2.3.1 Statements of Principle for Approved Persons

Question 1

For All Functions

Answer 1

1) Act with Integrity
2) Act with due skill, care and diligence in carrying out their accountable function
3) Observe proper standards of market conduct in carrying out their accountable function
4) Deal with the FCA and with other regulators in a cooperative way, disclose any information of which the FCA would expect notice

Question 2

Additional Principles for SIFs (Significant Influence Functions)

Answer 2

1) Take steps to ensure the business of the firm for which they are responsible for their accountable function is organised, so it can be controlled
2) Exercise skill, care and diligence n managing the business of the firm for which they are responsible in their accountable function
3) Take steps to ensure the business of the firm for which they ar responsible in their accountable functions complies with the relevant requirements and standards of the regulatory system

Question 3

Code of Practice for Statement of Principle 1 -

Answer 3

FCA considers any of the following is a failure to comply with the requirement for an approved person to act with integrity in their controlled function

Question 4

1) Deliberately misleading a client, the firm (firm’s auditors or appointed actuary) or the FCA by either act or emission. This includes deliberately:

Answer 4

• falsifying documents
• misleading a client about the risks of investment
• misleading a client about the charges or surrender penalties of investment products
• misleading a client about the likely future performance of investment products by providing inappropriate projections of future investment returns
• misleading a client by informing them that the products only require a single payment, when that isn’t the case
• mismarking the value or investments on trading positions
• procuring the unjustified allocation of prices on illiquid or off-exchange contracts
• misleading others within the firm about the creditworthiness of a borrower
• Providing false documentation or information, including details of training, qualifications, past employment of experience
• Providing false / inaccurate info to the firm or the FCA
• Destroying or causing destruction of documents (inc false documents), or tapes or their content relevant to misleading a client, firm or FCA (or attempting to mislead)
• failing to disclose dealings where disclosure is required by the firm’s personal account-dealing rules
• Misleading others in the firm about the nature of risks being accepted

Question 5

3) Deliberately failing to inform a customer, the firm (its auditors or its actuary) or the FCA of the fact that their understanding of a material issue is incorrect. This includes deliberately failing to:

Answer 5

• disclose the existence of falsified documents

- rectify mismarked positions immediately

Question 6

4) Deliberately preparing inaccurate or inappropriate records or returns in connection with an accountable function, such as

Answer 6

• Performance reports for transmission to customers which are inaccurate or inappropriate
• inaccurate training records or details of qualifications, past employment record or experience
• inaccurate trading confirmations, contract notes or other records of transactions or holdings of securities for a customer, whether or not a customer is aware of these inaccuracies or has requested such records

Question 7

5) Deliberately misusing the assets or confidential information of a client or a firm, such as

Answer 7

• Front running client orders (handling the firm’s own orders before a clients so as to benefit from price movements arising from client activity)
• Carryng out unjustified trading on client accounts to generate a benefit to the approved person, someitmesk known as churning
• misappropriating a clients assets, including wrongly transferring cash or securities belonging to clients to personal. accounts
• Wrongly using one lcient’s funds to settle margin calls or to cover trading losses on another client account or on firm account
• using a client’s funds for purposes other than those for which they are provided
• Retaining a client’s funds wrongly
• pledging the assets of a client as security or margin in circumstances where the firm isn’t permitted to do so

Question 8

6) Deliberately designing transactions ao as to disguise breaches of requirements and standards of the regulatory system

Answer 8

Deliberately designing transactions ao as to disguise breaches of requirements and standards of the regulatory system

Question 9

7) Deliberately failing to disclose the existence of a conflict of interest in connection with dealings of a client

Answer 9

7) Deliberately failing to disclose the existence of a conflict of interest in connection with dealings of a client

Question 10

8) Deliberately not paying due regard to the interest of a customer

Answer 10

Deliberately not paying due regard to the interest of a customer

Question 11

9) Deliberate acts, omissions or business practices that could be expected to cause customer detriment

Answer 11

9) Deliberate acts, omissions or business practices that could be expected to cause customer detriment