SYSC 6.1 Compliance

A firm must establish, implement and maintain adequate policies and procedures sufficient to ensure compliance of the firm including its managers, employees and appointed representatives (or where applicable, tied agents) with its obligations under the regulatory system and for countering the risk that the firm might be used to further financial crime.

[Note: article 16(2) of MiFID and article 12(1)(a) of the UCITS Directive]

A firm that is amanagement company or an operator of an electronic system in relation to lending must, taking intoaccount the nature, scale and complexity of its business, and the nature and range of financial services and activities undertaken in the course of that business, establish, implement and maintain adequate policies and procedures designed to detect any risk of failure by the firm to comply with its obligations under the regulatory system, as well as associated risks, and put in place adequate measures and procedures designed to minimise such risks and to enable the FCA to exercise its powers effectively under the regulatory system.

[Note: article 10(1) of the UCITS implementing Directive]

A firm that is amanagement company or an operator of an electronic system in relation to lending must maintain a permanent and effective compliance function which operates independently and which has the following responsibilities:

1. (1)

   to monitor and, on a regular basis, to assess the adequacy and effectiveness of the measures and procedures put in place in accordance with SYSC 6.1.2 R, and the actions taken to address any deficiencies in the firm's compliance with its obligations; and

2. (2)

   to advise and assist the relevant persons responsible for carrying out regulated activities to comply with the firm's obligations under the regulatory system.

[Note: article 10(2) of the UCITS implementing Directive]

A common platform firm must establish and maintain a permanent and effective compliance function which operates independently and which has the following responsibilities:

1. (1) to monitor on a permanent basis and to assess, on a regular basis, the adequacy and effectiveness of the measures, policies and procedures put in place in accordance with SYSC 6.1.2-AR, and the actions taken to address any deficiencies in the firm's compliance with its obligations;
2. (2) to advise and assist the relevant persons responsible for carrying out the firm's designated investment business to comply with the firm's obligations under the UK law on markets in financial instruments;
3. (3) to report to the management body, at least on an annual basis, on:
   1. (a) the implementation and effectiveness of the overall control environment for the firm'sdesignated investment business;
   2. (b) the risks that have been identified; and
   3. (c) the complaints-handling reporting as well as remedies undertaken or to be undertaken;
4. (4) to monitor the operations of the complaints-handling process and consider complaints as a source of relevant information in the context of its general monitoring responsibilities.

In order to enable the compliance function to discharge its responsibilities properly and independently, a firm that is amanagement company or an operator of an electronic system in relation to lending must ensure that the following conditions are satisfied:

1. (1)

   the compliance function must have the necessary authority, resources, expertise and access to all relevant information;

2. (2)

   a compliance officer must be appointed and must be responsible for the compliance function and for any reporting as to compliance required by SYSC 4.3.2 R;

3. (3)

   the relevant persons involved in the compliance functions must not be involved in the performance of the services or activities they monitor;

4. (4)

   the method of determining the remuneration of the relevant persons involved in the compliance function must not compromise their objectivity and must not be likely to do so.

[Note: article 10(3) of the UCITS implementing Directive]

1. (1)

   A firm which is not a common platform firm or management company and which carries on designated investment business with or for retail clients or professional clients must allocate to a director or senior manager the function of:

   1. (a)

      having responsibility for oversight of the firm's compliance; and

   2. (b)

      reporting to the governing body in respect of that responsibility.

2. (2)

   In SYSC 6.1.4A R (1) compliance means compliance with the rules in:

   1. (a)

      COBS (Conduct of Business sourcebook);

   2. (b)

      COLL (Collective Investment Schemes sourcebook);

   3. (c)

      CASS (Client Assets sourcebook); and

   4. (d)

      ICOBS (Insurance: Conduct of Business sourcebook).

A firm that is amanagement company or an operator of an electronic system in relation to lending need not comply with SYSC 6.1.4 R (3) or SYSC 6.1.4 R (4) if it is able to demonstrate that in view of the nature, scale and complexity of its business, and the nature and range of financial services and activities, the requirements under those rules are not proportionate and that its compliance function continues to be effective.

[Note: article 10(3) second paragraph of the UCITS implementing Directive]