FCA Handbook - SYSC 2 Senior management arrangements

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SYSC 2.1 Apportionment of Responsibilities

A firm must take reasonable care to maintain a clear and appropriate apportionment of significant responsibilities among its directors and senior managers in such a way that:

(1)
it is clear who has which of those responsibilities; and
(2)
the business and affairs of the firm can be adequately monitored and controlled by the directors, relevant senior managers and governing body of the firm.

Firms should also consider the additional guidance on risk-centric governance arrangements for effective risk management contained in SYSC 21.

The role undertaken by a non-executive director will vary from one firm to another. For example, the role of a non-executive director in a friendly society may be more extensive than in other firms. Where a non-executive director is an approved person, for example where the firm is a body corporate, his responsibility and therefore liability will be limited by the role that he undertakes.

Insurance distribution activities

A firm carrying on insurance distribution activities must allocate to a senior manager the function of ensuring the proper implementation of the policies and procedures approved in accordance with SYSC 3.1.11R.

[Note: second paragraph of article 10(8) of the IDD]

SYSC 2.2 Recording the apportionment

(1)
A firm must make a record of the arrangements it has made to satisfy SYSC 2.1.1 R (apportionment) and take reasonable care to keep this up to date.
(2)
This record must be retained for six years from the date on which it was superseded by a more up-to-date record.

SYSC 2.2.1R does not apply to a firm to whom PRA Rulebook: Solvency II firms: Insurance – Allocation of Responsibilities, 5.1 and 5.2 or PRA Rulebook: Large Non-Solvency II firms – Allocation of Responsibilities, 5.1 and 5.2, applies nor to a large non-directive insurer.

(1)
A firm will be able to comply with SYSC 2.2.1 R by means of records which it keeps for its own purposes provided these records satisfy the requirements of SYSC 2.2.1 R and provided the firm takes reasonable care to keep them up to date. Appropriate records might, for this purpose, include organisational charts and diagrams, project management documents, job descriptions, committee constitutions and terms of reference provided they show a clear description of the firm's major functions.
(2)
Firms should record any material change to the arrangements described in SYSC 2.2.1 R as soon as reasonably practicable after that change has been made.

Where responsibilities have been allocated to more than one individual, the firm's record should show clearly how those responsibilities are shared or divided between the individuals concerned.