The FSA has confirmed an extension of the approved persons regime for those that perform a ‘significant influence’ function at firms
In its supervisory enhancement programme (SEP) the FSA stated that it would place greater emphasis on the role of senior management, including non-executive directors (NEDs). Today’s policy statement sets out changes to the approved persons regime which improves FSA’s approach to ‘significant influence’ functions by ensuring that those likely to exert a significant influence on a firm fall within the scope of the approved persons regime
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
It has also 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
The regulator has also amended the application of the approved persons regime to UK branches of overseas firms based outside the EEA
The original proposals included clarifying the role of NEDs to make clear that the FSA will look at NEDs more closely where it believes they should have intervened more actively within a firm’s management. Before making a final decision on this issue, the FSA wishes to consider the relevant recommendations of the Walker Review and the Financial Reporting Council’s review of the Combined Code. The results of this consideration will be included in a further consultation paper on governance which the FSA expects to publish in Q4 2009
Graeme Ashley-Fenn, director of permissions, decisions and reporting division, said: “It is important that directors and senior managers at firms understand their regulatory obligations and have the relevant competencies and experience to carry out their roles with integrity