In June 2020, we set out our expectations to help firms using Appointed Representative (AR) arrangements apply the Approved Persons Regime (APR) during coronavirus (Covid-19). We offered some additional flexibility in the application of rules to firms that were impacted by coronavirus. Below is our updated information.
December 2020 update
As firms have adapted to the impact of the pandemic over the past few months, our expectation is that firms’ application of these rules returns to normal.
Firms should be aware that some of the previously available provisions will end on 7 January 2021 and that the relevant modifications by consent will end after 30 April 2021. We provide more detail below on what this means.
Temporary arrangements for controlled functions – 12-week rule
We previously issued a Modification by Consent to the 12-week rule to support firms using temporary arrangements during the crisis. If temporary arrangements made as a result of the pandemic lasted longer than 12 weeks, firms could notify us that they consented to an extension of the 12-week rule.
The modification by consent is still available. However, a firm cannot consent to the modification after 30 April 2021 and all modifications consented to before then will come to an end on that date. The end date means that the maximum period of extension available to firms reduces closer to 30 April 2021. For example, if a temporary replacement for an approved person is first appointed on 1 January 2021, the allowance for a temporary replacement runs out on 30 April 2021. It makes no difference to the end date when the firm consents to the modification and whether it does this before or after the date of this statement. This means that the modification will not assist with a temporary appointment that begins after 5 February 2021.
Only the Principal can consent to the modification by consent and so it is the Principal – rather than the AR – who should notify us of the consent. Roles requiring approval under the customer function (CF30) cannot be covered using the 12-week rule. The modification by consent does not vary this exclusion.
There is little change from the previous statement in relation to furloughed staff.
There may be cases where ARs decide to furlough Approved Persons if they are unable to fulfil their responsibilities, eg due to illness, caring responsibilities or if they have no current practical responsibilities. Unless an individual is permanently leaving their post, they can retain their approval during their absence and will not need to be re-approved by the FCA when they return. The Principal firm is still responsible for ensuring the Approved Person in the AR is fit and proper.
Notification and documentation
In our previous statement in relation to notifications about temporary arrangements, we said that we did not expect firms to notify us under Form D of the temporary arrangements described on this page. We made clear that we expected these arrangements to be clearly documented internally, so that everyone understands who is responsible for what, and that this should be available if we request it – now or in the future.
This provision will end on 7 January 2021, and we expect firms to apply these rules as normal from then. However, we do not expect firms to submit their Form D relating to changes made before 7 January 2021.
Responsibilities of the Principal firm
Regulated firms that use ARs to carry on regulated activity remain responsible for their ARs and networks meeting our rules. Principals should continue to ensure that:
- the controllers, directors, partners, proprietors and managers of an AR are fit and proper
- the AR is solvent and suitable to act for the firm
- the Principal has adequate controls over the AR’s activities
- the appointment does not prevent the firm from satisfying and continuing to satisfy the threshold conditions
- the Principal is able to monitor and enforce compliance with relevant requirements