Prudential Regulation Authority Rulebook

3.1

The Chief Executive function (SMF1) is the function of having responsibility, under the immediate authority of the governing body, alone or jointly with others, for carrying out the management of the conduct of the whole of the business (or relevant activities) of a firm.

3.2

The Chief Finance function (SMF2) is the function of having responsibility for the management of the financial resources of a firm and reporting to the governing body of a firm in relation to its financial affairs.

3.3

The Chief Risk function (SMF4) is the function of having responsibility for overall management of the risk management system specified in Conditions Governing Business 3.

3.4

The Head of Internal Audit function (SMF5) is the function of having responsibility for the management of the internal audit function specified in Conditions Governing Business 5.

3.5

The Head of Key Business Area function (SMF6) is the function of having responsibility for management of a business area or division of a firm (other than a third country branch undertaking) where:

1. (1) the relevant business area or division of the firm accounts for more than 20% of the firm’s gross revenue; and
2. (2) the person performing that function does not report to a person performing the Head of Key Business Area function in respect of that same business area or division of the firm; and
3. (3) either the gross total assets or the technical provisions of the relevant business area or division of the firm exceed £10 billion.

3.6

For the purposes of 3.5, the gross total assets and technical provisions of the business area or division of the firm and the percentage of the gross revenue of the firm shall be assessed on the basis of either:

1. (1) the assets, technical provisions and revenues for the business area or division and the firm for the firm’s financial year immediately preceding that in which the person is allocated with the specified responsibilities; or
2. (2) if the threshold amount is not met for that period, on the basis of the annual average amount assessed across a rolling period of five years, assessed by reference to the firm’s annual accounting date; and where the firm or the business area or division has been in existence for less than five years, the assessment will be made on the basis of the annual average amount for the period during which the firm or that business area or division has existed (calculated by reference to the firm’s annual accounting date).

3.7

The Chief Operations function (SMF24) is the function of having responsibility for the internal operations and technology of a firm.