The FCA has recently updated its Senior Managers and Certification Regime (“SMCR”) webpage for FCA solo-regulated firms (https://www.fca.org.uk/firms/senior-managers-certification-regime/solo-regulated-firms).
In particular, by reference to a list of positive/negative “indicators”, the FCA has set out further details on its expectations of firms in relation to fit and proper assessments and Conduct Rules training programmes.
Full details of the relevant indicators are set out below.
This update sets out important (non-handbook) guidance on the FCA’s expectations in relation to SMCR implementation. SMCR implementation is likely to be a key area of supervisory focus for the FCA in the coming years and may result in the FCA visiting firms to assess their level of compliance.
Although the guidance is focussed on FCA solo-regulated firms (who are yet to come fully into scope for the purposes of the regime), in our view the indicators are equally relevant for PRA/FCA dual-regulated firms who may be reviewing their SMCR compliance frameworks. For smaller firms, the FCA accept that they may need to interpret some of the indicators in a proportionate way, but smaller firms should still give thought to the intention behind the indicators.
If firms do not get SMCR implementation right then there is the risk that the FCA may take disciplinary action. Such enforcement action would likely focus on not just the firm, but also on the Senior Managers with the prescribed responsibilities relating to SMCR.
We would suggest that all firms review their processes against these indicators, and make any improvements that may be necessary.
FCA expectations in relation to fitness and propriety
FCA expectations in relation to the Conduct Rules