The Financial Conduct Authority (FCA) has just published the final rules on the extension of the UK Senior Managers and Certification Regime (SM&CR) to FCA solo-regulated firms. Previously, the SM&CR applied to UK banks, building societies, credit unions, PRA-designated investment firms, branches of foreign banks operating in the UK and insurers.
The full details of the final rules can be found on the FCA website, with key confirmed changes including:
- Clarity on the requirements of the scope of the SM&CR;
- Confirmation that the head of legal is excluded from the requirement to be approved as a Senior Manager; and
- Senior Manager Conduct Rule 4 is extended to include non-approved Executive Directors at Limited Scope firms.
FCA solo-regulated firms will now need to consider whether their firm is classified as a Limited Scope, Core or Enhanced firm under the SM&CR. Establishing which category firms fall into is critical in ensuring compliance with the correct rules under the regime.
Publication of the final rules follows the release by HM Treasury on 18 July 2019 of the SM&CR commencement regulations, which confirmed that the provisions will come into force for FCA solo-regulated firms on 9 December 2019 (with the exception of benchmark firms who will be subject to the SM&CR from 7 December 2020).
As reported previously here, the SM&CR increases individual accountability across the financial services sector by ensuring that individuals have a clear understanding of their responsibilities within the firm and improving conduct at all levels. The extension of this regime to FCA solo regulated firms is the next step in the development of a ‘culture of accountability’, and one that will affect an estimated 47,000 firms on 9 December 2019.
The FCA has produced a guide for companies summarising the SM&CR’s application to solo-regulated firms. This can be accessed here. The guide provides a useful summary, although the FCA have noted that it is not a substitute for reading the relevant handbook requirements.
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