FCA Approved Persons at regulated/consumer credit firms: all information

FCA Approved PersonsFirst of all let’s explain: what are the FCA Approved Persons?

An approved person is someone who is approved to perform a ‘controlled function’ (see below) for an authorised firm or an appointed representative firm.

To be approved to perform a controlled function, you must:

  • satisfy the FCA that you can meet, and maintain, the criteria for approval (the Fit and Proper Test FCA) and then
  • perform that controlled function in line with a set of standards (the Statements of Principle and Code of Practice for Approved Persons (APER))

A ‘Controlled Function’ role is that which has a particular regulatory significance for an FCA regulated business. You can see the list of all controlled functions, including brief explanation, at the FCA Handbook.

The firm can then make an application on your behalf by providing information stating that you are correctly performing a ‘controlled function’. They will state you are meeting the Fit and Proper Test FCA requirements. The burden is on the applicant firm to satisfy the FCA that the individual candidate is fit and proper to perform the controlled function applied for.

How to become FCA Approved Persons?
Your Firm must apply on your behalf
Application Application
For authorisation by a firm For approval of individuals within the business performing a controlled function In this application, your firm will be asked to help prove that an individual carrying on a controlled function:
  • can comply with the standards required to carry out their controlled function or functions (the Statements of Principle and Code of Practice for Approved Persons)

The Financial Conduct Authority will have regard to a number of factors when assessing the fitness and propriety of an individual to perform a particular controlled function. The most important are concerned with the individual’s:

  • honesty, integrity and  reputation (the FCA must be satisfied that the individual will be open and  honest in his dealings and is able to comply with the requirements imposed on  him);
  • competence and  capability (the individual must have the necessary skills to carry on the  function he is to perform); and
  • financial soundness.

It is also worth remembering that when considering these factors, the FCA does not limit itself to only considering issues that arose in a financial services context.

When determining fitness and propriety, the Financial Conduct Authority will take into account the particular controlled function which the individual is to perform and the activities of the firm itself. So make sure you are joining a reputable firm in the first place. You may ruin your future career in the financial markets by working for firms who may be showing, in the future, to be dishonest and subsequently fined/closed down by the regulator. Be particularly wary of vacancies abroad, promising lots of wealth, but which involve selling unregulated products to the UK marketplace. If you end up working for a ‘Boiler Room’, the FCA will presume it is your own fault and won’t accept ignorance as an excuse.

If there have been any incidents in your past which may affect your Fit and Proper Test application, the policy of the Financial Conduct Authority is not to speculate on the outcome of an application prior to receipt of the application form, the following ‘matters of common relevance’  generally apply to all applications;

  • whether the candidate  has been open and honest with the regulator and disclosed all relevant matters;
  • the seriousness of the  issue and the relevance to the specific role applied for;
  • the passage of time  since the incident occurred;
  • whether the issue relates to an isolated incident or whether there is a pattern of adverse behaviour.

FCA Approved Persons

FCA Approved Persons for consumer credit firms.

At least one individual in most consumer credit firms must be ‘approved’ by FCA. This individual will be the approved person for your firm.

FCA can approve an individual only if they are satisfied they are fit and proper to perform the controlled function(s) they apply for.

When considering a candidate’s fitness and propriety, FCA looks at:

  • honesty (including being open regarding any self-disclosure)
  • integrity and reputation
  • competence and capability
  • financial soundness

Responsibilities of FCA Approved Persons

Being an approved person brings with it several important responsibilities. These include a duty to be aware of – and comply with – our regulatory requirements and understand how they apply to the carrying out of each controlled function.

More specifically, approved persons must:

  • comply with and continue to comply with FCA’s FIT test for Approved Persons
  • comply with the APER, which describe the conduct we require and expect of individuals we approve, and the Code of Practice for Approved Persons
  • report to the firm and to us any matter that may affect the firm’s ongoing fitness and propriety

Controlled functions of FCA Approved Persons

12 controlled functions potentially apply to consumer credit firms, depending on their business and legal status. Controlled functions need to be carried out by approved persons who are closely involved in running the firm.

It is unlikely you will be able to outsource these roles and still meet the standards FCA expects, although they will assess this case-by-case. You can, however, outsource any resources you need for the guidance and support of approved persons. The number of roles your staff will need to be approved for will depend on the type of credit activities you intend to carry out, the legal status of your business and the permissions you require. Firms with limited permission will normally only need to appoint one person.

You can be an approved person for more than one function in your firm, but you will need to demonstrate in your application that you have the ability to manage multiple roles. FCA will consider your application in the context of the scale of your firm and the activities it plans to undertake.

You can also be an approved person for more than one firm. Again, FCA will consider your application against how you plan to do this, including how you will manage the risks associated with being an approved person for more than one firm.

Find out the other qualifications and skill set you will need for your career in finance and broking.