FCA Approved Persons
An approved person is an individual who has been approved by the FCA to perform one or more controlled functions on behalf of an authorised firm. To become an approved person, a candidate must first apply to the FCA. Approval must be obtained before a person can perform a controlled function.
What is the FCA’s fit & proper test?
Before approving an individual, the FCA will assess whether the candidate is fit and proper to perform the controlled function(s) applied for.
The FCA consider three criteria:
- Honesty, Integrity & Reputation
- Competence & Capability
- Financial Soundness
As part of the fit and proper test, the candidate will be asked about their current and previous circumstances, including (but not limited to):
- Have they ever been convicted of a criminal offence?
- As a Director or Partner of a business, have they ever gone into insolvency, liquidation or administration?
- Have they ever been dismissed from or asked to resign from employment or from a position of trust or similar?
- Can they demonstrate by their experience and training that they are suitable?
- Have they got adequate time to perform the responsibilities of the controlled function?
- Have they ever been subject to an outstanding judgement debt or award?
What are the responsibilities of an approved person(s)?
Being an approved person brings with it a number of important responsibilities. They have a duty to be aware of and comply with FCA regulatory requirements and expectation. Specifically, approved persons must:
- Continue to comply with the FCA’s Fit and Proper Test for Approved Persons.
- Comply with the Statements of Principle and the Code of Practice for Approved Persons.
- Report to the authorised firm and to the FCA any matter that may impact on their ongoing fitness and propriety.
Non-compliance with these regulatory requirements may result in the FCA taking enforcement action against the approved person.
Who should be the approved person(s)?
Approved persons performing controlled functions are generally:
- Someone who exerts significant influence on the conduct of the authorised firm’s regulatory activities, e.g. directors, senior managers, finance, audit, and compliance staff.
- Someone who deals with customers, particularly in an advisory capacity, e.g. financial advisers.
Does an approved person have to be a controller of the business?
No, the approved person does not need to be a controller but usually is.
Rules about controllers of businesses
A controller is any individual with a shareholding of 20% or more in an authorised firm. For example, if a limited company has four directors each holding 25% of the shares, then the business would have to register all four as controllers. You will need to complete a ‘controllers and influencers’ form as part of your application.
Note: Personal details of both the approved person(s) and the controllers have to be supplied with the application, including copies of their CVs.
What is a controlled function?
Controlled functions are a list of functions that relate to the carrying on of a regulated activity by a firm. When applying for authorisation, the applicant firm must put forward at least one person to be an approved person who will then be responsible for performing the controlled function(s).
Typical controlled functions include (but are not limited to):
- CF01 – Director function
- CF08 – Apportionment & oversight
- CF11 – Money laundering reporting
An approved person is someone who carries out controlled functions. A controller is some with a shareholding of 20% or more in the business. A controller does not necessarily have to be an approved person (but usually is). Both approved persons and controllers have to be registered with the FCA as part of the application process.
Where are the forms for registering approved persons & controllers?
The forms are available via the main application screen on Connect (the FCA application software) and are at the foot of the page and referred to as ‘additional related applications’.
This article is based on information found on the FCA’s website