Part

SYSC Senior Management Arrangements, Systems and Controls sourcebook

Chapter

Employees, agents and other relevant persons [Note: Not mandatory for a common platform firm until 01/11/07. See SYSC TP1]

Printed on: 15/10/2024

Rulebook at: 28/08/2007

SYSC 5

Employees, agents and other relevant persons [Note: Not mandatory for a common platform firm until 01/11/07. See SYSC TP1]

SYSC 5.1

Skills, knowledge and expertise

  • 01/01/2007

SYSC 5.1.1

handbook-rule

A common platform firm must employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them.

[Note: article 5(1)(d) of the MiFID implementing Directive]

  • 01/01/2007

SYSC 5.1.2

handbook-guidance
A firm's systems and controls should enable it to satisfy itself of the suitability of anyone who acts for it. This includes assessing an individual's honesty and competence. This assessment should normally be made at the point of recruitment. An individual's honesty need not normally be revisited unless something happens to make a fresh look appropriate.
  • 01/01/2007

SYSC 5.1.3

handbook-guidance
Any assessment of an individual's suitability should take into account the level of responsibility that the individual will assume within the firm. The nature of this assessment will generally differ depending upon whether it takes place at the start of the individual's recruitment, at the end of the probationary period (if there is one) or subsequently.
  • 01/01/2007

SYSC 5.1.4

handbook-guidance
The FSA's requirements on firms with respect to the competence of individuals are in the Training and Competence sourcebook (TC).
  • 01/01/2007

SYSC 5.1.5

handbook-guidance
The requirements on firms with respect to approved persons are in Part V of the Act (Performance of regulated activities) and SUP 10 .
  • 01/01/2007

Segregation of functions

SYSC 5.1.6

handbook-rule

A common platform firm must ensure that the performance of multiple functions by its relevant persons does not and is not likely to prevent those persons from discharging any particular functions soundly, honestly and professionally.

[Note: article 5(1)(g) of the MiFID implementing Directive]

  • 01/01/2007

SYSC 5.1.7

handbook-rule

The senior personnel of a common platform firm must define arrangements concerning the segregation of duties within the firm and the prevention of conflicts of interest.

[Note:annex V paragraph 1 of the Banking Consolidation Directive]

  • 01/01/2007

SYSC 5.1.8

handbook-guidance
The effective segregation of duties is an important element in the internal controls of a firm in the prudential context. In particular, it helps to ensure that no one individual is completely free to commit a firm's assets or incur liabilities on its behalf. Segregation can also help to ensure that a firm'sgoverning body receives objective and accurate information on financial performance, the risks faced by the firm and the adequacy of its systems.
  • 01/01/2007

SYSC 5.1.9

handbook-guidance

A common platform firm should normally ensure that no single individual has unrestricted authority to do all of the following:

  1. (1) initiate a transaction;
  2. (2) bind the firm;
  3. (3) make payments; and
  4. (4) account for it.
  • 01/01/2007

SYSC 5.1.10

handbook-guidance
Where a common platform firm is unable to ensure the complete segregation of duties (for example, because it has a limited number of staff), it should ensure that there are adequate compensating controls in place (for example, frequent review of an area by relevant senior managers).
  • 01/01/2007

SYSC 5.1.11

handbook-guidance

Where a common platform firm outsources its internal audit function, it should take reasonable steps to ensure that every individual involved in the performance of this service is independent from the individuals who perform its external audit. This should not prevent services from being undertaken by a firm's external auditors provided that:

  1. (1) the work is carried out under the supervision and management of the firm's own internal staff; and
  2. (2) potential conflicts of interest between the provision of external audit services and the provision of internal audit are properly managed.
  • 01/01/2007

Awareness of procedures

SYSC 5.1.12

handbook-rule

A common platform firm must ensure that its relevant persons are aware of the procedures which must be followed for the proper discharge of their responsibilities.

[Note: article 5(1)(d) of the MiFID implementing Directive]

  • 01/01/2007

General

SYSC 5.1.13

handbook-rule

The systems, internal control mechanisms and arrangements established by a firm in accordance with this chapter must take into account the nature, scale and complexity of its business and the nature and range of investment services and activities undertaken in the course of that business.

[Note: article 5(1) final paragraph of the MiFID implementing Directive]

  • 01/01/2007

SYSC 5.1.14

handbook-rule

A common platform firm must monitor and, on a regular basis, evaluate the adequacy and effectiveness of its systems, internal control mechanisms and arrangements established in accordance with this chapter, and take appropriate measures to address any deficiencies.

[Note: article 5(5) of the MiFID implementing Directive]

  • 01/01/2007