New firms and activities
Any new firm wishing to carry on a regulated activity must apply to the FSA using the correct application form, for permission. The firm cannot start the regulated business until they have been authorised.
If the firm is refused permission it can appeal to the Financial Services and Markets Tribunal.
Appointed representatives
Appointed representatives are a specific type of exempt firm defined under section 39 of the FSMA 2000. An appointed representative must have a contract with an authorised firm, where the authorised firm acts as principal and accepts in writing that the authorised firm accepts compliance responsibility for the appointed representative.
Appointed representatives come in two categories. Those who can carry on the same level of activity as the authorised firm, and those who are only permitted to introduce clients and distribute advertisements. The last category is called introducer appointed representatives.
Individual registration
Individuals undertaking controlled functions must be individually approved by the FSA. Controlled functions are those that involve,
- A significant influence on the conduct of an authorised person’s affairs; or
- Dealing with customers in connection with regulated activities; or
- Dealing with the property of customers in connection with regulated activities.
Thus individual registration is necessary for:
- Directors and chief executives;
- Appointed actuaries of insurance companies
- Money laundering reporting offices
- Heads of compliance
- Internal auditors
- Senior management
- Customer advisers and traders
- Discretionary investment managers
Since an individual is separately authorised that authorisation can also be withdrawn by the FSA. The FSA can also apply fines and penalties against individuals and take disciplinary action. The FSA will only take hard line action where the circumstances indicate that level of action is required.
Those individuals who held individual registration under the Financial Services Act did not need to apply for fresh approval with the FSA.
An approved person must be fit and proper. This includes the following areas,
- Honesty
- Integrity
- Reputation
- Competence
- Capability
- Financial soundness
For senior managers the firm must maintain a clear appointment of significant functions. There must be appropriate controls and checks to make certain that the firm is always within compliance with the rules.