Fri, Jul 23, 2021

When Do Senior Managers Have to Be Certified and Reported as Directory Persons?

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Financial Conduct Authority (FCA) guidance states that if a Senior Manager is performing a certification function that is very different to what they are doing as a Senior Manager, they must be certified. There has been some confusion over when this applies. For example, when a Senior Manager has responsibility for investment advice provided by the firm, there is some question over whether they need to be certified, as providing this type of advice is part of their role as a senior manager.

The FCA has clarified this position. Whilst the management certification functions (e.g., managers of certification employees, significant management and material risk takers) are not very different to Senior Manager functions, the non-management certification functions are very different to Senior Manager functions. Therefore the FCA’s view is that if an individual is approved as a Senior Manager and also meets the definition of the client dealing function or functions requiring qualifications, they must be certified, regardless of whether that individual has responsibility for that area of the business as a Senior Manager. It follows that Senior Managers who are also certified will need to be reported to the FCA as directory persons.

We recommend that firms review their Senior Manager populations to assess whether any individuals need to be certified under the client dealing function or the functions requiring qualifications.

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