The Financial Conduct Authority’s new senior managers regime (SMR) will come into force on 7 March 2016. Under the SMR, individuals with overall responsibility for activities, functions or areas of the business need to be pre-approved to perform senior management functions. TheFCA has become aware of uncertainty on the status of those, such as in house legal, with overall responsibility for a firm’s legal function.

The FCA’s view is that providing legal advice to a firm’s board would not automatically bring a general counsel within the scope of the SMR, but acknowledges that there are differing views on how desirable this would be. In particular, there are concerns that a general counsel subject to the SMR would be required to disclose legal privileged information to regulators.

There is insufficient time before 7 March 2016 for the FCA to make a policy decision or for firm’s to change their current arrangements. The FCA will publish a consultation paper to gather views on whether individuals with overall responsibility for a firm’s legal function should be covered by the SMR. Once a final decision has been made, transitional measures will be announced if needed, but until then firms that have sought to make a decision in good faith about whether or not to include under the SMR individuals in charge of their legal function should not need to change their approach.

Separately, the FCA has announced that the new regulated reference proposals for candidates applying for senior management and significant harm functions under the certification regime will be postponed after complex issues have been raised in the course of consultation.

The final rules on regulatory references are expected to be published in summer 2016. Until they are in force, the FCA’s current referencing requirements under the Approved Person Regime will continue (subject to minor amendments).