Transitional Provisions and Schedules

Part

SYSC Senior Management Arrangements, Systems and Controls sourcebook

Chapter

Transitional Provisions and Schedules

Printed on: 06/11/2024

Rulebook at: 27/07/2012

Transitional Provisions and Schedules

SYSC TP 1

Common platform firms

TP 1: Common platform firms

Application

1.1

SYSC TP 1 applies to a common platform firm.

Commencement and expiry of SYSC TP1

1.2

SYSC TP 1 comes into force on 1 January 2007 and applies until 1 November 2007.

Purpose

1.3

From 1 November 2007, a firm must comply with the common platform requirements and SYSC 3 will cease to apply to it. However, until 1 November 2007, a firm may choose to comply with the specific parts of the common platform requirements instead of SYSC 3. The purpose of SYSC TP 1 is to give a firm the option of complying with the common platform requirements sooner than 1 November 2007.

1.4

The ability to comply with the common platform requirements before 1 November 2007 does not apply to SYSC 9 (Record-keeping), SYSC 8.2 (Outsourcing of portfolio management for retail clients to a non-EEA State) or SYSC 8.3 (Guidance on outsourcing portfolio management for retail clients to a non-EEA State). All firms must continue to comply with the record-keeping requirements in SYSC 3.2.22 G until 1 November 2007, when SYSC 9 will enter into force.

The decision to comply with the common platform requirements

1.5

SYSC 4 to SYSC 7, SYSC 8.1 and SYSC 10 do not apply to a firm unless it decides to comply with them sooner than 1 November 2007.

1.6

If a firm decides to comply with the common platform requirements in accordance with SYSC TP 1.5R:

(1) it must make a record of the date of the decision and the date from which it is to be effective; and

(2) subject to SYSC TP 1.7R below, from the effective date, it must comply with SYSC 4 to SYSC 7, SYSC 8.1 and SYSC 10, and SYSC 3 will not apply to it.

1.7

The following provisions in SYSC 3 will continue to apply to a firm that decides to comply with the common platform requirements before the 1 November 2007:

(1) SYSC 3.2.23 R, SYSC 3.2.24 R, SYSC 3.2.26 R and SYSC 3.2.28 R to SYSC 3.2.35 R in so far as SYSC 12.1.13 R applies to it; and

(2) SYSC 3.2.20 R to SYSC 3.2.22 G.

1.8

The purpose of SYSC TP 1.7R is to ensure the effective operation of the provisions on consolidated risk management processes and internal control mechanisms in relation to a firm that decides to comply with the common platform requirements before 1 November 2007.

1.9

A decision by a firm to comply with the common platform requirements must be made in relation to all of the common platform requirements. The firm may not 'cherry-pick'.

Definitions in SYSC TP1 and the common platform requirements

1.10

The terms common platform firm and MiFID investment firm have effect in SYSC TP 1 and the common platform requirements as if MiFID applied generally from 1 January 2007.

01/01/2007

SYSC TP 2

Firms other than common platform firms, insurers, managing agents and the Society

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies

Transitional provision

Transitional provision: dates in force

Handbook provisions:
Coming into force

2.1

SYSC 8.1

If a firm other than a common platform firm, insurer, managing agent or the Society has in force on 1 April 2009 outsourcing arrangements which would be covered by SYSC 8.1 it need not amend those contracts to comply with these provisions but should comply with the new rules and guidance in respect of any outsourcing contracts which are entered into, or materially amended, on or after 1 April 2009.

1 April 2009 indefinitely

1 April 2009

01/04/2009

SYSC TP 3

Remuneration code

[deleted]

Until 1 January 2012, SYSC 19A.3.54 R and SYSC 19A Annex 1 (on voiding and recovery) apply only in relation to a firm that was subject to the version of the Remuneration Code that applied before 1 January 2011.

(1)

Paragraph (2) applies in relation to a firm that was not subject to the version of the Remuneration Code that applied before 1 January 2011 but satisfies at least one of the conditions set out in SYSC 19A.3.54 R (1B) to SYSC 19A.3.54 R (1D).

(2)

Where this paragraph applies, a contravening provision that is contained in an agreement made before 3 November 2011 is not rendered void by SYSC 19A Annex 1.1R unless it is subsequently amended so as to contravene a rule to which SYSC 19A Annex 1.1R applies.

The effect of 6R is to limit the provisions on voiding and recovery to firms which were subject to the version of the Remuneration Code which applied before 1 January 2011. That transitional provision comes to an end on 1 January 2012. A new limit providing for voiding to apply only in relation to certain types of firm is provided in SYSC 19A.3.54 R (1B) to SYSC 19A.3.54 R (1D). Paragraph 6AR applies to firms which become subject to the provisions on voiding after the transitional provision in 6R comes to an end. It prevents certain contravening provisions which predate the making of the new rules limiting the application of voiding from becoming void.

(1)

This guidance applies to a firm to which the Remuneration Code applies, where both of the following conditions are satisfied:

(a)

condition 1 is that the firm is a non-listed firm; and

(b)

condition 2 is that any parent undertaking of the firm is a non-listed undertaking.

(2)

The FSA considers that, where each of the conditions set out below is satisfied, a firm to which this guidance applies might (but will not necessarily) be able to rely on the proportionality provisions of SYSC 4.1.2 R and the remuneration principles proportionality rule (of SYSC 19A.3.3 R) to justify not complying with the requirement to pay at least 50% of variable remuneration in shares or other non-cash instruments (SYSC 19A.3.47 R).

(a)

Condition 1 is that the firm is taking the necessary steps to comply with the requirement as soon as reasonably possible and, in any event, by 1 July 2012.

(b)

Condition 2 relates to the proportion of cash that would have been issued in shares or other non-cash instruments had SYSC 19A.3.47 R been complied with ("relevant cash"). The relevant cash should not be paid at the point in time that the shares or other non-cash instruments would have vested. This is because shares or other non-cash instruments continue to have risk-alignment features following vesting due to the requirement for the firm to apply an appropriate retention policy (SYSC 19A.3.47 R (2)). Instead, the firm should pay the relevant cash following a period of deferral, the length of which should mirror the retention policy that would have been applied had SYSC 19A.3.47 R been complied with. Where the relevant cash is already subject to deferral in accordance with SYSC 19A.3.49 R, this period of deferral should be added to the period determined under SYSC 19A.3.49 R. The relevant cash should be subject to performance adjustment in accordance with Remuneration Principle 12(h) (SYSC 19A.3.51 R to SYSC 19A.3.53 G) until it vests.

(c)

Condition 3 is that the firm has adopted and is maintaining specific and effective arrangements, processes and mechanisms to manage the risks raised by its non-compliance with SYSC 19A.3.47 R.

(3)

The guidance in (1) to (2) ceases to have effect on 1 July 2012. As a result this guidance does not apply to remuneration which vests on or after 1 July 2012 (including remuneration awarded before 1 July 2012, but where deferral under SYSC 19A.3.49 R leads to it vesting on or after 1 July 2012).

01/01/2012

SYSC TP 4

Transitional Provision 4 Combined Code

(1)

(2) Material to which the transitional provision applies

(3)

(4) Transitional provision

(5) Transitional provision: dates in force

(6) Handbook provisions: coming into force

SYSC 2.1.6 G , SYSC 3.1.3 G and SYSC 4.4.6 G

References to provisions in the UK Corporate Governance Code are to be read as references to the equivalent provisions in the Combined Code for accounting periods beginning before 29 June 2010.

From 29 June 2010 to 28 December 2011

6 August 2010

06/01/2011

SYSC Sch 1

Record keeping requirements

01/12/2004

SYSC Sch 1.1

The aim of the guidance in the following table is to give the reader a quick over-all view of the relevant record keeping requirements.

It is not a complete statement of those requirements and should not be relied on as if it were.

01/12/2004

SYSC Sch 1.2

Handbook reference

Subject of record

Contents of record

When record must be made

Retention period

SYSC 2.2.1 R

Arrangements made to satisfy SYSC 2.1.1 R (apportionment) and SYSC 2.1.3 R (allocation)

Those arrangements

On making the arrangements and when they are updated

Six years from the date on which the record is superseded by a more up-to-date record

SYSC 3.2.20 R

Matters and dealings (including accounting records) which are the subject of requirements and standards under the regulatory system

Adequate

Adequate time

Adequate

SYSC 10.1.6 R

Conflict of interest

Kinds of service or activity carried out by or on behalf of the firm in which a conflict of interest entailing a material risk of damage to the interests of one or more clients has arisen or, in the case of an ongoing service or activity, may arise.

Not specified

5 years

SYSC 14.1.53 R

Prudential risk management and systems and controls

Accounting and other records that are sufficient to enable the firm to demonstrate to the FSA : (1) that the firm is financially sound and has appropriate systems and controls; (2) the firm's financial position and exposure to risk (to a reasonable degree of accuracy); (3) the firm's compliance with the rules in GENPRU, INSPRU and SYSC.

Not specified

3 years, or longer as appropriate

01/01/2007

SYSC Sch 2

Notification requirements

01/12/2004

SYSC Sch 2.1

There are no notification or reporting requirements in SYSC.

01/12/2004

SYSC Sch 3

Fees and other required payments

01/12/2004

SYSC Sch 3.1

There are no requirement for fees or other payments in SYSC.

01/12/2004

SYSC Sch 4

Powers exercised

01/12/2004

SYSC Sch 4.1

The following powers and related provisions in the Act have been exercised by the FSA to make the rules in SYSC:

Section 138 (General rule-making power)

Section 139A (General rules about remuneration)

Section 145 (Financial promotion rules)

Section 146 (Money laundering rules)

Section 149 (Evidential provisions)

Section 150(2) (Actions for damages)

Section 156 (General supplementary powers)

01/01/2011

SYSC Sch 4.2

The following powers in the Acthave been exercised by the FSA to give the guidance in SYSC:

Section 157(1) (Guidance)

Section 158A (Guidance on outsourcing by investment firms and credit institutions)

06/10/2009

SYSC Sch 5

Rights of action for damages

01/12/2004

SYSC Sch 5.1

The table below sets out the rules in SYSC contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

01/12/2004

SYSC Sch 5.2

If a 'Yes' appears in the column headed 'For private person', the rule may be actionable by a 'private person' under section 150 (or, in certain circumstances, his fiduciary or representative; see article 6(2) and (3)(c) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (SI 2001 No 2256)). A 'Yes' in the column headed 'Removed' indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given.

01/12/2004

SYSC Sch 5.3

The column headed 'For other person' indicates whether the rule may be actionable by a person other than a private person (or his fiduciary or representative) under article 6(2) and (3) of those Regulations. If so, an indication of the type of person by whom the rule may be actionable is given.

01/12/2004

SYSC Sch 5.4

Chapter/Appendix

Section/Annex

Paragraph

Right of action under section 150

For private person?

Removed?

For other person?

SYSC 2 and SYSC 3

Yes SYSC 1 Annex 1.1.12R

SYSC 4 to SYSC 10

Yes SYSC 1 Annex 1.2.19R

SYSC 11 to SYSC 19A

Yes SYSC 1.4.2 R

01/01/2011

SYSC Sch 6

Rules that can be waived

01/12/2004

SYSC Sch 6.1

As a result of regulation 10 of the Regulatory Reform (Financial Services and Markets Act 2000) Order 2007 (SI 2007/1973) the FSA has power to waive all its rules, other than rules made under section 247 (Trust scheme rules) or section 248 (Scheme particulars rules) of the Act. However, if the rules incorporate requirements laid down in European directives, it will not be possible for the FSA to grant a waiver that would be incompatible with the United Kingdom's responsibilities under those directives.

06/01/2011