Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to every firm that is:

1. (1) a CRR firm;
2. (2) a credit union; or
3. (3) a third country CRR firm in relation to:
1. (a) the activities of its establishment in the UK; or
2. (b) if it does not have an establishment in the UK, activities in the UK.

1.2

The matters referred to in 2 are relevant to the PRA’s determination of whether a person to whom a PRA senior management approval application relates is fit and proper.

1.3

In this Part, the following definition shall apply:

regulatory reference template

means the template in 7.1.

2.1

A firm must not make a PRA senior management approval application in relation to a person unless it is satisfied that person is fit and proper to perform the PRA senior management function to which the application relates.

2.2

A firm must not issue a certificate in relation to a person, unless it is satisfied that person is fit and proper to perform the certification function to which the certificate relates.

2.3

A firm must not appoint a person as a notified non-executive director or credit union non-executive director, unless it is satisfied that person is fit and proper to perform that non-executive director role.

2.4

A firm other than a third country CRR firm must ensure that each member of its management body is at all times fit and proper.

[Article 91(1) CRD IV]

2.5

A third country CRR firm must ensure that each person who performs a PRA senior management function in relation to its UK establishment is at all times fit and proper.

2.6

In deciding whether a person is fit and proper pursuant to 2.1 to 2.5 and, where applicable, section 60A(1) of FSMA, a firm must be satisfied that the person:

1. (1) has the personal characteristics (including being of good repute and integrity);
2. (2) possesses the level of competence, knowledge and experience;
3. (3) has the qualifications; and
4. (4) has undergone or is undergoing all training,

required to enable such person to perform his or her function effectively and in accordance with any relevant regulatory requirements, including those under the regulatory system, and to enable sound and prudent management of the firm.

2.7

1. (1) Before deciding whether a person (P) is fit and proper, a firm must take reasonable steps to obtain appropriate references covering the past 6 years from the following:
1. (a) each FCA-authorised person and PRA-authorised person that is, or was:
1. (i) P’s current or former employer; or
2. (ii) an organisation (not falling within (i)) at which P is currently serving, or has served, as an approved person, non-executive director, notified non-executive director, credit union non-executive director or a key function holder, or performed, or is currently performing, a certification function;
2. (b) P’s other current and former employers; and
3. (c) from other organisations at which P served as, or is currently, a non-executive director.
2. (2) A firm (A) is not required to request references from an employer of P or any organisation referred to in (1) (such employer or organisation, B) where:
1. (a) A and B are members of the same group; and
2. (b) there are adequate arrangements in place under which A has access to all information sources to which B has access to the extent necessary were B giving a reference in accordance with this Part.
3. If A has access to only some of the information sources in (b), A may ask for a reference that only covers the information to which A does not have access. To the extent that A does not request a reference in the circumstances set out in this (2), A must access and obtain the relevant information.
4. (3) A firm must take reasonable steps to obtain references:
1. (a) in respect of a PRA senior management approval application, no later than one month before the end of the application period set out in section 61 of FSMA;
2. (b) where a request by a firm for a reference in respect of a PRA senior management approval application to an employer or organisation would require the firm, the employer, the organisation or any other person to make a mandatory disclosure prior to P disclosing to its current employer or organisation, as the case may be, that such application has been made, before the end of the application period set out in in section 61 of FSMA; or
3. (c) in respect of the issuing of a certificate under section 63F of FSMA, before the certificate is issued.

2.8

1. (1) Where a firm (A) seeks to obtain a reference pursuant to 2.7, A must request that the organisation giving the reference (B) discloses all matters of which B is aware that B reasonably considers to be relevant to the assessment of that person’s fitness and propriety.
2. (2) A must also request that, if B is a full scope regulatory reference firm, B discloses the information contained in the regulatory reference template.

2.9

In deciding whether a person (P) is fit and proper in connection with a PRA senior management approval application or on appointment as a notified non-executive director or credit union non-executive director, a firm must:

1. (1) obtain P’s consent for the firm to request the fullest information in relation to P that it is lawfully able to request under the Police Act 1997 (Certificates of Criminal records, etc) and related subordinated legislation of the UK or any part of the UK;
2. (2) if P has lived or worked outside the UK for a material time in the previous six years, obtain P’s consent for the firm to request the fullest information in relation to P that it is lawfully able to request under equivalent overseas legislation; and
3. (3) request, and have regard to, such information.

2.10

If a firm previously obtained the information in 2.7 to 2.9 when it determined that a person was fit and proper for the purposes of this Part and the firm engages that person for a continuous period of time, the firm is not required to comply with 2.7 to 2.9 again in respect of any subsequent appointments at the same firm within that continuous period.

3.1

A firm must contractually require any PRA approved person, notified non-executive director or credit union non-executive director to:

1. (1) act with integrity;
2. (2) act with due skill, care and diligence;
3. (3) be open and co-operative with the FCA, the PRA and other regulators; and
4. (4) disclose appropriately any information to the FCA or PRA which they would reasonably expect notice.

3.2

A firm must contractually require any PRA approved person to:

1. (1) take reasonable steps to ensure that the business of the firm for which they are responsible is controlled effectively;
2. (2) take reasonable steps to ensure that the business of the firm for which they are responsible complies with relevant requirements and standards of the regulatory system; and
3. (3) take reasonable steps to ensure that any delegation of their responsibilities is to an appropriate person and that they oversee the discharge of the delegated responsibility effectively.

4.1

This chapter applies to CRR firms only.

4.2

A firm must notify the PRA when a person becomes a notified non-executive director and shall provide the PRA with all of the information needed to assess whether that person is fit and proper. The PRA directs that when such information is provided by a designated investment firm, it must be accompanied by the designated additional information.

4.3

If the notification referred to in 4.2 is in respect of a person who, on becoming a notified non-executive director, ceases to perform a PRA senior management function or an FCA-designated senior management function, the firm is not required to provide information needed to assess the fitness and propriety of that person unless there has been a change in the information provided in respect of that person regarding fitness and propriety provided to the PRA or the FCA at the time the application for the approval for performance of the PRA senior management function or the FCA-designated senior management function was made.

4.4

If a firm becomes aware of information which would reasonably be material to the assessment of a current or former notified non-executive director’s fitness and propriety under this Part, it must inform the PRA in writing as soon as practicable.

4.5

Where a firm replaces a notified non-executive director because the firm considers that person no longer fulfils the requirements of 2.3, the firm must notify the PRA as soon as reasonably practicable.

4.6

Where a notified non-executive director assumes a new role with the firm or ceases to be a director of the firm, the firm must notify the PRA in writing as soon as reasonably practicable.

5.1

1. (1) If any PRA-authorised person (A):
1. (a) is considering issuing a certificate to, making a PRA senior management approval application in respect of, or appointing as a key function holder, a non-executive director, a notified non-executive director or a credit union non-executive director, a person (P);
2. (b) makes a request for a reference or other information in respect of P from a firm to which this Part applies (B), in B’s capacity as:
1. (i) P’s current or former employer; or
2. (ii) an organisation (not falling within (i)) at which P served as, or is currently, a senior manager, other approved person, non-executive director, notified non-executive director or credit union non-executive director, or performed, or is currently performing, a certification function or any other function; and
3. (iii) indicates to B the purpose of the request
2. B must, as soon as reasonably practicable, provide a reference and disclose to A in the reference all information of which B is aware that B reasonably considers to be relevant to A’s assessment of whether P is fit and proper.
3. (2) A firm (B) which is required to make a disclosure under (1) is required to disclose information on or relating to something which occurred or existed:
1. (i) in the six years before the request for a reference;
2. (ii) between the date of the request for a reference and the date B gives the reference; or
3. (iii) in the case of serious matters, at any time.
4. (3) When giving the reference referred to in 5.1(1), a firm must
1. (a) use the regulatory reference template; and
2. (b) include all the information set out in the regulatory reference template.
5. (4) A firm may make formatting modifications to the regulatory reference template when giving a reference under 5.1(1), provided the regulatory reference template as modified includes all substantive information required by (3)(b).

5.2

1. (1) If:
1. (a) a firm to whom this Part applies (B) has given a reference pursuant to 5.1 to any PRA-authorised person (A) about any person (P); and
2. (b) either
1. (i) B is or has become aware of matters or circumstances that mean that, if B was giving that reference now, this Part would require B to draft it differently; or
2. (ii) B has reached conclusions of the type described in item (E), or taken disciplinary action of the type described in item (F), of the regulatory reference template, and had B taken or reached those conclusions or actions in the six year period referred to in the regulatory reference template, this Part would require B to draft the reference differently; and
3. (c) it would be reasonable to consider the differences in (b) to be significant for an assessment by A of the fitness and propriety of P for the role at A for which the reference was given;
2. B must make reasonable enquiries as to the identity of P’s current employer and (subject to (3)), provide A with details of those differences in writing as soon as reasonably practicable.
3. (2) The obligation to update regulatory references applies in the following circumstances:
1. (a) if P is no longer employed by or in the service of B, the obligation to update references in (1) ends six years after P ceased to be employed by, or in the service of B;
2. (b) if P is no longer employed by or in the service of B and the matters or circumstances are not serious matters, B does not have to disclose something if it did not occur or exist in the six year period ending on the date B gave the original reference. This limitation is additional to that in (2) (a).
3. (c) if P is still employed by, or in the service of B, (1), applies throughout the period P remains employed by, or in the service of, B.
4. (3) B is not required to update a regulatory reference given to A if:
1. (a) A is no longer a full scope regulatory reference firm;
2. (b) P is no longer employed by, or in the service of, A;
3. (c) P is not yet employed by, or in the service of A, and it is no longer intended that P will be employed or serve at A: or
4. (d) despite making reasonable enquiries under (1) B does not know whether P is still employed by, or in the service of, A.
5. (4) (1) does not require B to update references provided prior to 7 March 2017.
6. (5) If a firm (B) has given a reference to another firm (A) under 2.7 in respect of a person (P) no more than six years ago and, B asks A if P is still an employee of, or serving at, A, A must answer that question as soon as reasonably possible, even if B does not tell A the reason for the enquiry.

5.3

A firm must not enter into any arrangements or agreements with any person that limit its ability to disclose information under this Part.

5.4

This Part does not require a firm to disclose information that has not been properly verified.

5.5

1. (1) A firm must arrange for orderly records to be kept that are sufficient to enable it to comply with the requirements of this Part in response to any requests for references referred to in that Part in relation to item (E) and item (F) in the regulatory reference template.
2. (2) A firm does not breach the requirements of this Part by failing to include information in a reference that it would otherwise have to include if:
1. (a) the reason for the omission is that the firm does not have the necessary records; and
2. (b) neither (1) nor any other requirement of or under the regulatory system requires the firm to have those records.

6.1

The requirement to obtain regulatory references in accordance with 2.7 does not apply to a firm in respect of any person to the extent that:

1. (a) the firm is deciding whether the person is fit and proper for the purpose of issuing a certificate to perform a certification function;
2. (b) immediately prior to 7 March 2017, the person performed the same certification function for the firm.

6.2

The requirement to request regulatory references from a full scope regulatory reference firm in accordance with the requirements of 2.8(2) does not apply to a firm in respect of an application for approval as an approved person made before 7th March 2017.

6.3

[Deleted.]

6.4

A CRR firm must notify the PRA before 7 March 2016 of any director who, in relation to the firm, will be a notified non-executive director on 7 March 2016 and who immediately prior to 7 March 2016 was approved as a non-executive director.

6.5

Item (F) in the regulatory reference template does not require disclosure of disciplinary action that took place before 7th March 2016 if the firm’s records do not show whether the conduct that was subject to disciplinary action amounted to a breach of the individual conduct requirements referred to in item (F) in the regulatory reference template.

7.1

The regulatory reference template is the template found here Opens in a new window.