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Application provision

1.1 Unless otherwise stated, this Part applies to a small non-directive insurer.

1

Application and Definitions

1.1

07/03/2016

Unless otherwise stated, this Part applies to a small non-directive insurer.

1.2

10/12/2018

In this Part, the following definitions shall apply:

continued approval

has the meaning given in Non-Solvency II Firms - Senior Managers Regime – Transitional Provisions.

disciplinary action 

has the meaning given in section 64C of FSMA

regulatory reference template

means the template found in 6.1.

2

Fitness and Propriety Assessments by Firms

2.1

10/12/2018

A firm must ensure that all persons who perform a PRA senior management function are fit and proper persons.

2.2

10/12/2018

In deciding whether a person is fit and proper pursuant to 2.1 and, where applicable, section 60A(1), a firm must be satisfied that the person:

  1. (1) has the personal characteristics (including being of good repute and integrity);
  2. (2) possesses the level of competence, knowledge and experience;
  3. (3) has the qualifications; and
  4. (4) has undergone or is undergoing all training,

required to enable such person to perform his or her PRA senior management function effectively and in accordance with any relevant regulatory requirements, including those under the regulatory system, and to enable sound and prudent management of the firm.

2.3

10/12/2018

Before deciding, and in considering on an on-going basis, whether a person is fit and proper pursuant to 2.1 and 2.2, a firm must consider the person's past business conduct, including whether the person performs his or her PRA senior management functions in accordance with the relevant conduct standards specified in Non-Solvency II Firms - Conduct Standards 2.

2.4

10/12/2018

In deciding whether a person (P) is fit and proper to perform a PRA senior management function, a firm must:

  1. (1) obtain P’s consent for the firm to request the fullest information in relation to P that it is lawfully able to request under the Police Act 1997 and related subordinated legislation of the UK or any part of the UK;
  2. (2) if P has lived or worked outside the UK for a material time in the previous six years, obtain P’s consent for the firm to request the fullest information in relation to P that it is lawfully able to request under equivalent overseas legislation; and 
  3. (3) request, and have regard to, such information.

2.4A

10/12/2018

  1. (1) Before deciding whether a person (P) is fit and proper to be appointed as a PRA senior management function holder a firm must take reasonable steps to obtain appropriate references covering the past six years from the following:
    1. (a) each FCA-authorised person and PRA-authorised person that is, or was:
      1. (i) P’s current or former employer; or 
      2. (ii) an organisation (not falling within (i)) at which P is currently serving, or has served, as a key function holderPRA senior management function holder, other approved person, non-executive director, notified non-executive director or credit union non-executive director or performed, or is currently performing, a certification function
    2. (b) P’s other current and former employers; and 
    3. (c) other organisations at which P served as, or is currently, a non-executive director.   
  2. (2) A firm (A) is not required to request references from an employer of P or any organisation referred to in (1)(a) to (c) (such employer or organisation, B) where:
    1. (a) A and B are members of the same group; and
    2. (b) there are adequate arrangements in place under which A has access to all information sources to which B has access to the extent necessary were B giving a reference in accordance with this Part.

If A has access to only some of the information in 2.4A(2)(b), A may ask for a reference that only covers the information to which A does not have access. To the extent that A does not request a reference in the circumstances set out in this (2), A must access and obtain the relevant information. 

  1. (3) When making a PRA senior management approval application, a firm must take reasonable steps to obtain references in accordance with (1) and (2):
    1. (a) no later than one month before the end of the application period set out in section 61 of FSMA; or
    2. (b) where a request by a firm for a reference to an employer or organisation would require the firm, the employer, the organisation or any other person to make a mandatory disclosure prior to P disclosing to its current employer or organisation, as the case may be, that such application has been made, before the end of the application period set out in in section  61 of FSMA.

2.4B

10/12/2018

  1. (1) Where a firm (A) seeks to obtain a reference pursuant to 2.4A, A must request that the organisation giving the reference (B) discloses all matters of which B is aware that B reasonably considers to be relevant to the assessment of that person’s fitness and propriety.
  2. (2) A must also request that, if B is a full scope regulatory reference firm, B discloses the information contained in the regulatory reference template.

2.5

10/12/2018

If a firm previously obtained the information required by 2.4 to 2.4B when it determined that a PRA senior management function holder was fit and proper for the purposes of this Part, and the firm engages that person for a continuous period of time, the firm is not required to comply with 2.4 to 2.4B again in respect of any subsequent appointments at the same firm within that continuous period.

3

Regulatory References

3.1

10/12/2018

  1. (1) If any PRA-authorised person (A):
    1. (a) is considering issuing a certificate to, making a PRA senior management approval application in respect of, or appointing as a key function holder, a non-executive director, a notified non-executive director or a credit union non-executive director, a person (P);
    2. (b) makes a request for a reference or other information in respect of P from a firm to which this Part applies (B), in B’s capacity as:
      1. (i) P’s current or former employer; or
      2. (ii) an organisation (not falling within (i)) at which P is currently serving, or has served, as a PRA senior management function holder, other approved person or non-executive director; and
    3. (c) indicates to B the purpose of the request
    4. B must, as soon as reasonably practicable, provide a reference and disclose to A in the reference all information of which B is aware that B reasonably considers to be relevant to A’s assessment of whether P is fit and proper.
  2. (2) A firm (B) which is required to make a disclosure under 3.1(1) is required to disclose information on or relating to something which occurred or existed:
    1. (a) in the six years before the request for a reference; 
    2. (b) between the date of the request for a reference and the date B gives the reference; or
    3. (c) in the case of serious matters, at any time.
  3. (3) When giving the reference referred to in 3.1(1), a firm must:
    1. (a) use the regulatory reference template; and
    2. (b) include all the information set out in the regulatory reference template.
  4. (4) A firm may make formatting modifications to the regulatory reference template when giving a reference under 3.1(1), provided the regulatory reference template as modified includes all substantive information required by 3.1(3)(b).

3.1A

10/12/2018

  1. (1) If: 
    1. (a) a firm to whom this Part applies (B) has given a reference pursuant to 3.1 to any PRA-authorised person (A) about any person (P); and
    2. (b) either:
      1. (i) B is or has become aware of matters or circumstances that mean that, if B were giving that reference now, this Part would require B to draft it differently; or
      2. (ii) B has reached conclusions of the type described in item (E), or taken disciplinary action of the type described in item (F) of the regulatory reference template, and had B taken or reached those conclusions or actions in the six year period referred to in the regulatory reference template, this Part would require B to draft the reference differently; and 
    3. (c) it would be reasonable to consider the differences in (b) to be significant for an assessment by A of the fitness and propriety of P for the role at A for which the reference was given,
  2.       B must make reasonable enquiries as to the identity of P’s current employer and (subject to (3)) provide A with details of those differences in writing as soon as reasonably practicable.
  3. (2) The obligation to update regulatory references in (1) applies in the following circumstances:
    1. (a) if P is no longer employed by or in the service of B, the obligation to update references in (1) ends six years after P ceased to be employed by, or in the service of B;
    2. (b) if P is no longer employed by or in the service of B and the matters or circumstances are not serious matters, B does not have to disclose something if it did not occur or exist in the six year period ending on the date B gave the original reference. This limitation is additional to that in (2)(a);
    3. (c) if P is still employed by, or in the service of B, (1) applies throughout the period P remains employed by, or in the service of, B. 
  4. (3) B is not required to update a regulatory reference given to A if:
    1. (a) A is no longer a full scope regulatory reference firm;
    2. (b) P is no longer employed by, or in the service of, A; 
    3. (c) P is not yet employed by, or in the service of A, and it is no longer intended that P will be employed by or serve at A; or
    4. (d) despite making reasonable enquiries under (1), B does not know whether P is still employed by, or in the service of, A.
  5. (4) (1) does not require B to update references provided prior to 10 December 2018. 
  6. (5) If a firm (B) has given a reference to another firm (A) under 2.4A in respect of a person (P) no more than six years ago and B asks A if P is still an employee of, or serving at, A, A must answer that question as soon as reasonably possible, even if B does not tell A the reason for the enquiry.

3.2

07/03/2017

A firm must not enter into any arrangements or agreements with any person that limit its ability to disclose information under this Part.

3.3

07/03/2017

This Part does not require a firm to disclose information that has not been properly verified.

3.4

10/12/2018

  1. (1) A firm must arrange for orderly records to be kept that are sufficient to enable it to comply with the requirement of this Part in response to any requests for references referred to in this Part in relation to item (E) and item (F) in the regulatory reference template.
  2. (2) A firm does not breach the requirements of this Part by failing to include information in a reference that it would otherwise have to include if:
    1. (a) the reason for the omission is that the firm does not have the necessary records; and
    2. (b) neither (1) nor any other requirement of or under the regulatory system requires the firm to have those records.

4

Disclosure and Replacements

4.1

10/12/2018

A firm must ensure that any application it makes for the approval of a person to perform a PRA senior management function provides the PRA with:

  1. (1) all the information needed to assess whether such person is fit and proper; and
  2. (2) its record of the significant responsibilities allocated to that person.

4.2

10/12/2018

If a firm becomes aware of information which would reasonably be expected to be material to the assessment of a current or former PRA senior management function holder’s fitness and propriety under this Part, it must inform the PRA as soon as practicable.

4.3

10/12/2018

If a firm becomes aware of a significant change to a PRA senior management function holder’s responsibilities, it must inform the PRA as soon as practicable.

4.4

10/12/2018

Where a firm replaces a PRA senior management function holder because the firm considers that that person no longer fulfils the requirements in 2.2, the firm must notify the PRA as soon as reasonably practicable.

5

Fitness and Propriety Transitional Provisions

5.1

07/03/2016

The requirements of 2.4 do not apply to a firm in respect of any person who has continued approval in relation to that firm.

5.2

10/12/2018

Item (F) in the regulatory reference template does not require disclosure of the following information if the firm’s records do not show whether the conduct that was subject to disciplinary action amounted to a breach of the individual conduct requirements referred to in item (F) in the regulatory reference template:

  1. (1) disciplinary action that took place prior to 10 December 2018. 
  2. (2) [not used] 

6

Template

6.1

10/12/2018

The regulatory reference template is the template found here.