FSA is planning to change the approved persons regime in several respects:  

  • to include certain individuals within an authorised firm's parent company within the CF1 and 2 function. Its draft guidance suggests which individuals from outside the firm this might be;
  • to clarify its expectations on non-executive directors;
  • to include within the significant management function all proprietary traders who can significantly influence a firm. Currently some are approved persons, but FSA thinks the regime should cover more proprietary traders who are not senior managers;
  • to change the application of the regime to UK branches of non-EEA firms. FSA wants to bring more controlled functions to these firms to ensure better regulatory consistency and reflect current governance arrangements; and
  • to extend the rule that currently requires firms to be able to provide references for all CF30 function-holders so prospective employers can seek a reference for any controlled function.  

It wants to focus on competence of those in significant management functions, not just on honesty and integrity. FSA is clear it will where appropriate hold directors and nonexecutive directors accountable if they have failed competently to perform their duties. The consultation includes draft new text for APER and SUP and some changes to some definitions. FSA wants comments by 31 March.