Entire Section
GEN 4 GEN 4 Core Principles
GEN 4.1 GEN 4.1 Principles for Authorised Firms — application
GEN 4.1.1
(1) The twelve Principles forAuthorised Firms , set out in GEN section 4.2, apply subject to (2) and (3) to everyAuthorised Firm in accordance with Rules GEN 4.1.2 and GEN 4.1.3.(2) The twelve Principles forAuthorised Firms , set out in GEN section 4.2, do not apply to anAuthorised Firm which is aRepresentative Office .(3) AnAuthorised Firm which is aCredit Rating Agency does not have to comply with the Principles set out in Rules GEN 4.2.6, GEN 4.2.7, GEN 4.2.8 and GEN 4.2.9.Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]
[Amended]DFSA RM43/2007 (Made 1st June 2007). [VER14/06-07]
[Amended] DFSA RM68/2009 (Made 3rd January 2010). [VER24/01-10]
[Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]
[Amended] DFSA RM96/2012 (Made 24th July 2012) [VER30/07-12]GEN 4.1.2
(1) For the purposes of GEN Rule 4.1.3 the term 'activities' means:(a)Financial Services business;(b) activities carried on in connection with aFinancial Service business;(c) activities held out as being for the purpose of aFinancial Service business; and(d) in relation to any particular Principle, any activity specified in (2), (3) and (4).(2) Principles 3 and 4 also apply in aPrudential Context to anAuthorised Firm with respect to the carrying on of all its activities.(3) Principles 3 and 4 also take into account any activities of other members of theGroup of which theAuthorised Firm is a member.(4) Principles 10 and 11, to the extent that it relates to disclosing to theDFSA , also applies to anAuthorised Firm with respect to the carrying on of all its activities, and takes into account any activities of other members of theGroup of which theAuthorised Firm is a member.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]
[Amended]DFSA RM43/2007 (Made 1st June 2007). [VER14/06-07]
[Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]GEN 4.1.3 GEN 4.1.3
(1) ThePrinciples apply to anAuthorised Firm only with respect to activities carried on from an establishment maintained by it in theDIFC , unless an extension in (2), (3), (4) or (5) applies.(2) Where another applicableRule , which is relevant to the activity, has a wider territorial scope than that in (1), any relatedPrinciple applies with that wider scope in relation to the activity described in theRule .(3) Principles 1, 2 and 3 apply in aPrudential Context to anAuthorised Firm with respect to activities wherever they are carried on.(4) Principles 4 and 11 apply to anAuthorised Firm with respect to activities wherever they are carried on.(5) Principle 5 also applies to anAuthorised Firm with respect to the activities carried on in or from any place outside theDIFC if and to the extent that the activities have, or might reasonably be regarded as likely to have, a negative effect on confidence in the financial markets operating in theDIFC .Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]
[Amended]DFSA RM43/2007 (Made 1st June 2007). [VER14/06-07]GEN 4.1.3 Guidance
1. The Principles forAuthorised Firms have the status ofRules and are a general statement of fundamental regulatory requirements which apply alongside the otherRules and also in new or unforeseen situations which may not be covered elsewhere by a specificRule .Rules in other areas of theRulebook build upon these fundamental principles. Consequently theRules andGuidance elsewhere in theRulebook should not be seen as exhausting the implications of the Principles.2. Breaching a Principle forAuthorised Firms makes anAuthorised Firm liable to disciplinary action, and may indicate that it is no longer fit and proper to carry on aFinancial Service or to hold aLicence and theDFSA may consider withdrawing authorisation or theLicence on that basis.3. The onus will be on theDFSA to show that theAuthorised Firm has been at fault in some way, taking into account the standard of conduct required under the Principle in question.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]GEN 4.2 GEN 4.2 The Principles for Authorised Firms
Principle 1 — Integrity
GEN 4.2.1
An
Authorised Firm must observe high standards of integrity and fair dealing.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 2 — Due skill, care and diligence
GEN 4.2.2
In conducting its business activities an
Authorised Firm must act with due skill, care and diligence.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 3 — Management, systems and controls
GEN 4.2.3
An
Authorised Firm must ensure that its affairs are managed effectively and responsibly by its senior management. AnAuthorised Firm must have adequate systems and controls to ensure, as far as is reasonably practical, that it complies with legislation applicable in theDIFC .
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 4 — Resources
GEN 4.2.4
An
Authorised Firm must maintain and be able to demonstrate the existence of adequate resources to conduct and manage its affairs. These include adequate financial and system resources as well as adequate and competent human resources.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 5 — Market conduct
GEN 4.2.5
An
Authorised Firm must observe proper standards of conduct in financial markets.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 6 — Information and interests
GEN 4.2.6
An
Authorised Firm must pay due regard to the interests of its customers and communicate information to them in a way which is clear, fair and not misleading.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 7 — Conflicts of interest
GEN 4.2.7
An
Authorised Firm must take all reasonable steps to ensure that conflicts of interest between itself and its customers, between itsEmployees and customers and between one customer and another are identified and then prevented or managed, or disclosed, in such a way that the interests of a customer are not adversely affected.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]
[Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]Principle 8 — Suitability
GEN 4.2.8
An
Authorised Firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for customers who are entitled to rely upon its judgement.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 9 — Customer assets and money
GEN 4.2.9
Where an
Authorised Firm has control of or is otherwise responsible for assets or money belonging to a customer which it is required to safeguard, it must arrange proper protection for them in accordance with the responsibility it has accepted.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 10 — Relations with regulators
GEN 4.2.10
An
Authorised Firm must deal withRegulators in an open and co-operative manner and keep theDFSA promptly informed of significant events or anything else relating to theAuthorised Firm of which theDFSA would reasonably expect to be notified.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 11 — Compliance with high standards of corporate governance
GEN 4.2.11 GEN 4.2.11
An
Authorised Firm must have a corporate governance framework as appropriate to the nature, scale and complexity of its business and structure, which is adequate to promote the sound and prudent management and oversight of theAuthorised Firm's business and to protect the interests of its customers and stakeholders.[Added] DFSA RM43/2007 (Made 1st June 2007). [VER14/06-07]
[Amended] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]GEN 4.2.11 Guidance
Corporate governance framework encompasses structural and procedural arrangements such as systems, policies and practices that are put in place to promote good governance and include the specific measures required under GEN Rule 5.3.30.
[Added] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]Principle 12 — Remuneration practices
GEN 4.2.12
An
Authorised Firm must have a remuneration structure and strategies which are well aligned with the long term interests of the firm, and are appropriate to the nature, scale and complexity of its business.[Added] DFSA RM95/2012 (Made 14th June 2012). [VER29/06-12]GEN 4.3 GEN 4.3 Principles for Authorised Individuals — application
GEN 4.3.1 GEN 4.3.1
The six Principles for
Authorised Individuals set out in GEN section 4.4 apply to everyAuthorised Individual in respect of everyLicensed Function .
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]GEN 4.3.1 Guidance
1. The Principles forAuthorised Individuals do not apply to anAuthorised Individual in respect of any other functions he may carry out, although his conduct in those functions may be relevant to his fitness and propriety.2. Breaching a Principle forAuthorised Individuals makes anAuthorised Individual liable to disciplinary action and may indicate that he is no longer fit and proper to perform aLicensed Function and theDFSA may consider suspending or withdrawingAuthorised Individual status on that basis.3. The onus will be on theDFSA to show that he is culpable, taking into account the standard of conduct required under the Principle in question. In determining whether or not the particular conduct of anAuthorised Individual complies with the Principles forAuthorised Individuals , theDFSA will take account of whether that conduct is consistent with the requirements and standards relevant to hisAuthorised Firm , theAuthorised Individual's own role and the information available to him.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]GEN 4.4 GEN 4.4 The Principles for Authorised Individuals
Principle 1 — Integrity
GEN 4.4.1
An
Authorised Individual must observe high standards of integrity and fair dealing in carrying out everyLicensed Function .
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 2 — Due skill, care and diligence
GEN 4.4.2
An
Authorised Individual must act with due skill, care and diligence in carrying out everyLicensed Function .
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 3 — Market conduct
GEN 4.4.3
An
Authorised Individual must observe proper standards of conduct in financial markets in carrying out everyLicensed Function .
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 4 — Relations with the DFSA
GEN 4.4.4
An
Authorised Individual must deal with theDFSA in an open and co-operative manner and must disclose appropriately any information of which theDFSA would reasonably be expected to be notified.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 5 — Management, systems and control
GEN 4.4.5
An
Authorised Individual who has significant responsibility must take reasonable care to ensure that the business of theAuthorised Firm for which he is responsible is organised so that it can be managed and controlled effectively.
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]Principle 6 — Compliance
GEN 4.4.6
An
Authorised Individual who has significant responsibility must take reasonable care to ensure that the business of theAuthorised Firm for which he is responsible complies with any legislation applicable in theDIFC .
Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]