Aggregated News From Investment Management Regulators

Approved Persons Regime (APR) and coronavirus: our expectations

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We recognise that firms may need longer periods of temporary arrangements if, for example, an Approved Person is absent because of coronavirus, or if recruitment to replace an Approved Person has been delayed due to the pandemic.

We have also published our expectations on the Senior Managers & Certification Regime (SM&CR) for solo regulated firms and for dual-regulated firms with the Prudential Regulation Authority (PRA).

Temporary arrangements for controlled functions – 12-week rule

We recognise that some benchmark administrators and ARs have had to make temporary arrangements to cover absences in direct response to the pandemic and that this uncertainty has not yet been resolved. To provide further flexibility to firms at this time, we intend to issue a modification by consent to the 12-week rule, which will allow temporary arrangements for up to 36 weeks.

The 12-week rule allows an individual to cover for an Approved Person without being approved, where the absence is temporary or reasonably unforeseen, and the appointment is for less than 12 consecutive weeks.

If temporary arrangements last longer than 12-weeks as a result of the crisis, firms will be able to notify us that they consent to a modification of the 12-week rule. In these cases, temporary arrangements can last up to 36 weeks. If the modification by consent is being used in relation to an AR, the Principal – rather than the AR – should notify us.

Roles requiring approval under the customer function (CF30) cannot be covered using the 12-week rule. The modification by consent does varies this exclusion.

Furloughed staff

There may be cases where benchmark administrators or ARs decide to furlough Approved Persons if they are unable to fulfil their responsibilities, for example due to illness, caring responsibilities or if they have no current practical responsibilities.

Unless an individual is permanently leaving their post, they can retain their approval during their absence and will not need to be re-approved by the FCA when they return. The benchmark administrator – or, in the case of an AR, the principal –  is still responsible for ensuring the Approved Person is fit and proper.

Notification and documentation

We do not expect firms to notify us under Form D of the temporary arrangements described on this page.

We do expect these arrangements (however temporary) to be clearly documented internally, so that everyone understands who is responsible for what. This should be available if we request it – now or in the future.

Firms’ internal records should aim to keep a ‘running commentary’ of their personnel performing significant influence functions and their responsibilities during this period. Firms should make sure that their ARs do the same.

Responsibilities of the Principal firm

Regulated firms that use ARs to carry on regulated activity remain responsible for their ARs and networks meeting our rules. Principals should continue to ensure that:

  • the controllers, directors, partners, proprietors and managers of an AR are fit and proper
  • the AR is solvent and suitable to act for the firm
  • the principal has adequate controls over the AR’s activities
  • the appointment does not prevent the firm from satisfying and continuing to satisfy the threshold conditions
  • the principal is able to monitor and enforce compliance with relevant requirements

Regulator Information

Regulator Name: Financial Conduct Authority
Abbreviation: FCA
Jurisdiction: United Kingdom

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