Wed, May 6, 2020

SM&CR and COVID-19: The FCA’s Expectation of Solo-Regulated Firms

The FCA provided guidance around the application of SM&CR by solo-regulated firms during the COVID-19 crisis. The FCA does not require firms to have a single Senior Manager responsible for their coronavirus response, but firms should allocate responsibilities in order to manage the associated existing and emerging risks.

Firms may need to make changes to Senior Manager responsibilities in response to the crisis, and the FCA has issued a Modification by Consent to the 12-week rule. It is designed to support firms using temporary arrangements during the crisis, and provides two modifications:

  • Extension of the period in which an individual can cover for a Senior Manager without being approved (known as the ‘12-week rule’) from a maximum of 12 weeks in a consecutive 12-month period to a maximum of 36 weeks in a consecutive 12-month period, and
  • Allowing firms to allocate an absent Senior Manager’s Prescribed Responsibilities to the individual covering the role, unless the firm is subject to the Overall Responsibility rule in SYSC 26, in which case the Prescribed Responsibilities of the furloughed Senior Manager must be allocated to another Senior Manager

Firms wishing to take advantage of this Modification by Consent should submit an application through FCA Connect.

The FCA does not expect firms to submit updated Statements of Responsibilities if the changes are temporary, but any temporary changes must be fully documented and may be requested by the FCA.

Fixed firms, however, should supply the FCA with timely detail of the changes they would normally include in updated Statements of Responsibilities, and inform their FCA supervisors by email or telephone if Senior Managers are furloughed.

We recommend reading the full FCA statement, which is available here.

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