On 13 December 2017, the FCA has published a technical Consultation Paper 17/40 (CP 17/40) on the extension of the Senior Managers and Certification Regime (SMCR) to the entire financial services industry. CPI 7/40 contains the proposals for transitioning the FCA firms and individuals to the SMCR as well as the anticipated timelines for the changes.
CPI 7/40 follows a prior FCA Consultation Paper 17/25 (CP I 7/25) that was published in July 2017. CP 17/25 contained the FCA's initial proposals and draft rules on extending the SMCR to all FCA solo-regulated firms.
The FCA proposals in CPI 7/40 include automatically converting most of the senior persons currently covered by the Approved Persons Regime at Core and Limited Scope firms into the Senior Management Functions. A conversion notification form will nevertheless have to be submitted if the Core or Limited Scope firm has a non-executive director performing the role of the Chairman. Enhanced firms, on the other hand, will have more stringent requirements in place, including being required to submit conversion notification forms, Statements of Responsibilities and a Responsibilities Map to transition to the new regime. The difference reflects the FCA policy of taking a proportionate approach to the rollout of SMCR, requiring "little or no interaction with the FCA" for most Core or Limited Scope firms.
The precise timetable for when the new rules become effective is not yet fixed and will be set by the Treasury in due course. The FCA proposed that the regime applies to insurers from late 2018 and to solo-regulated firms from mid-to-late 2019. It also proposed to give the firms an extra 12 months to certify employees as fit and proper for the purposes of the Certification Regime.
The consultation will run until 21 February 2018. The FCA will consider the feedback it receives and will publish the final rules in a Policy Statement in summer 2018.