CTRL 5.1.1 Exercise of 2 or more controlled functions by same individual

(1) Subject to subrule (2), an individual may exercise 2 or more controlled functions for an authorised firm if (but only if):
(a) the firm’s governing body confirms to the Regulatory Authority in writing that it is satisfied that:
(i) the individual’s exercise of those controlled functions in combination:
(A) does not give rise to any internal or external conflict of interest; and
(B) does not compromise the independence, objectivity and effectiveness of the exercise of any of the functions;
(ii) the individual’s combined exercise of the functions will not increase the firm’s risk of non-compliance with the law applicable in the QFC or any other applicable law; and
(iii) it is not inappropriate, having regard to the nature, scale and complexity of the firm’s business, for the individual to exercise both or all of the controlled functions; and
(b) the Authority is satisfied that:
(i) the conditions in subparagraphs (a) (i), (ii) and (iii) have been met; and
(ii) the individual can adequately exercise the functions in combination.
(2) An authorised firm must not combine the internal audit function with any other controlled function.
(3) At least once in every year, the firm’s senior management must review:
(a) the firm’s policies, procedures and controls for combining the functions, including its procedures for assessing:
(i) whether it is feasible to continue to combine the functions;
(ii) the risk in doing so; and
(iii) the likely effect of doing so on the firm’s business; and
(b) the combined exercise of the functions, to satisfy itself that:
(i) the combined exercise does not compromise the independence, objectivity and effectiveness of the exercise of each function;
(ii) no internal or external conflict of interest arises;
(iii) the combined exercise has not increased, and will not increase, the firm’s risk of non-compliance with the law applicable in the QFC or any other applicable law; and
(iv) the combined exercise continues to be appropriate, having regard to the nature, scale and complexity of the firm’s business.
(4) The senior management must report the results of a review under subrule (2) to the firm’s governing body within 30 days after the review is completed.
(5) If the Regulatory Authority is satisfied that it is no longer appropriate for 2 or more controlled functions to be exercised for an authorised firm by the same individual, the Authority may, by written notice, direct the firm to do either or both of the following:
(a) stop combining the functions;
(b) appoint 1 or more individuals to exercise any of the functions.
(6) In particular, the Authority may give a direction under subrule (4) if the Authority considers that:
(a) the continued performance by the individual of both or all the functions:
(i) is no longer appropriate, having regard to the nature, scale and complexity of the firm’s business;
(ii) has given rise, or is likely to give rise, to an internal or external conflict of interest; or
(iii) has compromised, or is likely to compromise, the independence, objectivity and effectiveness of the performance of any of the functions;
(b) the individual is performing any of the functions at a standard that is below the standard at which a reasonable person having the necessary skills, knowledge and experience would be expected to perform that function; or
(c) the combined performance of the functions by the individual has impaired, or is likely to impair, the firm’s compliance with the requirements applicable to the conduct of its business in or from the QFC.

 

Derived from QFCRA RM/2012-4 (as from 1st July 2013)
Amended by QFCRA RM/2020-4 (as from 1st July 2021)