The FSA has extended its regulation to encompass those that perform a ‘significant influence' function at firms. In a policy statement the FSA said it would place greater emphasis on the role of senior management, including non-executive directors (NEDs).
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.
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; and amended the application of the approved persons regime to UK branches of overseas firms based outside the EEA.
Before making a final decision on this issue, the FSA will to consider 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.
These changes will come into effect on 6 August 2009 with a transitional period of six months. Firms should now begin assessing which individuals require approval and submit timely applications to comply with the end of the transitional period.
