On July 27, the UK Financial Services Authority (FSA) confirmed an extension of the approved persons registration regime to include any person performing a “significant influence” function at an FSA authorized firm. The FSA also stated that it would place greater emphasis on the role of senior management, including non-executive directors. In particular, the FSA has:
- extended the scope and application of CF1 (director function) and CF2 (Non-Executive Director) to include those persons employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm;
- extended the definition of the significant management controlled function (CF29) to include all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm; and
- amended the way that the approved persons regime applies to UK branches of overseas firms incorporated outside the European Economic Area.
The changes take effect from August 6, with a transitional period of six months. The FSA regulated firms should immediately commence an assessment of which additional individuals require registration with the FSA in order to ensure that the registration process is completed within the transitional period.
The FSA has indicated that it will announce further proposals in relation to non-executive directors after it has had the opportunity to consider the conclusions of the Walker and Financial Reporting Council reviews. The Walker review of corporate governance of UK banks issued a consultation document earlier in July. The conclusions are due to be published in autumn 2009. The Financial Reporting Council review of the impact of the Combined Code on Corporate Governance, with which UK listed companies are required under the Listing Rules to “comply or explain”, is due to be published later in 2009.