On January 23, the UK Financial Conduct Authority (FCA), published a consultation paper on optimizing the senior managers and certification regime (SM&CR) (for further details on the SM&CR, see the March 11, 2016 edition of the Corporate & Financial Weekly Digest). Its proposals intend to help firms adjust to the SM&CR and to identify some of the rules which need to be revised, as currently drafted in the Individual Accountability (Amendment) (No 1) Instrument 2019.
The FCA’s key proposals include:
- excluding the Legal Function (i.e., heads of legal) from the Overall Responsibility requirement and having to be approved as a senior manager under the Senior Managers Regime;
- amending the scope of the Client Dealing Function under the Certification Regime to allow firms to exclude purely administrative roles that participate in “managing” or “arranging” investment activities, as interpreted under the current draft rules;
- ensuring that the Certification Regime applies to individuals performing roles that were Systems and Controls Functions under the Approved Persons Regime, but that are no longer approved under the SM&CR, which will therefore involve the introduction of a new certification function; and
- applying Senior Manager Conduct Rule 4 (which requires relevant individuals to appropriately disclose any information of which the FCA would reasonably expect notice) to non-approved executive directors at limited-scope firms to ensure that executive and non-executive directors at such firms are subject to equivalent requirements.
The deadline for submitting comments on the consultation paper is April 23. The FCA will consider feedback and publish its rules and guidance in a policy statement scheduled for the third quarter of 2019.
The FCA’s consultation paper is available here.