"Merry Christmas" from the FCA!

Guidance on the upcoming Senior Managers and Certification Regime.

On Monday, 9th December 2019, the Senior Managers and Certification Regime (SM&CR) comes into effect. Replacing the current Approved Persons Regime, this new regulation will fundamentally change how regulated firms operate and engage with the Financial Conduct Authority (FCA).

In accordance with the regulator, the aim of the regime is to:

reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence”.

As a continued response to the 2008 banking crisis and significant conduct failings, the SM&CR introduction is seen as a catalyst for change – “an opportunity for firms to establish healthy cultures and effective governance… by encouraging greater individual accountability and setting a new standard of personal conduct.

Clarification of Accountability: Senior Managers are defined by the FCA as those who carry out senior management functions. Under the new regime, all Senior Managers will have prescribed responsibilities which must be detailed in the firm’s written statement of responsibilities. All Senior Managers will need to be approved by the FCA and, if there is a breach, the Senior Manager in question will be held personally liable.

The Certification Regime also covers all staff who are not Senior Managers, but, by virtue of their role, could cause significant harm to the firm or any of its customers. Firms are required to self-certificate staff to ensure that they are “fit and proper” when they join the firm and annually there-on. Everyone covered by the regime will be required to follow the conduct rules which can be found in the FCA handbook.

Firms it applies to: The SM&CR will apply to all FCA-regulated firms, although there are different requirements depending on the type of firm.

If you need any further advice on the SM&CR and how to implement it, please do not hesitate to get in touch with our Financial Services team.

Jennifer Pass | e.jennifer.pass@ecovis.co.uk | t.+44 (0) 207 495 2244