The FCA publishes Consultation Paper on extension of the Senior Managers and Certification Regime

The Financial Conduct Authority (FCA) has, on 26 July 2017, published its consultation paper on the extension of SMCR to all FCA firms. We highlight the main implications of the proposed new regime.

On 26 July 2017, the FCA published its consultation paper (CP17/25) on extending the Senior Managers and Certification Regime (SMCR) to all FCA firms. We hope you will join our conference call summarising the consultation paper on Friday 28 July 2017 at 12.30pm.

(The consultation paper (CP 17/25) does not affect insurers, which are covered in a separate consultation (CP 17/26 - extending SMCR to insurers). Although the bulk of the consultation paper deals with extension of SMCR, there are some changes that affect application of SMCR to banks - see below.)

The extension of SMCR will apply to all FCA solo-regulated firms and replace the current FCA Approved Persons Regime for them. The consultation will close on 03 November 2017, with the final rules being published in a Policy Statement in Summer 2018. HM Treasury will set the date for implementation of the regime, which is expected to be “from 2018”.

The proposed new regime reflects the requirements of the Financial Services and Markets Act (FSMA) and largely echoes the arrangements which have been in place for banks since March 2016, focussing on three main components:

  • Senior Managers Regime: Firms will need to identify their Senior Managers and allocate certain Prescribed Responsibilities to them, and these Senior Managers will need to be approved by the FCA.
  • Certification Regime: Firms will take on (from the FCA) responsibility for assessing (and certifying on an annual basis) the fitness and propriety of their certification staff (effectively individuals capable of causing significant harm to a firm or its customers).
  • Conduct Rules: All staff (other than ancillary staff, such as receptionists or security) will be subject to conduct rules and firms will need to provide training on those rules.

Key points to note are:

What you should do now:

  • If you have not already done so, ensure that senior management is aware of the new regime and that you have assigned responsibility for implementation.
  • Consider any key issues for your business which should be fed into the consultation process.

If you would like to discuss the consultation paper or the regime generally, or would like to arrange further in-depth training, please contact your usual Simmons & Simmons contact.

We are currently in the process of developing a toolkit to help firms progress implementation in a cost effective way. The structure of that toolkit can be found here to give you an idea of what it will provide when fully developed. We expect to begin populating it shortly, finalising the content when we have the final rules.

For further information regarding the proposed extension of the regime, please visit our SMCR Extension microsite.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.