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 for
Authorised Firms, set out in GEN section 4.2, apply subject to (2) and (3) to every Authorised Firmin accordance with Rules GEN 4.1.2 and GEN 4.1.3.(2) The twelve Principles for Authorised Firms, set out in GEN section 4.2, do not apply to an Authorised Firmwhich is a Representative Office.(3) An Authorised Firmwhich is a Credit Rating Agencydoes 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 Servicesbusiness;(b) activities carried on in connection with a Financial Servicebusiness;(c) activities held out as being for the purpose of a Financial Servicebusiness; and(d) in relation to any particular Principle, any activity specified in (2), (3) and (4).(2) Principles 3 and 4 also apply in a Prudential Contextto an Authorised Firmwith respect to the carrying on of all its activities.(3) Principles 3 and 4 also take into account any activities of other members of the Groupof which the Authorised Firmis a member.(4) Principles 10 and 11, to the extent that it relates to disclosing to the DFSA, also applies to an Authorised Firmwith respect to the carrying on of all its activities, and takes into account any activities of other members of the Groupof which the Authorised Firmis a member.
GEN 4.1.3 GEN 4.1.3(1) The
Principlesapply to an Authorised Firmonly with respect to activities carried on from an establishment maintained by it in the DIFC, unless an extension in (2), (3), (4) or (5) applies.(2) Where another applicable Rule, which is relevant to the activity, has a wider territorial scope than that in (1), any related Principleapplies with that wider scope in relation to the activity described in the Rule.(3) Principles 1, 2 and 3 apply in a Prudential Contextto an Authorised Firmwith respect to activities wherever they are carried on.(4) Principles 4 and 11 apply to an Authorised Firmwith respect to activities wherever they are carried on.(5) Principle 5 also applies to an Authorised Firmwith respect to the activities carried on in or from any place outside the DIFCif 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 the DIFC.
GEN 4.1.3 Guidance1. The Principles for
Authorised Firmshave the status of Rulesand are a general statement of fundamental regulatory requirements which apply alongside the other Rulesand also in new or unforeseen situations which may not be covered elsewhere by a specific Rule. Rulesin other areas of the Rulebookbuild upon these fundamental principles. Consequently the Rulesand Guidanceelsewhere in the Rulebookshould not be seen as exhausting the implications of the Principles.2. Breaching a Principle for Authorised Firmsmakes an Authorised Firmliable to disciplinary action, and may indicate that it is no longer fit and proper to carry on a Financial Serviceor to hold a Licenceand the DFSAmay consider withdrawing authorisation or the Licenceon that basis.3. The onus will be on the DFSAto show that the Authorised Firmhas been at fault in some way, taking into account the standard of conduct required under the Principle in question.
GEN 4.2 GEN 4.2 The Principles for Authorised Firms
Principle 1 — Integrity
Authorised Firmmust observe high standards of integrity and fair dealing.
Principle 2 — Due skill, care and diligence
In conducting its business activities an
Authorised Firmmust act with due skill, care and diligence.
Principle 3 — Management, systems and controls
Authorised Firmmust ensure that its affairs are managed effectively and responsibly by its senior management. An Authorised Firmmust have adequate systems and controls to ensure, as far as is reasonably practical, that it complies with legislation applicable in the DIFC.
Principle 4 — Resources
Authorised Firmmust 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.
Principle 5 — Market conduct
Authorised Firmmust observe proper standards of conduct in financial markets.
Principle 6 — Information and interests
Authorised Firmmust pay due regard to the interests of its customers and communicate information to them in a way which is clear, fair and not misleading.
Principle 7 — Conflicts of interest
Authorised Firmmust take all reasonable steps to ensure that conflicts of interest between itself and its customers, between its Employeesand 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.
Principle 8 — Suitability
Authorised Firmmust take reasonable care to ensure the suitability of its advice and discretionary decisions for customers who are entitled to rely upon its judgement.
Principle 9 — Customer assets and money
Authorised Firmhas 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.
Principle 10 — Relations with regulators
Authorised Firmmust deal with Regulatorsin an open and co-operative manner and keep the DFSApromptly informed of significant events or anything else relating to the Authorised Firmof which the DFSAwould reasonably expect to be notified.
Principle 11 — Compliance with high standards of corporate governance
GEN 4.2.11 GEN 4.2.11
Authorised Firmmust 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 the Authorised Firm'sbusiness and to protect the interests of its customers and stakeholders.
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
Authorised Firmmust 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 Individualsset out in GEN section 4.4 apply to every Authorised Individualin respect of every Licensed Function.
GEN 4.3.1 Guidance1. The Principles for
Authorised Individualsdo not apply to an Authorised Individualin 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 for Authorised Individualsmakes an Authorised Individualliable to disciplinary action and may indicate that he is no longer fit and proper to perform a Licensed Functionand the DFSAmay consider suspending or withdrawing Authorised Individualstatus on that basis.3. The onus will be on the DFSAto 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 an Authorised Individualcomplies with the Principles for Authorised Individuals, the DFSAwill take account of whether that conduct is consistent with the requirements and standards relevant to his Authorised Firm, the Authorised Individual'sown role and the information available to him.
GEN 4.4 GEN 4.4 The Principles for Authorised Individuals
Principle 1 — Integrity
Authorised Individualmust observe high standards of integrity and fair dealing in carrying out every Licensed Function.
Principle 2 — Due skill, care and diligence
Authorised Individualmust act with due skill, care and diligence in carrying out every Licensed Function.
Principle 3 — Market conduct
Authorised Individualmust observe proper standards of conduct in financial markets in carrying out every Licensed Function.
Principle 4 — Relations with the DFSA
Authorised Individualmust deal with the DFSAin an open and co-operative manner and must disclose appropriately any information of which the DFSAwould reasonably be expected to be notified.
Principle 5 — Management, systems and control
Authorised Individualwho has significant responsibility must take reasonable care to ensure that the business of the Authorised Firmfor which he is responsible is organised so that it can be managed and controlled effectively.
Principle 6 — Compliance
Authorised Individualwho has significant responsibility must take reasonable care to ensure that the business of the Authorised Firmfor which he is responsible complies with any legislation applicable in the DIFC.