Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to every firm that is:

1. (1) a CRR firm; or
2. (2) a credit union; or
3. (3) a third country CRR firm in relation to:
1. (a) the activities of its establishment in the UK; or
2. (b) if it does not have an establishment in the UK, its activities in the UK.

1.1A

This Part does not apply to a SRO firm.

1.2

In this Part, the following definitions shall apply:

employee

in relation to a firm, includes any person within the description set out in section 63E(9) of FSMA.

Material Risk Takers Regulation

means Commission Delegated Regulation (EU) No 604/2014 of 4 March 2014 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards with respect to qualitative and appropriate quantitative criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile.

significant risk taker

means

1. (1) an employee of a CRR firm whose professional activities have a material impact on the firm's risk profile, including any employee who is deemed to have a material impact on the firm's risk profile in accordance with criteria set out in Articles 3 to 5 of the Material Risk Takers Regulation;
2. (2) any employee of a credit union who:
1. (a) is a member of the governing body;
2. (b) is a member of the senior management;
3. (c) is responsible and accountable to the management body for the activities of the independent risk management function, compliance function or internal audit function;
4. (d) heads a function responsible for legal affairs, finance including taxation and budgeting, human resources, remuneration policy, information technology or economic analysis; or
3. (3) any employee of a third country CRR firm who would fall within (1) if it had applied in relation to him or her, unless the firm has deemed the employee not to be a material risk taker under Remuneration 3.2.

1.3

This Part does not apply to a function performed by:

1. (1) a person acting as an insolvency practitioner within the meaning of section 388 of the Insolvency Act 1986;
2. (2) a person acting as a nominee in relation to a voluntary arrangement under Part I (Company Voluntary Arrangements) of the Insolvency Act 1986;
3. (3) a person acting as an insolvency practitioner within the meaning of Article 3 of the Insolvency (Northern Ireland) Order 1989;
4. (4) a person acting as a nominee in relation to a voluntary arrangement under Part II (Company Voluntary Arrangements) of the Insolvency (Northern Ireland) Order 1989;
5. (5) a PRA approved person;
6. (5A) a person in relation to whom a notice under section 59ZZA has been given to an authorised person:
7. (6) a person who performs an FCA controlled function; or
8. (7) a non-executive director in relation to their non-executive director function.

2.1

A firm must take reasonable care to ensure that none of its employees performs a certification function under an arrangement entered into by the firm in relation to the carrying on by the firm of a regulated activity, unless the employee has a valid certificate issued by the firm.

2.2

For the purposes of this Part, any function that is performed by a significant risk taker for a firm is a certification function to the extent that the function requires the significant risk taker to be involved in one or more aspects of the firm’s affairs, so far as relating to a regulated activity carried on by the firm.

2.3

However, a significant risk taker does not perform a certification function for a firm under 2.2 if the significant risk taker is performing any controlled function for that firm.

2.4

To the extent that:

1. (1) a firm appoints a person to perform a function which, but for this rule, would be a certification function;
2. (2) the appointment solely is to provide cover for a certification employee whose absence is reasonably unforeseen; and
3. (3) the appointment is for less than four weeks;

such a person does not perform a certification function.