Reform of Approved Persons Regime

More changes to the Handbook arising from the impending move from the FSA to the FCA/PRA regime are proposed in CP12/26 ‘Regulatory reform: the PRA and FCA regimes for Approved Persons’ – see Regulatory Roundup 44 for details of proposed changes to the authorisation and supervision regime for the same reason.

The paper particularly addresses the Approved Persons approach for dualregulated firms which will face the problem of having certain controlled functions split between the FCA (e.g. CF1 Director) and the PRA (e.g. CF3 Chief Executive). Such firms should refer to Chapter 3 of the paper.

Fortunately the majority of firms will fall under the FCA for both conduct of business and prudential regulation. Although there will be new terminology e.g. ‘customer-dealing function’ and ‘accountable functions’, and the replacement of SUP 10 with SUP 10A (FCA) and SUP 10B (PRA) there will not, in practical terms, be that many changes and indeed section 2.3 advises “…matters will continue very much as before”. The concept of Forms A to E will still exist (SUP 10 Annex 2), although we will lose CF12, 12A & 12B (actuarial functions) as these will only be relevant to dual-regulated firms.

The above relates to applications under the FCA/PRA; CP12/26 does not provide detail on the treatment of people who are already approved – details of further legislation is awaited – but it is expected that current approvals will be grandfathered over to the new regulator(s) without the need to make any new applications.

As the CP states in 4.1 (“We currently sets out (sic)… “) in line with the changes to SUP, APER (The Statements of Principle for Approved Persons) will also be amended. Note that the changes to APER 1 (Application) extend the application of APER. Currently the ‘Statements’ only apply to the extent that an approved person is performing a controlled function. The changes will extend the ‘Statements’ to include any function performed by an approved person in relation to the carrying on of a regulated activity by a firm. The functions i.e. current and as extended will be called the accountable functions (see reference above).

Comments are invited by 7 December.

We can expect further consultations driven by regulatory reform over the coming months.

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