Code of Practice for Approved Persons: general

Part

APER Statements of Principle and Code of Practice for Approved Persons

Chapter

Code of Practice for Approved Persons: general

Printed on: 14/10/2024

Rulebook at: 01/10/2005

APER 3

Code of Practice for Approved Persons: general

APER 3.1

Introduction

01/12/2004

APER 3.1.1

This Code of Practice for Approved Persons is issued under section 64 of the Act (Conduct: statements and codes) for the purpose of helping to determine whether or not an approved person's conduct complies with a Statement of Principle. The code sets out descriptions of conduct which, in the FSA's opinion, do not comply with the relevant Statements of Principle. The code also sets out certain factors which, in the opinion of the FSA, are to be taken into account in determining whether an approved person's conduct complies with a particular Statement of Principle. The description of conduct, the factors and related provisions are identified in the text by the letter 'E' as explained in chapter 6 of the Reader's Guide.

01/04/2005

APER 3.1.2

The Code of Practice for Approved Persons in issue at the time when any particular conduct takes place may be relied on so far as it tends to establish whether or not that conduct complies with a Statement of Principle.

01/12/2001

APER 3.1.3

The significance of conduct identified in the Code of Practice for Approved Persons as tending to establish compliance with or a breach of a Statement of Principle will be assessed only after all the circumstances of a particular case have been considered. Account will be taken of the context in which a course of conduct was undertaken, including the precise circumstances of the individual case, the characteristics of the particular controlled function and the behaviour to be expected in that function.

01/12/2001

APER 3.1.4

(1) An approved person will only be in breach of a Statement of Principle where he is personally culpable. Personal culpability arises where an approved person's conduct was deliberate or where the approved person's standard of conduct was below that which would be reasonable in all the circumstances (see ENF 11.5.3 G (Action against approved persons)).
(2) For the avoidance of doubt, the Statements of Principle do not extend the duties of approved persons beyond those which the firm owes in its dealings with customers or others.

01/12/2001

APER 3.1.5

In particular, in determining whether or not an approved person's conduct complies with a Statement of Principle, the FSA will take into account the extent to which an approved person has acted in a way that is stated to be in breach of a Statement of Principle.

01/12/2001

APER 3.1.6

The Code of Practice for Approved Persons (and in particular the specific examples of behaviour which may be in breach of a generic description of conduct in the code) is not exhaustive of the kind of conduct that may contravene the Statements of Principle. The purpose of the code is to help determine whether or not a person's conduct complies with a Statement of Principle. The code may be supplemented from time to time. The FSA will amend the code if there is a risk that unacceptable practice may become prevalent, so as to make clear what conduct falls below the standards expected of approved persons by the Statements of Principle.

01/12/2001

APER 3.1.7

Statements of Principle 1 to 4 apply to all approved persons. In the Statements of Principle and in the Code of Practice for Approved Persons, a reference to "his controlled function" is a reference to the controlled function to which the approval relates. A person performing a significant influence function is also subject to the additional requirements set out in Statements of Principle 5 to 7 in performing that controlled function. Those responsible under SYSC 2.1.3 R (Apportionment of responsibilities) for the firm's apportionment obligation will be specifically subject to Statement of Principle 5 (and see in particular APER 4.5.6 E). In addition, it will be the responsibility of any such approved person to oversee that the firm has appropriate systems and controls under Statement of Principle 7 (and see in particular APER 4.7.3 E).

01/12/2001

APER 3.1.8

In applying Statements of Principle 5 to 7, the nature, scale and complexity of the business under management and the role and responsibility of the individual performing a significant influence function within the firm will be relevant in assessing whether an approved person's conduct was reasonable. For example, the smaller and less complex the business, the less detailed and extensive the systems of control need to be. The FSA will be of the opinion that an individual performing a significant influence function may have breached Statements of Principle 5 to 7 only if his conduct was below the standard which would be reasonable in all the circumstances. (See also APER 3.3.1 E (3) to (5))

01/12/2001

APER 3.1.9

UK domestic firms listed on the London Stock Exchange are subject to the Combined Code developed by the Committee on Corporate Governance, whose internal control provisions are amplified in the Guidance for Directors issued by the Institute of Chartered Accountants in England and Wales. FSA-regulated firms in this category will thus be subject to that code as well as to the requirements and standards of the regulatory system. In forming an opinion whether approved persons have complied with its requirements, the FSA will give due credit for their following corresponding provisions in the Combined Code and related guidance.

01/12/2001

APER 3.2

Factors relating to all Statements of Principle

01/12/2004

APER 3.2.1

In determining whether or not the particular conduct of an approved person within his controlled function complies with the Statements of Principle, the following are factors which, in the opinion of the FSA, are to be taken into account:

(1) whether that conduct relates to activities that are subject to other provisions of the Handbook;
(2) whether that conduct is consistent with the requirements and standards of the regulatory system relevant to his firm.

01/12/2001

APER 3.3

Factors relating to Statements of Principle 5 to 7

01/12/2004

APER 3.3.1

In determining whether or not the conduct of an approved person performing a significant influence function complies with Statements of Principle 5 to 7, the following are factors which, in the opinion of the FSA, are to be taken into account:

(1) whether he exercised reasonable care when considering the information available to him;
(2) whether he reached a reasonable conclusion which he acted on;
(3) the nature, scale and complexity of the firm's business;
(4) his role and responsibility as an approved person performing a significant influence function;
(5) the knowledge he had, or should have had, of regulatory concerns, if any, arising in the business under his control.

01/12/2001