SYSC 26.7 Meaning of local and overall responsibility: Reporting to the governing body

This section gives guidance on what overall and local responsibility for a function means when the governing body manages the function in question under SYSC 26.3 (Main rules).

When this chapter refers to a person having overall or local responsibility for a function as described in SYSC 26.7.1G, it means a person who has:

1. (1)

   ultimate responsibility (under the governing body and the chief executive) for managing or supervising that function; and

2. (2)

   primary and direct responsibility for:

   1. (a)

      briefing and reporting to the governing body about that function; and

   2. (b)

      putting matters for decision about that function to the governing body.

In general, the FCA expects that a person to whom overall responsibility for a function is allocated as described in SYSC 26.7.1G will be the most senior employee or officer responsible for managing or supervising that function under the management of the governing body.

1. (1)

   A person with overall or local responsibility for a matter will either be a member of the governing body or will report directly to the governing body for that matter.

2. (2)

   For example, a firm appoints A to be head of sales. A is not on the governing body. A reports to an executive director (B) and B reports to the governing body about the sales function. In this example B, rather than A, has overall responsibility for sales.

1. (1)

   A person who reports to another, or is subject to oversight by another, may still have overall or local responsibility for a function.

2. (2)

   For example, a head of compliance may report direct to the governing body but be subject to performance appraisal by the chief executive. In this example, the head of compliance will still have overall responsibility for compliance.

3. (3)

   If a person (A):

   1. (a)

      reports directly to the firm’s governing body about a particular matter; but

   2. (b)

      is not a member of the governing body; and

   3. (c)

      reports to a member of the governing body (B) about that matter, who also reports to the governing body about that matter;

   B has overall or local responsibility for that matter.

4. (4)

   If:

   1. (a)

      a person (A) reports directly to the firm’s governing body about a particular matter;

   2. (b)

      A also reports to another person (B) about that matter;

   3. (c)

      neither A nor B is a member of the governing body; and

   4. (d)

      B also reports directly to the firm’s governing body about that matter;

   B has overall responsibility for that matter.

5. (5)

   A member of the governing body who reports to the chief executive may still have overall or local responsibility for a function.

6. (6)

   If:

   1. (a)

      a person (A) reports directly to the firm’s governing body about a particular matter; and

   2. (b)

      A’s function is subject to oversight by a non-executive director (B) or by a committee of the firm’s governing body chaired by B;

   A (not B) has overall or local responsibility for that matter.

A person may have local responsibility for a function for a branch of an overseas SMCR firm even though that person also reports to a person outside the branch.