Financial Conduct Authority (FCA) UK Regulation Sample Exam

Under which circumstance does a regulated firm need to seek approval for an individual to be an approved person?

1. If the individual is going to be a non-executive director

2. If the individual has prior regulatory experience

3. If the individual works part-time

4. If the individual is a junior staff member

The correct answer is: If the individual is going to be a non-executive director

A regulated firm is required to seek approval for an individual to be an approved person primarily when the individual is going to assume roles that involve significant influence or decision-making within the firm, such as being a non-executive director. Non-executive directors are responsible for overseeing the executive management and ensuring that the company is being run properly, adhering to applicable regulations and standards. This role entails a level of responsibility and governance that necessitates regulatory scrutiny to ensure that the individual meets the necessary standards of integrity, competence, and experience. In contrast, prior regulatory experience, part-time employment, or being a junior staff member do not inherently require regulatory approval. While those factors may be relevant in assessing the suitability of an individual for a role, they do not trigger the requirement for approval as non-executive director status does.