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Alternative Finance blog

Approved Persons Regime Replaced

Approved Persons Regime Replaced

4 months


The Financial Conduct Authority (FCA) have replaced the Approved Persons Regime from the 9 December 2019.

Along with the new P2P platform rules, detailing the need for transparency and ensuring potential Investors have adequate knowledge and understanding before investing, the FCA have updated the rules for Approved persons to “reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence’.

This rule is not only applicable to the P2P and Equity Crowdfunding community, it is a rule across the entire financial industry regulated by the FCA.

The FCA are seeking to encourage a culture of staff at all levels taking personal responsibility for their actions and to make sure firms clearly understand and demonstrate where their responsibilities lie. Appointed Senior managers should fully understand the risks they are taking on under SM&CR.

There are specific responsibilities a firm must give to their senior managers known as ‘prescribed responsibilities’ but once a firm has identified the Senior Managers it must clearly state what their responsibilities are and what they are accountable for. If the FCA find a senior manager in breach of any rules for their area, they are then held personally liable if no remedies are taken to either stop the breach or to prevent it.

The FCA can, and have in the past with banks, enforce fines on the individual rather than the firm and if there are serious breaches of the rules, custodial sentences.

The P2P industry has seen quite a few changes recently however they are to encourage firms to act more responsibly to ensure there is no harm to consumers and to strengthen the integrity of the market.

 



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