This summary is based on the consultation paper (CP17/25) published by the FCA on 26 July 2017 and the FCA’s “near-final” rules (PS18/14) published on 04 July 2018.
The Senior Managers Regime (SMR) focuses on those individuals who really run firms. Anyone who holds a Senior Management Function (an SMF) will require FCA approval (much in the same way that existing Approved Persons do today). The firm will also be required to ensure that it has appropriate processes in place to assess a Senior Manager’s fitness and propriety, both prior to applying for approval and at least annually throughout the time that the Senior Manager holds the relevant role. The standards in relation to fitness and propriety are broadly similar to those under the current regime.
Each Senior Manager will be required to sign (and the firm will be required to submit to the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibility within the firm (and will include certain “Prescribed Responsibilities” mandated by the FCA that firms are required to allocate amongst their Senior Manager population). Firms will need to tell the FCA whenever there is a material change to a Senior Manager’s Statement of Responsibilities.
Every Senior Manager will also be subject to a “duty of responsibility” - a statutory duty under FSMA which means that if something goes wrong, the FCA will consider whether or not the Senior Manager took “reasonable steps” to stop this from happening.
The FCA proposes to automatically convert most of the approved persons at Core or Limited Scope firms into corresponding new Senior Management Functions. Enhanced firms will be required to submit a conversion notification (Form K) and accompanying documents.
All Senior Managers will need to comply with the Conduct Rules from commencement of the regime.
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.