The FSA have issued a Consultation Paper proposing to change the provisions of the CRED part of their Handbook on this.
The present position is that the task of allocating (“apportioning”) significant responsibilities to people must itself be allocated by the credit union – normally to the Chief Executive – CRED 4.2.4G to 4.2.7G. However, this can be held jointly by the chief executive and particular members of the management committee or, if there is no chief executive, only by particular members of the committee or even to every member of the committee either together or separately – CRED 4.2.8G, CRED 4.2.9G and CRED 4.2.10.G.
As part of the application to all firms of the “common platform” of systems and controls currently applicable to firms covered by the MIFID and CRD requirements of the EU, the FSA proposes to remove the requirement that an individual be given the role of apportioning specific responsibilities – FSA, “Organisational systems and controls- extending the common platform” CP 07/23, 2007 Appendix 1, Annex B.
Instead, the requirement will be that the credit union
“when allocating functions internally, must ensure that senior personnel……are responsible for ensuring that the firm complies with its obligations under the regulatory system. In particular, senior personnel…………must assess and periodically review the effectiveness of the policies, arrangements and procedures put in place to comply with the firm’s obligations under the regulatory system and take appropriate measures to address any deficiencies.” – SYSC 4.3.1R.
“Senior personnel” are defined in the FSA Handbook Glossary as:
“those persons who effectively direct the business of the firm, which could include a firm’s governing body and other persons who effectively direct the business of the firm.”
Under this system, the committee and the senior managers will together have this responsibility and will be able to allocate it as they think fit. Clearly, the Chief Executive (if any) is likely to continue to have the main responsibility and to share it to a greater or lesser extent with one or more members of the Committee. Equally, if there is no Chief Executive some or all committee members will carry out this role. The change simply means that CRED is less prescriptive about that level of detail.
This change will take effect from 1st October 2008 if the consultation being carried out in early 2008 agrees the proposal.