UK's Financial Services Authority: £1 Million A year Saving For Firms In Approved Persons Simplification

The Financial Services Authority (FSA) today confirmed it will merge the customer functions in its Approved Persons regime into a new single category, following strong support from the industry for the proposal.

The change eliminates the need for firms to submit a form when an employee already approved for a customer function within that firm wants to move between customer functions or add a customer function to one already held. This gives firms administrative savings and added flexibility to respond to their business needs. It is the latest in a series of initiatives to streamline and simplify the Handbook which the FSA has implemented over the last year.

David Kenmir, FSA Managing Director of Regulatory Services, said:

"Through our Handbook review programme and as part of our Better Regulation agenda, the FSA is removing regulations whose costs outweigh the benefits they bring. The merger of customer functions will save firms a further £1 million a year."

The merger will come into effect on 1 November 2007 at the same time as other Handbook changes relating to the implementation of the Market in Financial Instruments Directive (MiFID).

Background

1. PS07/4 'Reforming the Approved Persons Regime' feedbacks on the customer function merger proposals set out in CP06/15 'Reforming the Approved Persons Regime: Consultation and Feedback to CP05/10'.
2. Consultation Paper 05/10 'Reviewing the Handbook', published in July 2005, consulted on a number of changes to the Approved Persons regime and to the Money Laundering and Training and Competence regimes. Last year the FSA deleted the requirement for firms to produce an annual report on the roles and responsibilities of the FSA approved senior managers saving the industry about £2 million a year in administration costs. The detailed rules on anti-money laundering controls have been removed in their entirety and replaced with high-level requirements for firms to have their own risk-based controls on money laundering. The FSA has also confirmed that its detailed Training and Competence rules will not apply from 1 November this year to those individuals in financial firms who deal only with wholesale or non-private customers.
3. Approximately 9000 firms have individuals who are approved for a customer function. Currently there are seven customer functions: CF21 Investment Adviser, CF22 Investment Adviser (trainee), CF23 Corporate Finance Adviser, CF24 Pension Transfer Specialist, CF25 Adviser on Syndicate Participation at Lloyds, CF26 Customer Trading and CF27 Investment Management. The new single customer function will be designated CF 30.
4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
5. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.