Report contents:

  1. Key Proposals
  2. Next steps

Today the FCA published its consultation (CP17/25) on the extension of the Senior Managers and Certification Regime (“SM&CR”) to nearly all FCA regulated firms (including incoming branches of non-UK firms that have permission to carry out FCA regulated activities). The proposals regarding insurers are not covered in this consultation. See our earlier RegZone report on the extension of the regime here.

The SM&CR is already in force and in effect (as of March 2016) for banks, building societies, credit unions and PRA‑designated investment firms. Certain proposals are relevant to those already subject to the regime.

A detailed RegZone report on the consultation will follow shortly.

Key Proposals

The FCA proposes to:

  • apply a standard set of requirements to all FCA solo-regulated firms known as the ‘core regime’ for the SM&CR;
  • have extra requirements for a small number (fewer than 1%) of solo-regulated firms whose size, complexity and potential impact on consumers warrant more attention – these additions are called the ‘enhanced regime’; and
  • apply a reduced set of requirements for a group of firms we are defining as ‘limited scope’.

Key elements of core regime

  • FCA has defined Senior Management Functions. Senior Managers – those that perform these functions – must be approved by the FCA before they can begin their role.
  • Every Senior Manager will need to have a Statement of Responsibilities that clearly says what they are responsible and accountable for.
  • There are also specific responsibilities that firms will need to give to their Senior Managers (known as Prescribed Responsibilities).
  • Firms need to certify individuals subject to the Certification Regime are ‘fit and proper’ to perform their role at least once per year.
  • A new set of Conduct Rules will apply to virtually all individuals within a firm.

Key elements of enhanced regime

As above plus:

  • Additional Senior Management Functions.
  • Additional Prescribed Responsibilities.
  • Overall Responsibility - Enhanced firms will need to make sure that there is a Senior Manager with overall responsibility for every area, business activity and management function of the firm.
  • Responsibilities Maps - Enhanced firms will need to have a single document that sets out the firm’s management and governance arrangements.
  • Handover Procedures - Enhanced firms will need to make sure that a person who is becoming a Senior Manager has all the information and material that they could reasonably expect in order to do their job.

Next steps

The deadline for consultation responses is 3 November 2017.

The exact date for the commencement of extension of the regime is not yet known – it will enter into force during 2018.