of its objectives, the PRA may make rules about the conduct of the following persons—
a
persons in relation to whom it has given its approval under section 59;
b
persons in relation to whom the FCA has given its approval under section 59 in respect of the performance by them of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity;
c
persons who are employees of relevant PRA-authorised persons.
3
In subsection (2)—
“relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person (see section 71A), and
“relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).
4
Rules made under this section must relate to the conduct of persons in relation to the performance by them of qualifying functions.
5
In subsection (4) “qualifying function”, in relation to a person, means a function relating to the carrying on of activities (whether or not regulated activities) by—
a
in the case of an approved person, the person on whose application approval was given, and
b
in any other case, the person's employer.
6
In this section any reference to an employee of a person (“P”) includes a reference to a person who—
a
personally provides, or is under an obligation personally to provide, services to P under an arrangement made between P and the person providing the services or another person, and
b
is subject to (or to the right of) supervision, direction or control by P as to the manner in which those services are provided,
and “employer” is to be read accordingly.
64BRules of conduct: responsibilities of relevant authorised persons
1
This section applies where a regulator makes rules under section 64A (“conduct rules”).
2
Every relevant authorised person must—
a
notify all relevant persons of the conduct rules that apply in relation to them, and
b
take all reasonable steps to secure that those persons understand how those rules apply in relation to them.
3
The steps which a relevant authorised person must take to comply with subsection (2)(b) include, in particular, the provision of suitable training.
4
In this section “relevant person”, in relation to an authorised person, means—
a
any person in relation to whom an approval is given under section 59 on the application of the authorised person, and
b
any employee of the authorised person.
5
If a relevant authorised person knows or suspects that a relevant person has failed to comply with any conduct rules, the authorised person must notify the regulator of that fact.
6
In this section “employee”, in relation to an authorised person, has the same meaning as in section 64A.
7
For the meaning of “relevant authorised person”, see section 71A.
64CF136Requirement for relevant authorised persons to notify regulator of disciplinary action
1
If—
a
a relevant authorised person takes disciplinary action in relation to a relevant person, and
b
the reason, or one of the reasons, for taking that action is a reason specified in rules made by the appropriate regulator for the purposes of this section,
the relevant authorised person must notify that regulator of that fact.
2
“Disciplinary action”, in relation to a person, means any of the following—
a
the issuing of a formal written warning;
b
the suspension or dismissal of the person;
c
the reduction or recovery of any of the person's remuneration.
3
“The appropriate regulator” means—
a
in relation to relevant authorised persons that are PRA-authorised persons, the FCA or the PRA;
b
in relation to any other relevant authorised persons, the FCA.
4
“Relevant person” has the same meaning as in section 64B.
5
For the meaning of “relevant authorised person”, see section 71A.
C34C35C36C37C60C64C71C70C7266 Disciplinary powers.
1
F43A regulator may take action against a person under this section F44(whether or not it has given its approval in relation to the person) if—
a
it appears to the F45regulator that he is guilty of misconduct; and
b
the F46regulator is satisfied that it is appropriate in all the circumstances to take action against him.
F1591A
For provision about when a person is guilty of misconduct for the purposes of action by a regulator—
a
see section 66A, in the case of action by the FCA, and
b
see section 66B, in the case of action by the PRA.
F1602
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1662A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
If the F47regulator is entitled to take action under this section against a person, F1it may do one or more of the following——
C38a
impose a penalty on him of such amount as it considers appropriate;
F2aa
suspend, for such period as it considers appropriate, any approval of the performance by him of any function to which the approval relates;
F161ab
impose, for such period as it considers appropriate, any conditions in relation to any such approval which it considers appropriate;
ac
limit the period for which any such approval is to have effect;
b
publish a statement of his misconduct.
F33A
The period for which a suspension or F162condition is to have effect may not exceed two years.
3B
A suspension F168, condition or limitation may have effect in relation to part of a function.
3C
A F169condition may, in particular, be imposed so as to require any person to take, or refrain from taking, specified action.
3D
F48The regulator taking action under this section may—
b
vary a suspension or F172condition so as to reduce the period for which it has effect or otherwise to limit its effect.
F163c
vary a limitation so as to increase the period for which the approval is to have effect.
4
5
For the purposes of subsection (4)—
a
F51a regulator is to be treated as knowing of misconduct if it has information from which the misconduct can reasonably be inferred; and
b
proceedings against a person in respect of misconduct are to be treated as begun when a warning notice is given to him under section 67(1).
F1205ZA
“The relevant period” is—
a
in relation to misconduct which occurs before the day on which this subsection comes into force, the period of 3 years, and
b
in relation to misconduct which occurs on or after that day, the period of 6 years.
F45A
“Approval” means an approval given under section 59.
F1676
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1647
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F58
In relation to any time while a suspension is in force under subsection (3)(aa) in relation to part of a function, any reference in section 59 or 63A to the performance of a function includes the performance of part of a function.
9
If at any time a F165condition imposed under subsection (3)(ab) is contravened, the approval in relation to the person concerned is to be treated for the purposes of sections 59 and 63A as if it had been withdrawn at that time.
66AF142Misconduct: action by the FCA
1
For the purposes of action by the FCA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
2
Condition A is that—
a
the person has at any time failed to comply with rules made by the FCA under section 64A, and
b
at that time the person was—
i
an approved person, or
ii
an employee of a relevant authorised person.
3
Condition B is that—
a
the person has at any time been knowingly concerned in a contravention of a relevant requirement by an authorised person, and
b
at that time the person was—
i
an approved person in relation to the authorised person, or
ii
in the case of a relevant authorised person, an employee of the authorised person.
4
In this section “relevant requirement” means a requirement—
a
imposed by or under this Act, F173...
F174aa
imposed by the Alternative Investment Fund Managers Regulations 2013, or;
b
imposed by any qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
5
Condition C is that—
a
the person has at any time been a senior manager in relation to a relevant authorised person,
b
there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and
c
the senior manager was at that time responsible for the management of any of the authorised person's activities in relation to which the contravention occurred.
6
But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the FCA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).
7
For the purposes of subsection (5)—
“senior manager”, in relation to a relevant authorised person, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the authorised person of a regulated activity;
“designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).
8
In this section—
“approved person”—
- a
means a person in relation to whom an approval is given under section 59, and
- b
in relation to an authorised person, means a person in relation to whom such approval is given on the application of the authorised person;
- a
“employee”, in relation to a person, has the same meaning as in section 64A.
9
For the meaning of “relevant authorised person”, see section 71A.
66BMisconduct: action by the PRA
1
For the purposes of action by the PRA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
2
Condition A is that—
a
the person has at any time failed to comply with rules made by the PRA under section 64A, and
b
at that time the person was—
i
an approved person, or
ii
an employee of a relevant PRA-authorised person.
3
Condition B is that—
a
the person has at any time been knowingly concerned in a contravention of a relevant requirement by a PRA-authorised person, and
b
at that time the person was—
i
an approved person in respect of the performance of a relevant senior management function in relation to the carrying on by the PRA-authorised person of a regulated activity, or
ii
in the case of a relevant PRA-authorised person, an employee of the authorised person.
4
In this section “relevant requirement” means a requirement—
a
imposed by or under this Act, or
b
imposed by any qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
5
Condition C is that—
a
the person has at any time been a senior manager in relation to a relevant PRA-authorised person,
b
there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and
c
the senior manager was at that time responsible for the management of any of the authorised person's activities in relation to which the contravention occurred.
6
But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the PRA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).
7
For the purposes of subsection (5)—
“senior manager”, in relation to a relevant PRA-authorised person, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the authorised person of a regulated activity;
“designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).
8
In this section—
“approved person”—
- a
means a person in relation to whom—
- i
the PRA has given its approval under section 59, or
- ii
the FCA has given its approval under section 59 in respect of the performance by the person of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity, and
- i
- b
in relation to an authorised person, means a person in relation to whom approval under section 59 is given on the application of the authorised person;
- a
“employee”, in relation to a person, has the same meaning as in section 64A;
“relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person;
“relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).
9
For the meaning of “relevant authorised person”, see section 71A.
C39C40C41C42C60C65C71C70C7267 Disciplinary measures: procedure and right to refer to Tribunal.
1
2
A warning notice about a proposal to impose a penalty must state the amount of the penalty.
F72A
A warning notice about a proposal—
a
to suspend an approval, or
b
to impose a F178condition in relation to the performance of a function,
must state the period for which the suspension or F178condition is to have effect.
F1752B
A warning notice about a proposal to limit the period for which an approval is to have effect must state the length of that period.
3
A warning notice about a proposal to publish a statement must set out the terms of the statement.
C434
5
A decision notice about the imposition of a penalty must state the amount of the penalty.
F95A
A decision notice about—
a
the suspension of an approval, or
b
the imposition of a F180condition in relation to the performance of a function,
must state the period for which the suspension or F180condition is to have effect.
F1765B
A decision notice about limiting the period for which an approval is to have effect must state the length of that period.
6
A decision notice about the publication of a statement must set out the terms of the statement.
7
F118
Approval” means an approval given under section 59.
9
“Other interested parties”, in relation to F111a person (“A”) in relation to whom approval has been given, are—
a
the person on whose application the approval was given (“B”); and
b
the person by whom A's services are retained, if not B.
F112...
C44C45C46C60C66C71C70C7268 Publication.
After a statement under section 66 is published, F113the regulator publishing it must send a copy of it to the person concerned and to any person to whom a copy of the decision notice was given.
C47C48C49C50C60C62C67C71C70C7269 Statement of policy.
1
F52Each regulator must prepare and issue a statement of its policy with respect to—
b
the amount of penalties under that section; F125...
d
the period for which approvals under section 59 are to have effect as a result of a limitation under section 66.
2
F53A regulator's policy in determining what the amount of a penalty should be F13, or what the period for which a suspension or restriction is to have effect should be, must include having regard to—
a
the seriousness of the misconduct in question in relation to the nature of the principle or requirement concerned;
b
the extent to which that misconduct was deliberate or reckless; and
c
whether F14the person against whom action is to be taken is an individual.
3
4
If a statement issued under this section is altered or F56replaced by a regulator, the regulator must issue the altered or replacement statement.
5
F57A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
6
7
The F60regulator may charge a reasonable fee for providing a person with a copy of the statement.
8
C51C52C53C54C60C63C68C71C70C7270 Statements of policy: procedure.
1
2
The draft must be accompanied by notice that representations about the proposal may be made to the F65regulator within a specified time.
3
Before issuing the proposed statement, the F66regulator must have regard to any representations made to it in accordance with subsection (2).
4
If the F67regulator issues the proposed statement it must publish an account, in general terms, of—
a
the representations made to it in accordance with subsection (2); and
b
its response to them.
5
6
7
This section also applies to a proposal to alter or replace a statement.
Breach of statutory duty
I971 Actions for damages.
1
A contravention of section 56(6) or 59(1) or (2) is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
2
In prescribed cases, a contravention of that kind which would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty.
3
“Private person” has such meaning as may be prescribed.
F117 “Relevant authorised person”
S. 71A and cross-heading inserted (25.7.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 33, 148(5); S.I. 2014/1819, art. 2(1)(d)
71AMeaning of “relevant authorised person”
1
In this Part “relevant authorised person” means a UK institution which—
a
meets condition A or B, and
b
is not an insurer.
2
Condition A is that the institution has permission under Part 4A to carry on the regulated activity of accepting deposits.
3
Condition B is that—
a
the institution is an investment firm,
b
it has permission under Part 4A to carry on the regulated activity of dealing in investments as principal, and
c
when carried on by it, that activity is a PRA-regulated activity.
4
The Treasury may by order provide that authorised persons falling within any of the following descriptions are “relevant authorised persons” for the purposes of this Part—
a
non-UK institutions (or non-UK institutions of a specified description) that are credit institutions;
b
non-UK institutions that are investment firms of a specified description.
“Specified” means specified in the order.
5
If the Treasury propose to make an order under subsection (4) they must consult—
a
the FCA,
b
the PRA,
c
any organisations that appear to them to be representative of interests substantially affected by the proposals, and
d
any other persons that they consider appropriate.
6
In this section—
a
“UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;
b
“non-UK institution” means an institution that is not a UK institution;
c
“credit institution” means any credit institution as defined in Article 4.1(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council;
d
“insurer” means an institution which is authorised under this Act to carry on the regulated activity of effecting or carrying out contracts of insurance as principal.
7
Subsections (2), (3) and (6)(d) are to be read in accordance with Schedule 2, taken with any order under section 22.
Pt. V (ss. 56-71) modified (1.12.2001) by S.I. 2001/3592, arts. 1(2), 114(3)(a), 128(3)(a) (with art. 23(2))