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FCA issues update on Approved Persons regime and coronavirus

Link(s): https://www.fca.org.uk/news/approved-persons-regime-apr-and-coronavirus-our-expectations-december-2020-update

Context

The FCA has issued an update relating to its expectations of firms using Appointed Representative (AR) arrangements during Covid-19.  Whereas, previously, the FCA had allowed some latitude in the application of certain elements of the Approved Persons regime as it applied to ARs, the Regulator now expects application of the rules to return to normal as firms have adapted to the impact of the pandemic over the past few months.

Key points to note

  • The modification by consent to the 12-week rule previously issued by the FCA is still available, however a firm cannot consent to the modification after 30 April 2021, with all modifications consented to before then coming to an end on 30 April 2021
    • The modification meant that firms could notify the FCA that they consented to an extension of the 12-week rule if temporary arrangements in respect of an Approved Person, made as a result of the pandemic, lasted longer than 12 weeks
    • This change means that the modification will not assist with a temporary appointment that begins after 5 February 2021
    • Only the Principal firm can consent to the modification by consent so it should be the Principal firm which notifies the FCA
    • Roles requiring approval under the customer function (CF30) cannot be covered using the 12-week rule – CF30 does not apply to general insurance distribution
  • If an Approved Person has been furloughed, they can retain their approval throughout their absence and will not need to be re-approved when they return.  The Principal firm is still responsible for ensuring that any Approved Person(s) within the AR is fit and proper.
  • From 7 January 2021 firms will be required to notify the FCA of any temporary arrangements by submitting Form D
    • The FCA does not need to be notified of any temporary changes prior to this, however there is an expectation for these arrangements to be clearly documented internally and available to the FCA should they be requested.
  • 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