SUP 10C.3 General material about the definition of controlled functions

This section has general provisions that apply to the definition of all controlled functions.

There are two types of FCA controlled function under the Act:

1. (1)

   an FCA-designated senior management function; and

2. (2)

   an FCA controlled function that is not a designated senior management function.

All the controlled functions that the FCA has specified in this chapter are designated senior management functions. The FCA has not, in this chapter, used its power to specify controlled functions that are not designated senior management functions.

The FCA has (in SUP 10A (FCA Approved Persons in Appointed Representatives)) specified controlled functions for SMCR firms that are not designated senior management functions.

1. (1)

   Except as described in SUP 10C.3.4G, in this chapter, FCA controlled function and FCA-designated senior management function cover the same functions.

2. (2)

   Therefore, a function is only covered by SUP 10C.4.3R (Table of FCA-designated senior management functions) if that function meets both the following sets of requirements:

   1. (a)

      the requirements of SUP 10C.3.6R (Definition of FCA controlled function: arrangements); and

   2. (b)

      the requirements of SUP 10C.3.10R (Definition of FCA-designated senior management function).

Section 59(1) and (2) of the Act provide that approval is necessary for an FCA controlled function which is performed under an arrangement entered into by a firm, or its contractor (typically an appointed representative), in relation to a regulated activity.

1. (1)

   Arrangement is defined in section 59(10) of the Act as any kind of arrangement for the performance of a function which is entered into by a firm or any of its contractors with another person.

2. (2)

   Arrangement includes the appointment of a person to an office, a person becoming a partner, or a person's employment (whether under a contract of service or otherwise).

3. (3)

   An arrangement need not be a written contract but could arise by conduct, custom and practice.

If a firm is a member of a group, a person employed elsewhere in the group (for example, by the holding company) who carries out a function in relation to the firm will only perform an FCA controlled function:

1. (1)

   if the function is performed under an arrangement entered into by the firm (under section 59(1)); or

2. (2)

   if:

   1. (a)

      there is a contract (under section 59(2)) between the firm and the relevant group member permitting this; and

   2. (b)

      the function is performed under an arrangement entered into by the contractor.

Section 59ZA(2) of the Act says that a function is a ‘senior management function’, in relation to the carrying on of a regulated activity by a firm, if:

1. (1)

   the function will require the person performing it to be responsible for managing one or more aspects of the firm's affairs, so far as relating to the activity; and

2. (2)

   those aspects involve, or might involve, a risk of serious consequences:

   1. (a)

      for the firm; or

   2. (b)

      for business or other interests in the United Kingdom.

Section 59ZA(3) of the Act says that ‘managing’ includes, for these purposes, taking decisions, or participating in the taking of decisions, about how one or more aspects of the firm's affairs should be carried on.