Handbook at 30 October, 2014

Printed on 30 October, 2014

FCA / APER / 1

APER 1.1A Application

Who?

APER 1.1A.1
01/04/2013
FCA
APER applies to FCA-approved persons and PRA-approved persons.

What?

APER 1.1A.2
01/04/2013
FCA
(1)  APER applies to the performance by an approved person of:
(a)  FCA controlled functions (whether or not approval has been sought and granted); and
(b)  PRA controlled functions (whether or not approval has been sought and granted);

in relation to the authorised persons in relation to which that person is an approved person.
(2)  APER also applies to the performance by an approved person of any other functions in relation to the carrying on of a regulated activity by the authorised persons referred to in (1).
APER 1.1A.3
01/04/2013
FCA
The functions described in APER 1.1A.2 P are called accountable functions.
APER 1.1A.4
01/04/2013
FCA
The relevance of MiFID to the Statements of Principle will depend on the extent to which the corresponding requirement imposed on firms under MiFID is reserved to a Home State regulator or has been disapplied under MiFID (see APER 2.1A.2 P and FIT 1.2.4 G. See also COBS 1 Annex 1, Part 2, 1.1R (EEA territorial scope rule: compatibility with European law)).

Where?

APER 1.1A.5
01/04/2013
FCA
The territorial scope of the approved persons regime and its application to incoming EEA firms is set out in SUP 10A.1 (see SUP 10A.1.11R and SUP 10A.1.13R).

Coverage of APER

APER 1.1A.6
01/04/2013
FCA
APER 1.1A.7 G gives examples of the effect of APER 1.1A.1 P and APER 1.1A.2 P. The first column says whether the example involves an FCA-approved person and the second column says whether the example involves a PRA-approved person. So for example if there is a "Yes" in both columns that means that the example concerns a person who has been approved both by the FCA and by the PRA. The third column explains what functions APER covers in the scenario set out in the first two columns. The table is divided between cases in which the person performs the controlled function for an FCA-authorised person and ones where the person does so for a PRA-authorised person.
APER 1.1A.7
01/04/2013
FCA
Table: Examples of what activities APER covers
FCA approved PRA approved Coverage of APER
FCA-authorised person
(1) Yes, in relation to firm A Not applicable Applies to the FCA controlled function. Also applies to any other function performed for firm A in relation to the carrying on by firm A of a regulated activity even if it is not a controlled function.
(2) Yes, in relation to firm A. No, in relation to firm B, Not applicable In relation to firm A, the answer is the same as for scenario (1). However, APER does not apply to any function that the approved person carries on in relation to firm B even if that function relates to regulated activities carried out by firm B. However, if the function that he performs in relation to firm B is a controlled function the approved person and firm B may be subject to legal sanctions (see SUP 10A.13.1 G to SUP 10A.13.2 G).
PRA-authorised person
(3) Yes, in relation to firm A No The answer is the same as for scenario (1).
(4) No Yes, in relation to firm A Applies to PRA controlled function. Also applies to any other function performed for firm A in relation to the carrying on by firm A of a regulated activity even if it is not a controlled function.
(5) Yes, in relation to firm A Yes, in relation to firm A Applies to FCA controlled function and PRA controlled function. Also applies to any other function performed for firm A in relation to the carrying on by firm A of a regulated activity even if it is not a controlled function.
(6) Yes, in relation to firm A. No, in relation to firm B, Yes, in relation to firm A. No, in relation to firm B, In relation to firm A, the answer is the same as for scenario (5). However, APER does not apply to any function that the approved person carries on in relation to firm B even if that function relates to regulated activities carried out by firm B. However, if the function that he performs in relation to firm B is a controlled function the approved person and firm B may be subject to legal sanctions (see SUP 10A.13.1 G to SUP 10A.13.21G).

APER 1.1A.8
01/04/2013
FCA
A person may be an approved person in relation to more than one firm. When that is the case, APER applies in relation to all those firms.
APER 1.1A.9
01/04/2013
FCA
(1)  APER 1.1A.2 P refers to the authorised person in relation to which a person is an approved person.
(2)  Under section 59 of the Act (Approval for particular arrangements) there are two kinds of approved person.
(3)  Section 59(1) of the Act describes the first. It covers a person who performs a controlled function under an arrangement entered into by an authorised person ("A"). In this case, APER 1.1A.2 P refers to A.
(4)  Section 59(2) of the Act describes the second. It covers a person who performs a controlled function under an arrangement entered into by a contractor ("B") of an authorised person ("A"). In this case, APER 1.1A.2 P refers to A (and not B).

Rule in GEN about provisions shared between the FCA and PRA

APER 1.1A.10
01/04/2013
FCA
GEN 2.2.23 R (Cutover: Application of provisions made by both the FCA and the PRA) does not apply to any provision of APER marked with an "E" in the margin.
APER 1.1A.11
01/04/2013
FCA
GEN 2.2.23 R does not apply to any of APER. It does not apply to any part of APER that is not shared as GEN 2.2.23 R only applies to Handbook provisions made by both the FCA and the PRA. Hence GEN 2.2.23 R does not apply to the Statements of Principle. APER 1.1A.10 E means that GEN 2.2.23 R does not apply to shared provisions marked with an "E" in the margin. GEN 2.2.23 R does not apply to shared guidance in APER because the guidance is about material to which GEN 2.2.23 R does not apply

APER 1.2 Purpose

APER 1.2.1A
01/04/2013
FCA
The Statements of Principle contained in APER 2 are issued under section 64(1) of the Act (Conduct: statements and codes). The paragraphs of the application section in APER 1.1A labelled "P" also form part of the Statements of Principle.
APER 1.2.2
01/04/2013
FCAPRA
Section 64(2) of the Act states that if an appropriate regulator issues Statements of Principle it must also issue a code of practice for the purpose of helping to determine whether or not a person's conduct complies with the Statements of Principle. The Code of Practice for Approved Persons in APER 3 and APER 4 fulfils this requirement.
APER 1.2.3
01/04/2013
FCA
The Code of Practice for Approved Persons sets out descriptions of conduct which, in the opinion of theFCA, 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 FCA, 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.
APER 1.2.5
01/04/2013
FCA
As set out in SUP 10A.3.1 R (Provisions related to the Act), a function is a controlled function only to the extent that it is performed under an arrangement entered into by:
(1) a firm; or
(2) a contractor of the firm;
in relation to the carrying on by the firm of a regulated activity.