APER 1
Application and purpose
APER 1.1
Application
- 01/12/2004
Who?
APER 1.1.1
See Notes
- 01/12/2001
APER 1.1.2
See Notes
- 01/11/2007
APER 1.1.3
See Notes
- 01/11/2007
APER 1.1.4
See Notes
- 01/11/2007
Where?
APER 1.1.5
See Notes
- 01/11/2007
APER 1.2
Purpose
- 01/12/2004
APER 1.2.1
See Notes
- 01/12/2001
APER 1.2.2
See Notes
- 01/12/2001
APER 1.2.3
See Notes
The Code of Practice for Approved Persons sets out descriptions of conduct which, in the opinion of the FSA, do not comply with a Statement of Principle and, in the case of Statement of Principle 3, conduct which tends to show compliance within that statement. The Code of Practice for Approved Persons also sets out, in certain cases, factors which, in the opinion of the FSA, are to be taken into account in determining whether or not an approved person's conduct complies with a Statement of Principle. The guidance set out in APER 3 and APER 4 does not form part of the Code of Practice for Approved Persons.
- 01/12/2001
APER 1.2.5
See Notes
As set out in SUP 10.3.1 R (Arrangements and regulated activities), a function is a controlled function only to the extent that it is performed under an arrangement entered into by:
in relation to the carrying on by the firm of a regulated activity.
- 01/12/2001
APER 1.2.6
See Notes
- 01/12/2001
APER 1.2.7
See Notes
- 01/12/2001
APER 1.2.8
See Notes
- 01/12/2001
APER 1.2.9
See Notes
- 01/12/2001
APER 2
The Statements of Principle for Approved Persons
APER 2.1
The Statements of Principle
- 01/11/2007
APER 2.1.1
See Notes
- 01/12/2001
APER 2.1.1A
See Notes
- 01/11/2007
APER 2.1.2
See Notes
Statements of Principle issued under section 64 of the Act
Statement of Principle 1 An approved person must act with integrity in carrying out his controlled function. |
Statement of Principle 2 An approved person must act with due skill, care and diligence in carrying out his controlled function. |
Statement of Principle 3 An approved person must observe proper standards of market conduct in carrying out his controlled function. |
Statement of Principle 4 An approved person must deal with the FSA and with other regulators in an open and cooperative way and must disclose appropriately any information of which the FSA would reasonably expect notice. |
Statement of Principle 5 An approved person performing a significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function is organised so that it can be controlled effectively. |
Statement of Principle 6 An approved person performing a significant influence function must exercise due skill, care and diligence in managing the business of the firm for which he is responsible in his controlled function. |
Statement of Principle 7 An approved person performing a significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function complies with the relevant requirements and standards of the regulatory system. |
- 01/12/2001
APER 3
Code of Practice for Approved Persons: general
APER 3.1
Introduction
- 01/12/2004
APER 3.1.1
See Notes
- 01/04/2005
APER 3.1.2
See Notes
- 01/12/2001
APER 3.1.3
See Notes
- 01/12/2001
APER 3.1.4
See Notes
- (1) An approved person will only be in breach of a Statement of Principle where he is personally culpable. Personal culpability arises where an approved person's conduct was deliberate or where the approved person's standard of conduct was below that which would be reasonable in all the circumstances (see DEPP 6.2.4 G (Action against approved persons under section 66 of the Act)).
- (2) For the avoidance of doubt, the Statements of Principle do not extend the duties of approved persons beyond those which the firm owes in its dealings with customers or others.
- 28/08/2007
APER 3.1.5
See Notes
In particular, in determining whether or not an approved person's conduct complies with a Statement of Principle, the FSA will take into account the extent to which an approved person has acted in a way that is stated to be in breach of a Statement of Principle.
- 01/12/2001
APER 3.1.6
See Notes
- 01/12/2001
APER 3.1.7
See Notes
- 01/04/2009
APER 3.1.8
See Notes
- 01/12/2001
APER 3.1.9
See Notes
UK domestic firms listed on the London Stock Exchange are subject to the UK Corporate Governance Code, whose internal control provisions are amplified in the publication entitled "Internal Control: Revised Guidance for Directors on the Combined Code (October 2005)" issued by the Financial Reporting Council. FSA-regulated firms in this category will thus be subject to that code as well as to the requirements and standards of the regulatory system. In forming an opinion whether approved persons have complied with its requirements, the FSA will give due credit for their following corresponding provisions in the UK Corporate Governance Code and related guidance.
- 06/08/2010
APER 3.2
Factors relating to all Statements of Principle
- 01/12/2004
APER 3.2.1
See Notes
- (1) whether that conduct relates to activities that are subject to other provisions of the Handbook;
- (2) whether that conduct is consistent with the requirements and standards of the regulatory system relevant to his firm.
- 01/12/2001
APER 3.3
Factors relating to Statements of Principle 5 to 7
- 01/12/2004
APER 3.3.1
See Notes
- (1) whether he exercised reasonable care when considering the information available to him;
- (2) whether he reached a reasonable conclusion which he acted on;
- (3) the nature, scale and complexity of the firm's business;
- (4) his role and responsibility as an approved person performing a significant influence function;
- (5) the knowledge he had, or should have had, of regulatory concerns, if any, arising in the business under his control.
- 01/12/2001
APER 4
Code of Practice for Approved Persons:
specific
APER 4.1
Statement of Principle 1
- 01/12/2004
APER 4.1.1
See Notes
- 01/12/2001
APER 4.1.2
See Notes
- 01/01/2011
APER 4.1.3
See Notes
- 01/10/2005
APER 4.1.4
See Notes
- (1) falsifying documents;
- (2) misleading a client about the risks of an investment;
- (3) misleading a client about the charges or surrender penalties of investment products;
- (4) misleading a client about the likely performance of investment products by providing inappropriate projections of future investment returns;
- (5) misleading a client by informing him that products require only a single payment when that is not the case;
- (6) mismarking the value of investments or trading positions;
- (7) procuring the unjustified alteration of prices on illiquid or off-exchange contracts, or both;
- (8) misleading others within the firm about the credit worthiness of a borrower;
- (9) providing false or inaccurate documentation or information, including details of training, qualifications, past employment record or experience;
- (10) providing false or inaccurate information to the firm (or to the firm's auditors or an actuary appointed by the firm under SUP 4 (Actuaries));
- (11) providing false or inaccurate information to the FSA;
- (12) destroying, or causing the destruction of, documents (including false documentation), or tapes or their contents, relevant to misleading (or attempting to mislead) a client, his firm, or the FSA;
- (13) failing to disclose dealings where disclosure is required by the firm's personal account dealing rules;
- (14) misleading others in the firm about the nature of risks being accepted.
- 01/10/2005
APER 4.1.5
See Notes
- 01/12/2001
APER 4.1.6
See Notes
- 01/10/2005
APER 4.1.7
See Notes
- (1) failing to disclose the existence of falsified documents;
- (2) failing to rectify mismarked positions immediately.
- 01/12/2001
APER 4.1.8
See Notes
- 01/12/2001
APER 4.1.9
See Notes
- (1) preparing performance reports for transmission to customers which are inaccurate or inappropriate (for example, by relying on past performance without appropriate warnings);
- (2) preparing inaccurate training records or inaccurate details of qualifications, past employment record or experience;
- (3) preparing inaccurate trading confirmations, contract notes or other records of transactions or holdings of securities for a customer, whether or not the customer is aware of these inaccuracies or has requested such records.
- 01/12/2001
APER 4.1.10
See Notes
- 01/12/2001
APER 4.1.11
See Notes
- (1) front running client orders;
- (2) carrying out unjustified trading on client accounts to generate a benefit (whether direct or indirect) to the approved person (that is, churning);
- (3) misappropriating a client's assets, including wrongly transferring to personal accounts cash or securities belonging to clients;
- (4) wrongly using one client's funds to settle margin calls or to cover trading losses on another client's account or on firm accounts;
- (5) using a client's funds for purposes other than those for which they were provided;
- (6) retaining a client's funds wrongly;
- (7) pledging the assets of a client as security or margin in circumstances where the firm is not permitted to do so.
- 01/12/2001
APER 4.1.12
See Notes
- 01/12/2001
APER 4.1.13
See Notes
- 01/12/2001
APER 4.1.14
See Notes
- 01/01/2011
APER 4.1.15
See Notes
- 01/01/2011
APER 4.2
Statement of Principle 2
- 01/12/2004
APER 4.2.1
See Notes
- 01/12/2001
APER 4.2.2
See Notes
- 01/01/2011
APER 4.2.3
See Notes
- 01/10/2005
APER 4.2.4
See Notes
- (1) failing to explain the risks of an investment to a customer;
- (2) failing to disclose to a customer details of the charges or surrender penalties of investment products;
- (3) mismarking trading positions;
- (4) providing inaccurate or inadequate information to a firm, its auditors or an actuary appointed by his firm under SUP 4 (Actuaries);
- (5) failing to disclose dealings where disclosure is required by the firm's personal account dealing rules.
- 01/10/2005
APER 4.2.5
See Notes
- 01/12/2001
APER 4.2.6
See Notes
- 01/12/2001
APER 4.2.7
See Notes
- 01/12/2001
APER 4.2.8
See Notes
- 01/12/2001
APER 4.2.9
See Notes
- 01/12/2001
APER 4.2.10
See Notes
- 01/12/2001
APER 4.2.11
See Notes
- 01/12/2001
APER 4.2.12
See Notes
- 01/12/2001
APER 4.2.13
See Notes
- 01/12/2001
APER 4.2.14
See Notes
- 01/01/2011
APER 4.3
Statement of Principle 3
- 01/12/2004
APER 4.3.1
See Notes
- 01/12/2001
APER 4.3.3
See Notes
- 01/11/2007
APER 4.3.4
See Notes
- 01/12/2001
APER 4.4
Statement of Principle 4
- 01/12/2004
APER 4.4.1
See Notes
The Statement of Principle 4 (see APER 2.1.2 P) is in the following terms: "An approved person must deal with the FSA and with other regulators in an open and cooperative way and must disclose appropriately any information of which the FSA would reasonably expect notice."
- 01/12/2001
APER 4.4.2
See Notes
- 01/12/2001
APER 4.4.3
See Notes
- 01/12/2001
APER 4.4.4
See Notes
- 01/12/2001
APER 4.4.5
See Notes
There is no duty on an approved person to report such information directly to the FSA unless he is one of the approved persons responsible within the firm for reporting matters to the FSA. However, if an approved person takes steps to influence the decision so as not to report to the FSA or acts in a way that is intended to obstruct the reporting of the information to the FSA, then the FSA will, in respect of that information, view him as being one of those within the firm who has taken on responsibility for deciding whether to report that matter to the FSA.
- 01/12/2001
APER 4.4.6
See Notes
- (1) the likely significance to the FSA of the information which it was reasonable for the individual to assume;
- (2) whether the information related to the individual himself or to his firm;
- (3) whether any decision not to report the matter internally was taken after reasonable enquiry and analysis of the situation.
- 01/12/2001
APER 4.4.7
See Notes
- 01/12/2001
APER 4.4.8
See Notes
- (1) the likely significance of the information to the FSA which it was reasonable for the approved person to assume;
- (2) whether any decision not to inform the FSA was taken after reasonable enquiry and analysis of the situation.
- 01/12/2001
APER 4.4.9
See Notes
- (1) inform a regulator of information of which the approved person was aware in response to questions from that regulator;
- (2) attend an interview or answer questions put by a regulator, despite a request or demand having been made;
- (3) supply a regulator with appropriate documents or information when requested or required to do so and within the time limits attaching to that request or requirement;
- 01/12/2001
APER 4.5
Statement of Principle 5
- 01/12/2004
APER 4.5.1
See Notes
- 01/12/2001
APER 4.5.2
See Notes
- 01/12/2001
APER 4.5.3
See Notes
- 01/12/2001
APER 4.5.4
See Notes
- 01/12/2001
APER 4.5.5
See Notes
- (1) implementing confusing or uncertain reporting lines (see APER 4.5.12 G);
- (2) implementing confusing or uncertain authorisation levels (see APER 4.5.13 G);
- (3) implementing confusing or uncertain job descriptions and responsibilities (see APER 4.5.13 G).
- 01/12/2001
APER 4.5.6
See Notes
- 01/04/2009
APER 4.5.7
See Notes
- (1) failing to review regularly the significant responsibilities which the firm is required to apportion under APER 2.1.1 G;
- (2) failing to act where that review shows that those significant responsibilities have not been clearly apportioned.
- 01/12/2001
APER 4.5.8
See Notes
- 01/12/2001
APER 4.5.9
See Notes
- (1) failing to review the competence, knowledge, skills and performance of staff to assess their suitability to fulfil their duties, despite evidence that their performance is unacceptable (see APER 4.5.14 G);
- (2) giving undue weight to financial performance when considering the suitability or continuing suitability of an individual for a particular role (see APER 4.5.14 G);
- (3) allowing managerial vacancies which put at risk compliance with the requirements and standards of the regulatory system to remain, without arranging suitable cover for the responsibilities (see APER 4.5.15 G).
- 01/12/2001
APER 4.5.10
See Notes
- 01/12/2001
Apportionment of responsibilities
APER 4.5.11
See Notes
- 01/12/2001
Reporting lines
APER 4.5.12
See Notes
- 01/12/2001
Authorisation levels and job descriptions
APER 4.5.13
See Notes
- 01/12/2001
Suitability of individuals
APER 4.5.13A
See Notes
- 01/01/2011
APER 4.5.14
See Notes
If an individual's performance is unsatisfactory, then the appropriate approved person (if any) performing a significant influence function should review carefully whether to allow that individual to continue in position. In particular, if he is aware of concerns relating to the compliance with requirements and standards of the regulatory system (or internal controls) of the individual concerned, or of staff reporting to that individual, the approved person performing a significant influence function should take care not to give undue weight to the financial performance of the individual or group concerned when considering whether any action should be taken. An adequate investigation of the concerns should be undertaken (including, where appropriate, adherence to internal controls). The approved person performing a significant influence function should satisfy himself, on reasonable grounds, that the investigation is appropriate, the results are accurate and that the concerns do not pose an unacceptable risk to compliance with the requirements and standards of the regulatory system (see in particular Statement of Principle 6 and APER 4.5.8 E and APER 4.5.9 E (1) and APER 4.5.9 E (2)).
- 01/12/2001
Temporary vacancies
APER 4.5.15
See Notes
- 01/12/2001
APER 4.6
Statement of Principle 6
- 01/12/2004
APER 4.6.1
See Notes
- 01/12/2001
APER 4.6.2
See Notes
- 01/12/2001
APER 4.6.3
See Notes
- 01/12/2001
APER 4.6.4
See Notes
- (1) permitting transactions without a sufficient understanding of the risks involved;
- (2) permitting expansion of the business without reasonably assessing the potential risks of that expansion;
- (3) inadequately monitoring highly profitable transactions or business practices or unusual transactions or business practices;
- (4) accepting implausible or unsatisfactory explanations from subordinates without testing the veracity of those explanations;
- (5) failing to obtain independent, expert opinion where appropriate; (see APER 4.6.12 G).
- 01/12/2001
APER 4.6.5
See Notes
- 01/12/2001
APER 4.6.6
See Notes
- 01/12/2001
APER 4.6.7
See Notes
- (1) disregarding an issue or part of the business once it has been delegated;
- (2) failing to require adequate reports once the resolution of an issue or management of part of the business has been delegated;
- (3) accepting implausible or unsatisfactory explanations from delegates without testing their veracity.
- 01/12/2001
APER 4.6.8
See Notes
- 01/12/2001
APER 4.6.9
See Notes
- (1) failing to take personal action where progress is unreasonably slow, or where implausible or unsatisfactory explanations are provided;
- (2) failing to review the performance of an outside contractor in connection with the delegated issue or business.
- 01/12/2001
APER 4.6.10
See Notes
- (1) the competence, knowledge or seniority of the delegate; and
- (2) the past performance and record of the delegate.
- 01/12/2001
APER 4.6.11
See Notes
- 01/12/2001
Knowledge about the business
APER 4.6.12
See Notes
- (1) It is important for the approved person performing a significant influence function to understand the business for which he is responsible (APER 4.6.4 E). An approved person performing a significant influence function is unlikely to be an expert in all aspects of a complex financial services business. However, he should understand and inform himself about the business sufficiently to understand the risks of its trading, credit or other business activities.
- (2) It is important for an approved person performing a significant influence function to understand the risks of expanding the business into new areas and, before approving the expansion, he should investigate and satisfy himself, on reasonable grounds, about the risks, if any, to the business.
- (3) Where unusually profitable business is undertaken, or where the profits are particularly volatile or the business involves funding requirements on the firm beyond those reasonably anticipated, he should require explanations from those who report to him. Where those explanations are implausible or unsatisfactory, he should take steps to test the veracity of those explanations.
- (4) Where the approved person performing a significant influence function is not an expert in a business area, he should consider whether he or those with whom he works have the necessary expertise to provide him with an adequate explanation of issues within that business area. If not he should seek an independent opinion from elsewhere within or outside the firm.
- 01/12/2001
Delegation
APER 4.6.13
See Notes
- (1) An approved person performing a significant influence function may delegate the investigation, resolution or management of an issue or authority for dealing with a part of the business to individuals who report to him or to others.
- (2) The approved person performing a significant influence function should have reasonable grounds for believing that the delegate has the competence, knowledge, skill and time to deal with the issue. For instance, if the compliance department only has sufficient resources to deal with day-to-day issues, it would be unreasonable to delegate to it the resolution of a complex or unusual issue without ensuring it had sufficient capacity to deal with the matter adequately.
- (3) If an issue raises questions of law or interpretation, the approved person performing a significant influence function may need to take legal advice. If appropriate legal expertise is not available in-house, he may need to consider appointing an appropriate external adviser.
- (4) The FSA recognises that the approved person performing a significant influence function will have to exercise his own judgment in deciding how issues are dealt with, and that in some cases that judgment will, with the benefit of hindsight, be shown to have been wrong. He will not be in breach of Statement of Principle 6 unless he fails to exercise due and reasonable consideration before he delegates the resolution of an issue or authority for dealing with a part of the business and fails to reach a reasonable conclusion. If he is in doubt about how to deal with an issue or the seriousness of a particular compliance problem, then, although he cannot delegate to the FSA the responsibility for dealing with the problem or issue, he can speak to the FSA to discuss his approach (see APER 4.6.5 E).
- 01/12/2001
Continuing responsibilities where an issue has been delegated
APER 4.6.14
See Notes
- 01/12/2001
APER 4.7
Statement of Principle 7
- 01/12/2004
APER 4.7.1
See Notes
- 01/12/2001
APER 4.7.2
See Notes
In the opinion of the FSA, conduct of the type described in APER 4.7.3 E, APER 4.7.4 E, APER 4.7.5 E, APER 4.7.7 E, APER 4.7.9 E, APER 4.7.10 E or APER 4.7.11A E does not comply with Statement of Principle 7 (APER 2.1.2 P).
- 06/08/2009
APER 4.7.3
See Notes
- 01/04/2009
APER 4.7.4
See Notes
- 01/12/2001
APER 4.7.5
See Notes
- 01/12/2001
APER 4.7.6
See Notes
- 01/12/2001
APER 4.7.7
See Notes
- 01/12/2001
APER 4.7.8
See Notes
- (1) unreasonably failing to implement recommendations for improvements in systems and procedures;
- (2) unreasonably failing to implement recommendations for improvements to systems and procedures in a timely manner.
- 01/12/2001
APER 4.7.9
See Notes
- 01/04/2009
APER 4.7.10
See Notes
- 01/04/2009
APER 4.7.11
See Notes
- 01/12/2001
APER 4.7.11A
See Notes
- 06/08/2009
Systems of control
APER 4.7.12
See Notes
- 06/07/2010
Possible breaches of regulatory requirements
APER 4.7.13
See Notes
- 01/12/2001
Review and improvement of systems and procedures
APER 4.7.14
See Notes
- 01/12/2001
Transitional Provisions and Schedules
APER TP 1
Transitional Provisions
In addition to the transitional provision below, GEN contains some technical transitional provisions that apply throughout the Handbook. |
(1) | (2) Material to which the transitional provision applies | (3) | (4) Transitional provision | (5) Transitional provision: dates in force | (6) Handbook provision coming into force |
1. | APER 3.1.9 G | R | 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 |
- 06/08/2010
APER Sch 1
Record keeping requirements
- 01/12/2004
APER Sch 1.1
See Notes
There are no record keeping requirements in APER. |
- 01/12/2004
APER Sch 2
Notification requirements
- 01/12/2004
APER Sch 2.1
See Notes
The aim of the guidance in the following table is to give the reader a quick overall view of the relevant requirements for notification and reporting. |
- 01/12/2004
APER Sch 2.2
See Notes
It is not a complete statement of those requirements and should not be relied on as if it were. |
- 01/12/2004
APER Sch 2.3
See Notes
Handbook reference | Matter to be notified | Contents of notification | Trigger event | Time allowed |
Statement of Principle 4 (APER 2.1.2 P) | Any information of which the FSA would reasonably expect notice | Appropriate disclosure | Any information of which the FSA would reasonably expect notice | Appropriate |
- 01/12/2004
APER Sch 3
Fees and required payments
- 01/12/2004
APER Sch 3.1
See Notes
There are no requirements for fees or other payments in APER. |
- 01/12/2004
APER Sch 4
Powers exercised
- 01/12/2004
APER Sch 4.1
See Notes
- 01/12/2004
APER Sch 4.2
See Notes
- 01/12/2004
APER Sch 5
Rights of action for damages
- 01/12/2004
APER Sch 6
Rules that can be waived
- 01/12/2004