Tue, Dec 11, 2018
The Senior Managers and Certification Regime (SM&CR) will be extended to all Financial Conduct Authority (FCA) regulated firms from December 9, 2019. This will replace the current Approved Persons Regime and will affect around 17,200 investment firms including wealth and asset managers, stockbrokers, financial advisors and insurance intermediaries along with the UK branches of both EEA and non-EEA firms.
How firms and individuals are impacted by the extended SM&CR
Sources - HM Treasury
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/ attachment_data/file/468328/SMCR_policy_paper_final_15102015.pdf
The extension of the SM&CR aims to drive a culture of greater individual accountability within financial services firms, following its implementation to banks in March 2016 and to insurers in December 2019.
SM&CR comprises three main elements:
Senior Managers will have a duty of responsibility to take reasonable steps to prevent regulatory breaches in the areas of the firm for which they are responsible. Senior Managers will need to understand and articulate what it is that they are responsible for, and document this through a Statement of Responsibility. This means that if a firm breaches an FCA requirement, the Senior Manager responsible for that area could be held personally accountable if they cannot demonstrate that reasonable steps were taken.
The FCA has a phased approach to the Certification Regime component. Conduct Rules will apply to all Certified Staff and SMFs from December 9, 2019, but firms will have a further 12 months to December 9, 2020 to conduct fit and proper assessments, train staff on Conduct Rules and complete certification assessments.
Actions to take now 12 months out from implementation
How Duff and Phelps can help?
Duff & Phelps has extensive knowledge and experience in advising firms on the transition to the SM&CR. Our team of regulatory technical experts have also performed numerous Skilled Persons reports on Governance and Individual Accountability and have a proven methodology in assisting firms create and maintain robust controls and governance frameworks. We can assist in the following areas:
Regulatory Expertise
Technology and Toolkits
Quality Assurance
To read the FCA’s guide on SM&CR for FCA solo-regulated firms, please click here.
Sources -
1 HM Treasury : https://assets.publishing.service.gov.uk/government/uploads/system/uploads/ attachment_data/file/468328/SMCR_policy_paper_final_15102015.pdf
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