Requirements of approved persons

Approved persons have to know and meet our regulatory requirements, as well as understand how to apply them.

Approved persons have to:

  • meet and abide by the rules of our fit and proper test
  • comply with the Conduct Rules
  • report anything that could affect their ongoing fitness and propriety to us and the authorised firm via Form D (PDF)

Conduct Rules

The Conduct Rules apply to all employees within a firm, not just approved persons. They set basic standards of good personal conduct, against which we can hold people to account. They can be found in the COCON chapter of our Handbook.

As the Conduct Rules apply to staff directly, they will help shape the culture, standards and policies of firms as a whole and promote positive behaviors that reduce them. The Conduct Rules represent a meaningful change in the standards of we expect from those working in the industry.

By applying the Conduct Rules to a broad range of staff we aim to improve individual accountability and awareness of conduct issues across firms. They apply to a firm’s regulated and unregulated financial services activities (including any related ancillary activities – i.e. an activity carried on in connect with a regulated activity).

There are two tiers of Conduct rules which apply to all firms. The first is a general set of rules that applies to most employees and directors in a firm. The second tier consists of rules that only apply to Senior Managers There is also one Senior Manager rule, SC4, that applies to NEDs who are not Senior Managers.

First Tier – Individual Conduct Rules:

  1. You must act with integrity
  2. You must act with due care, skill and diligence
  3. You must pay due regard to the interests of customers and treat them fairly
  4. 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 would reasonably expect notice

Non-compliance

We will take disciplinary action against approved persons who:

  • act in a way that is inconsistent with the rules for senior management functions
  • knowingly work together to breach their firm’s rules

Our actions include fines, suspensions of approval, imposing restriction and issuing a public statement about the misconduct.