Association of Professional Compliance Consultants

The body for compliance consultants who advise firms regulated in the UK.

The APCC is active in enhancing the professional standards of compliance consultants and is recognised as a trade body by the FCA and other regulators. This provides our members with significant benefits in terms of direct access to the Regulators as well as business leads.  The APCC often works in conjunction with the FCA to pilot or test new initiatives, and we also provide with valuable feedback on specific subjects as requested by them.

Controllers FCA Change of Emphasis

At the APCC FCA Authorisations and Regulatory Workshop on 14 April 2014 in the session on Controllers, the FCA issued a slide that stated “a CEO with a 5% right to profit is a significant influence controller” under s422(2)(c) of FSMA yet the first control band for a Directive Firm is “ 10% or more but less than 20%” and for a Non-Directive Firm, “20% or more”.

The current industry practice is to include persons with 10% or more voting or economic rights as controllers. However the FCA’s slide would tend to point to a shift in emphasis with regard to persons who hold a senior management position and hold an unquantified amount of shares or voting power as a result of which they are able to exercise significant influence over the management of the Firm. It will be difficult to define exactly what is meant by ‘significant influence’ in the context of a controller and this will potentially lead to divergent industry approaches to this issue. For instance a person who is on a Board comprised of fifteen directors will potentially exert less influence over the firm than a person who sits on a Board comprised of three directors.

Does this new emphasis mean that firms should be including all minority (sub 10%) shareholders or partners regardless of the size of their holding or voting rights by virtue of them being a Director or Partner of the Firm? This is despite the fact that they are already approved by the FCA in their senior management position as performing a ‘significant influence’ controlled function and therefore directly answerable to it. The APCC would be grateful for the thoughts of its members on this issue and it is possible that the APCC may go back to the FCA on this issue to seek greater clarity depending upon the response it receives from members.