The Financial Conduct Authority (FCA) has published a policy statement setting out its near final rules on how it intends to extend the Senior Managers and Certification Regime (SM&CR) to firms regulated only by the FCA (i.e. solo-regulated firms), including insurance intermediaries (Policy Statement). We published an article on how the SM&CR is being extended to insurers in our last HFW Insurance Bulletin; the article can be found here.

In March 2016, the FCA applied the SM&CR to banks, building societies, credit unions and PRA-designated investment firms. The SM&CR is now being extended to all firms authorised to provide financial services under the Financial Services and Markets Act 2000 (FSMA). Therefore, all firms regulated by the FCA will be affected by the changes brought about by the SM&CR, including EEA and third-country branches. However appointed representatives will continue to be subject to the Approved Persons Regime (APR) and firms currently exempt from the APR will not be affected by the SM&CR.

SM&CR requirements

The SM&CR is made up of the Senior Managers Regime, the Certification Regime and the Conduct Rules. The requirements that will apply to a firm will depend on whether the firm is categorised as a “Limited Scope", “Core", or “Enhanced" firm.

A Limited Scope firm is a firm currently subject to a limited application of the APR and will accordingly be subject to fewer SM&CR requirements than Core firms. Insurance intermediaries whose principal business is not insurance intermediation and which only have permission to carry on insurance mediation in relation to non-investment insurance contracts would fall within the Limited Scope category.

Core firms will have a base line of SM&CR requirements applied and most insurance intermediaries will fall within this category. Enhanced firms are a small proportion of firms which will be subject to extra rules and include firms with total intermediary regulated business revenue of £34m or more.

The FCA has published a helpful guide on how the SM&CR is being extended to solo-regulated firms which can be found here.

Next steps

The Treasury have announced that SM&CR will commence for solo-regulated firms on 9 December 2019 so firms should be taking steps to ensure they are prepared for the SM&CR in advance of the implementation date.