This Financial Services Update includes: summary of PS 18/14 – Extending the Senior Managers & Certification Regime to FCA firms - Feedback to CP17/25 and CP17/40, and near-final rules and summary of CP 18/19 – Introducing the Directory.
Summary of PS 18/14 – Extending the Senior Managers & Certification Regime to FCA firms - Feedback to CP17/25 and CP17/40, and near-final rules
Extending SM&CR to all FCA firms
On 4 July 2018, the Financial Conduct Authority published its near-final rules on the extension of Senior Manager & Certification Regime to all remaining FCA regulated firms – which will be subject to the rules under SM&CR from 9 December 2019 at the latest. SM&CR aims to increase individual accountability with a view to improving culture and behaviour within financial services firms. The rules are largely unchanged from previous consultation papers, however there are some notable exceptions including:
1. the removal of the prescribed responsibility for Core firms to inform the governing body of their legal and regulatory obligations;
2. changes to how firms voluntarily opt to have "enhanced" requirements;
3. amendments to how the enhanced thresholds are calculated for a firm to be "enhanced"; and
4. changes to the time period given to firms to implement the enhanced tier requirements, once they have met the relevant criteria.
The consultation paper also provides helpful clarification in a number of areas, but particularly in respect to the impact of the regime on groups, required functions and regulatory referencing.
Summary of CP 18/19 – Introducing the Directory
SM&CR – Directory of FS workers
On 4 July 2018, the Financial Conduct Authority published proposals on the introduction of a new Directory designed to assist both firms and consumers check information on individuals who are working within the financial services industry. The FCA has proposed that the Directory includes information on Senior Managers, Certified staff, Non-SMF Directors, Sole Traders and Appointed Representatives. The proposals will affect all regulated firms and it will require them to provide timely and accurate information on their employees to the FCA. The consultation ends on 5 October 2018.
Firms should consider how best to assess the impact of the proposed rules on their policies and processes, and then put in place an appropriate plan ensure these significant regulatory change projects are managed and implemented efficiently in their organisations.