2.3.6 Code of Practice for Statement of Principle 5

Question 1

Statement of Principle 5

Answer 1

Requires a person performing an SIF to take reasonable steps to ensure that the business of the firm for which they are responsible in their accountable function is organised. Including :

1) Reporting Lines
2) Authorisation levels and job descriptions
3) Suitability of individuals

Failure to comply with P 5 may include weaknesses and failings in areas such as:

• Failure to apportion responsibilities
• Poor Systems and controls
• Failure to act upon relevant management information
• Failure to review the competence of individuals
• Failure to take reasonable steps to ensure that suitable cover for responsibilities is arranged for temporary vacancies

Question 2

1) Reporting Lines

Answer 2

The organisation of the business and responsibilities of those within should be clearly defined with clear reporting lines. If dual reporting lines, responsibilities and accountability of each line manager should be clear

Question 3

2) Authorisation levels and job descriptions

Answer 3

members of staff with particular levels of authorisation should have these clearly set out and communicated to staff. Could be done by each member having a job desc

Question 4

3) Suitability of individuals

Answer 4

If an individual’s performance is unsatisfactory the appropriate approved person should review whether that individual should be allowed to continue in their position

Question 5

FCA failure to comply with P5 shows weakness/failings in the following areas

Answer 5

• Failure to apportion responsibilities
• Poor Systems and controls
• Failure to act upon relevant management information
• Failure to review the competence of individuals
• Failure to take reasonable steps to ensure that suitable cover for responsibilities is arranged for temporary vacancies